The information in this preliminary prospectus supplement and the accompanying
prospectus is not complete and may be changed. This preliminary prospectus
supplement and the accompanying prospectus are not an offer to sell these
securities and we are not soliciting offers to buy these securities in any
jurisdiction where the offer or sale is not permitted.
PROSPECTUS SUPPLEMENT (Subject to Completion, dated November 12, 2001)
(To Prospectus dated November 1, 2001)
$200,000,000
PartnerRe Capital Trust I
% PREFERRED SECURITIES
guaranteed by
PartnerRe Ltd.
-----------------
PartnerRe Capital Trust I is offering preferred securities that PartnerRe Ltd.
will fully and unconditionally guarantee, based on its combined obligations
under a preferred securities guarantee, a junior subordinated indenture and a
junior subordinated debt securities guarantee. PartnerRe Capital Trust I will
use the proceeds from the sales of preferred and common securities to buy an
equal principal amount of % junior subordinated debt securities due November
, 2031 of PartnerRe Finance I Inc., an indirect wholly owned subsidiary of
PartnerRe Ltd., and distribute any cash payments it receives thereon to the
holders of its preferred and common securities. PartnerRe Capital Trust I will
redeem the preferred securities on November , 2031, which date may be extended
to a date not later than November , 2050, and may redeem them earlier.
-----------------
The preferred securities are expected to be approved for listing on the New
York Stock Exchange, subject to official notice of issuance, and trading of the
preferred securities on the New York Stock Exchange is expected to commence
within 30 days after they are first issued. The New York Stock Exchange symbol
for the preferred securities is "PRE-PrT."
Investing in the preferred securities involves risks. See ''Risk Factors''
beginning on page S-9 of this prospectus supplement.
-----------------
PRICE $25 PER PREFERRED SECURITY
-----------------
Underwriting Proceeds To
Price To Discounts PartnerRe Capital
Public (1) and Commissions (2) Trust I (1)(2)
------------ ------------------- -----------------
Per preferred security $25.00 $ $25.00
Total................. $200,000,000 $ $200,000,000
(1)Plus accumulated distributions, if any, from November , 2001.
(2)Because the Trust will use all of the proceeds from the sale of its
preferred securities and its common securities to purchase junior
subordinated debt securities of PartnerRe Finance, PartnerRe Finance or one
of its affiliates will pay all underwriting discounts and commissions.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the preferred securities to purchasers on
November , 2001.
-----------------
MORGAN STANLEY
SALOMON SMITH BARNEY
UBS WARBURG
WACHOVIA SECURITIES
November , 2001
TABLE OF CONTENTS
Prospectus Supplement Page
--------------------- ----
Prospectus Supplement Summary................. S-3
Risk Factors.................................. S-9
Forward-Looking Statements.................... S-14
Use of Proceeds............................... S-15
Ratio of Earnings to Fixed Charges and
Preferred Share Dividends of PartnerRe...... S-15
Selected Financial Data of PartnerRe.......... S-16
Capitalization................................ S-17
Description of the Preferred Securities....... S-18
Description of the Junior Subordinated Debt
Securities.................................. S-27
Description of the Preferred Securities
Guarantee................................... S-33
Description of the Junior Subordinated Debt
Securities Guarantee........................ S-35
Relationship Among the Preferred Securities,
the Junior Subordinated Debt Securities, the
JSDS Guarantee and the Preferred Securities
Guarantee................................... S-37
United States Federal Income Tax
Consequences................................ S-39
Certain ERISA Considerations.................. S-43
Underwriters.................................. S-45
Legal Matters................................. S-46
Prospectus Page
---------- ----
Where You Can Find More Information.......... 1
Incorporation of Certain Documents By
Reference.................................. 2
About This Prospectus........................ 2
PartnerRe Ltd................................ 3
PartnerRe Finance............................ 4
The Capital Trust............................ 4
Risk Factors................................. 6
Forward Looking Statements................... 6
Use of Proceeds.............................. 7
Ratio of Earnings to Fixed Charges and
Preferred Share Dividends of PartnerRe..... 7
General Description of the Offered Securities 7
Description of our Capital Shares............ 8
Description of the Depositary Shares......... 13
Description of the Debt Securities........... 16
Certain Provisions of the Junior Subordinated
Debt Securities Issued to the Capital Trust 30
Description of the Junior Subordinated Debt
Securities Guarantee....................... 33
Description of the Warrants to Purchase
Common Shares or Preferred Shares.......... 35
Description of the Warrants to Purchase Debt
Securities................................. 37
Description of the Trust Preferred Securities 38
Description of the Trust Preferred Securities
Guarantee.................................. 47
Description of the Share Purchase Contracts
and the Share Purchase Units............... 50
Plan of Distribution......................... 51
Legal Opinions............................... 53
Experts...................................... 53
Enforcement of Civil Liabilities under United
States Federal Securities Laws............. 53
This document is in two parts. The first part is this prospectus supplement,
which describes the terms of the offering of the preferred securities and also
adds to and updates information contained in the accompanying prospectus and
the documents incorporated by reference into the prospectus. The second part is
the accompanying prospectus, which gives more general information, some of
which may not apply to the preferred securities.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus.
PartnerRe, PartnerRe Finance and the Trust have not authorized anyone to
provide you with information other than that contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. The
information in this prospectus supplement and the accompanying prospectus may
be accurate only as of their respective dates.
The Trust is offering to sell the preferred securities, and is seeking
offers to buy the preferred securities, only in jurisdictions where offers and
sales are permitted. The distribution of this prospectus supplement and the
accompanying prospectus and the offering of the preferred securities in certain
jurisdictions may be restricted by law. Persons outside the United States who
come into possession of this prospectus supplement and accompanying prospectus
must inform themselves about and observe any restrictions relating to the
offering of the preferred securities and the distribution of this prospectus
supplement and the accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not constitute, and
may not be used in connection with, an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
any person to whom it is unlawful to make such offer or solicitation.
S-2
PROSPECTUS SUPPLEMENT SUMMARY
The following contains basic information about PartnerRe, PartnerRe Finance,
the Trust, the % preferred securities to be issued by the Trust, the
guarantees to be issued by PartnerRe and the % junior subordinated debt
securities due November , 2031 to be issued by PartnerRe Finance. It does not
contain all the information that is important to you. You should read the
following summary together with the more detailed information and financial
statements and notes to the financial statements contained elsewhere or
incorporated by reference into this prospectus supplement or the accompanying
prospectus. To fully understand this offering, you should read all of these
documents. To the extent there is a conflict between the information contained
in this prospectus supplement, on the one hand, and the information contained
in the accompanying prospectus or any document incorporated by reference, on
the other hand, the information in this prospectus supplement shall control.
PartnerRe Ltd.
PartnerRe Ltd., also referred to as "PartnerRe," provides multi-line
reinsurance to insurance companies on a worldwide basis through its wholly
owned subsidiaries Partner Reinsurance Company, PartnerRe SA (formerly known as
SAFR PartnerRe) and Partner Reinsurance Company of the U.S. Risks reinsured
include property, catastrophe, agriculture, automobile, casualty, marine,
aviation and space, credit and surety, technical and miscellaneous lines and
life/annuity and health. PartnerRe is a Bermuda company, with its principal
executive office located at 96 Pitts Bay Road, Pembroke, HM 08 Bermuda (tel:
(441) 292-0888).
PartnerRe Finance I Inc.
PartnerRe Finance I Inc., also referred to as "PartnerRe Finance," is a
newly formed Delaware corporation, with its principal executive offices located
at One Greenwich Plaza, Greenwich, Connecticut 06830-6352. PartnerRe Finance's
telephone number is (203) 485-4200. PartnerRe Finance is an indirect, wholly
owned subsidiary of PartnerRe that was created solely for the purpose of
issuing the junior subordinated debt securities to the Trust.
PartnerRe Finance intends to loan the proceeds from the sale of the junior
subordinated debt securities to its parent, PartnerRe U.S. Corporation, on
terms substantially similar to the junior subordinated debt securities.
PartnerRe U.S. Corporation, an indirect wholly owned subsidiary of PartnerRe,
is a holding company whose principal assets consists of two U.S.-based
reinsurance operating subsidiaries. In the aggregate, these U.S.-based
reinsurance operations write approximately one-third of the worldwide premiums
written by PartnerRe.
PartnerRe Capital Trust I
PartnerRe Capital Trust I, also referred to as the "Trust," is a statutory
Delaware business trust. The Trust exists for the exclusive purposes of:
. issuing and selling its common securities that represent undivided
beneficial interests in the assets of the Trust to PartnerRe Finance;
. issuing and selling its preferred securities that represent undivided
beneficial interests in the assets of the Trust to the public;
. using the gross proceeds from the sale of the preferred securities and
common securities to acquire the junior subordinated debt securities
guaranteed by PartnerRe from PartnerRe Finance; and
. engaging in only those other activities necessary or incidental to the
issuance and sale of the preferred securities and common securities.
The JPMorgan Chase Bank will act as the property trustee of the Trust. The
office of the Delaware trustee of the Trust is located at c/o JPMorgan Chase
Bank USA, National Association, 500 Stanton Christiana Road, OPS4 3/rd/ Floor,
Newark, Delaware 19173. Two officers of PartnerRe Finance will act as
administrative trustees of the Trust. The principal office and telephone number
of the Trust are c/o PartnerRe U.S. Corporation, One Greenwich Plaza,
Greenwich, CT 06830-6352, telephone number (203) 485-4200.
S-3
The Offering
The Trust is offering its preferred securities for $25 per security. The
Trust will use all of the proceeds from the sale of its preferred securities
and its common securities to purchase junior subordinated debt securities of
PartnerRe Finance. The junior subordinated debt securities will be the Trust's
only assets. Subject to limitations described below, PartnerRe will fully and
unconditionally guarantee payments due on the preferred securities based on its
combined obligations under the junior subordinated indenture, its guarantee of
the junior subordinated debt securities and its guarantee of the preferred
securities. We sometimes refer to the guarantee of the junior subordinated debt
securities as the "JSDS Guarantee" and the guarantee of the preferred
securities as the "preferred securities guarantee."
The Preferred Securities
If you purchase preferred securities, you will be entitled to receive
cumulative cash distributions at an annual rate of $ for each preferred
security, which represents % of the liquidation amount of $25 for each
preferred security. If the Trust is terminated and its assets distributed, for
each preferred security you own, you are entitled to receive a like amount of
junior subordinated debt securities or the liquidation amount of $25 plus
accumulated but unpaid distributions from the assets of the Trust available for
distribution, after it has paid liabilities owed to its creditors. Accordingly,
you may not receive the full liquidation amount and accumulated but unpaid
distributions if the Trust does not have enough funds.
Distributions will accumulate from the date the Trust issues its preferred
securities. The amount of distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. The Trust will pay the
distributions quarterly on March 31, June 30, September 30 and December 31 of
each year, beginning December 31, 2001. These distributions may be deferred at
any time and from time to time during the term of the junior subordinated debt
securities (referred to as an "extension period") for up to 20 consecutive
quarterly periods, subject to the terms, conditions and covenants specified in
this prospectus supplement, and provided that no extension period will extend
beyond the stated maturity of the junior subordinated debt securities.
If you purchase the preferred securities, you will have limited voting
rights. You will be entitled to vote on the following matters:
. removal of the property trustee or the Delaware trustee for cause or
when there is an event of default under the junior subordinated debt
securities;
. material modifications to the terms of the preferred securities, the
preferred securities guarantee and the JSDS Guarantee; and
. the exercise of the Trust's rights as holder of the junior subordinated
debt securities.
A more detailed description of your voting rights is contained under
"Description of the Trust Preferred Securities--Voting and Preemptive Rights"
and "Description of the Trust Preferred Securities Guarantee--Amendments and
Assignment" in the accompanying prospectus.
The Common Securities
PartnerRe Finance will acquire all of the common securities of the Trust.
The common securities will have an aggregate liquidation amount of at least 3%
of the total capital of the Trust. Except as described under "Subordination of
Common Securities" below, the common securities will rank equal to the
preferred securities in priority of payment. Generally, the common securities
will have sole voting power on matters to be voted upon by the Trust's security
holders.
S-4
The Junior Subordinated Debt Securities
The Trust will purchase the junior subordinated debt securities from
PartnerRe Finance with the proceeds from the sale of its preferred securities
and common securities. PartnerRe Finance will issue the junior subordinated
debt securities under a junior subordinated indenture between PartnerRe Finance
as issuer, PartnerRe as guarantor and JPMorgan Chase Bank, as indenture
trustee. The junior subordinated debt securities will:
. have an aggregate principal amount equal to approximately $206,186,000,
which is the aggregate liquidation amount of the preferred securities
plus the capital contributed by PartnerRe Finance for the common
securities;
. bear interest at an annual rate of %;
. pay interest quarterly, subject to the right of PartnerRe Finance to
defer interest payments for up to 20 consecutive quarters, as described
below;
. mature on November , 2031, although PartnerRe Finance may redeem them
earlier or extend their maturity under the circumstances described below;
. be unsecured obligations of PartnerRe Finance, subordinated in right of
payment to all PartnerRe Finance's Senior Indebtedness (as defined on
page 27 of the accompanying prospectus); and
. be fully and unconditionally guaranteed by PartnerRe on a junior,
subordinated basis.
The Guarantee of the Preferred Securities
PartnerRe will guarantee payments due on the preferred securities on a
limited basis under the preferred securities guarantee.
The preferred securities guarantee requires PartnerRe to pay accumulated
unpaid distributions, redemption payments and liquidation payments on the
preferred securities on behalf of the Trust only to the extent that the Trust
has funds on hand available for such payment. It does not, however, require
PartnerRe to make payments on behalf of the Trust if the Trust does not have
sufficient funds to make payments on the preferred securities because PartnerRe
Finance, or PartnerRe as guarantor, have not made payments on the junior
subordinated debt securities. PartnerRe's obligations under the preferred
securities guarantee are subordinate to its other obligations to the same
extent as PartnerRe's obligations under the JSDS Guarantee. See "Description of
the Trust Preferred Securities Guarantee" in the accompanying prospectus.
The Guarantee of the Junior Subordinated Debt Securities
Under the JSDS Guarantee, PartnerRe will fully and unconditionally guarantee
on a junior, subordinated basis all obligations of PartnerRe Finance under the
junior subordinated debt securities and the junior subordinated indenture. The
JSDS Guarantee requires PartnerRe to pay in full the principal of, and any
accrued and unpaid interest on, the junior subordinated debt securities without
withholding or deduction at source for, or on account of, any present or future
taxes and other fees. If a withholding or deduction at source is required,
PartnerRe will, subject to certain limitations and exceptions, pay to the
holders of the junior subordinated debt securities any such additional amounts
as may be necessary so that every net payment of principal, premium, if any,
interest or any other amount made to such holders, after the withholding or
deduction, will not be less than the amount provided for in the junior
subordinated debt securities and the junior subordinated indenture to be then
due and payable. The JSDS Guarantee will be an unsecured obligation of
PartnerRe, subordinated in right of payment to the prior payment in full of all
PartnerRe Senior Indebtedness. See "Description of the Junior Subordinated Debt
Securities Guarantee" in the accompanying prospectus.
S-5
Subordination of Common Securities
The preferred securities will generally rank equal to the common securities
in priority of payments. The Trust will make payments on the preferred
securities and the common securities based on a proportionate allocation of the
payments it receives on the junior subordinated debt securities. However, the
preferred securities will rank prior to the common securities as to payments if
and so long as an event of default under the junior subordinated debt
securities has occurred and is continuing. See "Description of the Trust
Preferred Securities--Subordination of Common Securities" in the accompanying
prospectus.
The junior subordinated debt securities will be unsecured and will rank
subordinate and junior in right of payment to all of PartnerRe Finance's
current and future Senior Indebtedness. See "Description of the Debt
Securities--Subordination of Our Subordinated Debt Securities" in the
accompanying prospectus. PartnerRe is a holding company, and its obligations
under the JSDS Guarantee are effectively subordinated to all obligations of its
subsidiaries.
Deferral of Distributions
Unless there is an event of default under the junior subordinated debt
securities, PartnerRe Finance can defer interest payments on the junior
subordinated debt securities during any period of up to 20 consecutive
quarters, but not beyond their stated maturity date. After PartnerRe Finance
makes all interest payments that it has deferred, including accrued interest on
the deferred payments, PartnerRe Finance can again defer interest payments as
long as PartnerRe Finance adheres to the same requirements.
If PartnerRe Finance defers interest payments on the junior subordinated
debt securities, the Trust will defer distributions on the preferred
securities. During any deferral period, distributions will continue to
accumulate on the preferred securities at an annual rate of % of the
liquidation amount of $25 per preferred security. Also, the deferred
distributions will accrue additional distributions, as permitted by applicable
law, at an annual rate of %, compounded quarterly.
While PartnerRe Finance defers interest payments on the junior subordinated
debt securities:
. PartnerRe Finance and PartnerRe will generally not be permitted to
declare or pay any dividends or any distributions on, or redeem,
purchase, acquire or make a liquidation payment on any of their capital
stock;
. PartnerRe will generally not permit its subsidiaries to pay any
distributions on, or redeem, purchase or acquire any of, PartnerRe's
capital stock;
. PartnerRe Finance will generally not be permitted to make any payment of
principal of, or interest or premium, if any, on or repay, repurchase or
redeem debt securities of PartnerRe Finance that rank equal or junior to
the junior subordinated debt securities;
. PartnerRe will generally not be permitted to make any payment of
principal of, or interest or premium, if any, on or repay, repurchase or
redeem debt securities of PartnerRe that rank equal or junior to the
JSDS Guarantee; and
. PartnerRe Finance and PartnerRe will generally not be permitted to make
any guarantee payments on any guarantee made by them of any debt
securities of their subsidiaries if such guarantee ranks equal or junior
in interest to the junior subordinated debt securities, in the case of
PartnerRe Finance, or to the JSDS Guarantee, in the case of PartnerRe.
If PartnerRe Finance defers payments of interest on the junior subordinated
debt securities, the preferred securities would at that time be treated as
being issued with original issue discount for United States Federal income tax
purposes. This means that you would be required to include accrued interest in
your income for United States Federal income tax purposes without regard to
your receipt of any cash distributions. See "United States Federal Income Tax
Consequences" for a more complete discussion.
S-6
Redemption of Preferred Securities and the Junior Subordinated Debt Securities
The Trust will redeem all of the outstanding preferred securities and common
securities when PartnerRe Finance redeems the junior subordinated debt
securities or repays the junior subordinated debt securities at stated maturity
on November , 2031, which date may be accelerated under the limited
circumstances described under "Conditional Right to Shorten Maturity" below or
extended under "Option to Extend Maturity Date" below. If PartnerRe Finance
redeems any junior subordinated debt securities before their stated maturity,
the Trust will use the cash it receives from the redemption to redeem preferred
securities and common securities.
Except as described above under "Subordination of Common Securities," the
aggregate liquidation amount of preferred securities and common securities to
be redeemed will be allocated approximately 97% to the preferred securities and
approximately 3% to the common securities.
PartnerRe Finance can redeem the junior subordinated debt securities before
their stated maturity at 100% of their principal amount plus accrued interest
to the date of redemption:
. on or after November , 2006, in whole or in part, on one or more
occasions, at any time; and
. at any time, in whole but not in part, if adverse changes in tax or
investment company law described below in "Description of Preferred
Securities--Redemption" occur and are continuing.
Distribution of the Junior Subordinated Debt Securities
PartnerRe Finance has the right to terminate the Trust at any time. If
PartnerRe Finance decides to exercise its right to terminate the Trust, the
Trust will distribute approximately 97% of the junior subordinated debt
securities to holders of the preferred securities and approximately 3% to the
holders of the common securities. However, if an event of default has occurred
with respect to the junior subordinated debt securities, holders of preferred
securities will have priority over holders of common securities as described
under "Subordination of Common Securities" above. If the junior subordinated
debt securities are distributed, PartnerRe Finance will use its reasonable
efforts to list the junior subordinated debt securities on the New York Stock
Exchange or any other exchange on which the preferred securities are then
listed.
Conditional Right To Shorten Maturity
If a change in tax law occurs with respect to the deductibility of interest
on the junior subordinated debt securities by ParterRe Finance, as described
under "Description of the Preferred Securities--Redemption," PartnerRe Finance
will have the right, prior to any dissolution of the Trust, to shorten the
maturity of the junior subordinated debt securities. PartnerRe Finance may only
shorten the maturity to the extent necessary so that the interest paid on the
junior subordinated debt securities will continue to be tax deductible by
PartnerRe Finance. The shortened term of the junior subordinated debt
securities may not be less than 15 years from the date of their issuance. See
"Description of the Junior Subordinated Debt Securities--Conditional Right to
Shorten Maturity."
Option to Extend Maturity Date
PartnerRe Finance can extend the maturity of the junior subordinated debt
securities to a date no later than November , 2050, so long as at the time
such election is made and at the time such extension commences:
. no event of default under the junior subordinated debt securities has
occurred and is continuing;
. the Trust is not in arrears on payments of distributions on the
preferred securities and no deferred interest payments on the preferred
securities are accumulated; and
. the junior subordinated debt securities are, and immediately after such
extension will be, rated at least investment grade by either Standard &
Poor's Ratings Services, Moody's Investors Service, Inc. or any other
nationally recognized statistical rating organization.
S-7
Listing of the Preferred Securities
The preferred securities are expected to be listed on the New York Stock
Exchange, subject to official notice of issuance, and trading of the preferred
securities on the New York Stock Exchange is expected to commence within 30
days after they are first issued. You should be aware that the listing of the
preferred securities will not necessarily ensure that a liquid trading market
will be available for the preferred securities or that you will be able to sell
your preferred securities at the price you originally paid for them.
Form of Preferred Securities
The preferred securities will be represented by one or more global
securities that will be deposited with, or on behalf of, and registered in the
name of The Depository Trust Company ("DTC") or its nominee. This means that
you will not receive a certificate for your preferred securities and the
preferred securities will not be registered in your name. Rather, your broker
or other direct or indirect participant of DTC will maintain your position in
the preferred securities.
Concurrent Offering
Concurrently with this offering, PartnerRe is publicly offering $150,000,000
of its % PEPS Units (plus up to an additional $22,500,000 of its PEPS Units if
the underwriters exercise their over-allotment option in connection with the
offering of the PEPS Units in full), each unit consisting of a purchase
contract for common shares of PartnerRe and one of PartnerRe's % Series B
Cumulative Redeemable Preferred Shares, $1.00 par value per share. The offering
described in this prospectus supplement is not contingent on the PEPS Unit
offering nor is the PEPS Unit offering contingent on the offering described
herein. You should not assume that the PEPS Unit offering will be completed.
Risk Factors
Your investment in the preferred securities will involve risks. You should
carefully consider the discussion of risks that follows below in the section
entitled "Risk Factors" and the other information included in or incorporated
by reference in this prospectus supplement and the accompanying prospectus,
before deciding whether an investment in the preferred securities is suitable
for you.
S-8
RISK FACTORS
An investment in the preferred securities involves a number of risks. You
should carefully review the information contained in the other sections of this
prospectus supplement, the accompanying prospectus and the documents
incorporated by reference into the prospectus, including the risk factors
contained in PartnerRe's Current Report on Form 8-K, dated October 3, 2001, and
should particularly consider the following matters before purchasing any
preferred securities.
Because the Trust will rely on the payments it receives on the junior
subordinated debt securities to fund all payments on the preferred securities,
and because the Trust may distribute the junior subordinated debt securities in
exchange for the preferred securities, you are making an investment decision
with regard to the junior subordinated debt securities as well as the preferred
securities. You should carefully review the information in this prospectus
supplement and the accompanying prospectus about both of these securities and
the guarantees.
Holders of PartnerRe's Senior Indebtedness will get paid Before You will get
paid under the Preferred Securities Guarantee or the JSDS Guarantee
PartnerRe's obligations under the preferred securities guarantee and the
JSDS Guarantee are unsecured and will rank junior in priority of payment to all
of PartnerRe's current and future Senior Indebtedness. As of September 30,
2001, there was approximately $220,000,000 of outstanding Senior Indebtedness
of PartnerRe. Upon a default on its Senior Indebtedness, PartnerRe cannot make
any payment on the preferred securities guarantee or the JSDS Guarantee before
PartnerRe's Senior Indebtedness has been paid in full. In addition, in the
event of a bankruptcy, liquidation or dissolution of PartnerRe, its assets
would be available to pay obligations under the preferred securities guarantee
or the JSDS Guarantee only after all payments have been made on PartnerRe's
Senior Indebtedness.
Holders of PartnerRe Finance's Senior Indebtedness will get paid Before the
Trust will get paid under the Junior Subordinated Debt Securities
PartnerRe Finance's obligations under the junior subordinated debt
securities are unsecured and will rank junior in priority of payment to all of
PartnerRe Finance's Senior Indebtedness, if any. While PartnerRe Finance does
not expect to have any indebtedness, other than under the junior subordinated
debt securities, the terms of the junior subordinated indenture do not prohibit
it from incurring additional indebtedness.
In addition, upon any kind of payment or distribution of assets of PartnerRe
Finance, or in the event of a bankruptcy, liquidation or dissolution of
PartnerRe Finance, its assets would be available to pay obligations under the
junior subordinated debt securities only after all payments have been made on
PartnerRe Finance's Senior Indebtedness.
PartnerRe and PartnerRe Finance may Incur Additional Indebtedness
Neither the junior subordinated debt securities, the preferred securities
guarantee nor the JSDS Guarantee limit the ability of PartnerRe or any of its
subsidiaries, including PartnerRe Finance, to incur additional indebtedness,
liabilities and obligations, including indebtedness, liabilities and
obligations that would rank senior to or equal with the junior subordinated
debt securities and the guarantees. Any additional indebtedness so incurred
would reduce the amount of cash PartnerRe Finance would have available to pay
its obligations under the junior subordinated debt securities or PartnerRe
would have available to pay its obligations under the preferred securities
guarantee or the JSDS Guarantee.
PartnerRe is a Holding Company and its Creditors will get paid only after
Creditors of its Subsidiaries Get Paid
PartnerRe is a holding company that conducts substantially all of its
operations through its reinsurance company subsidiaries. As a result,
PartnerRe's ability to make payments under the guarantees will depend
S-9
primarily upon the receipt of dividends and other distributions from its
reinsurance subsidiaries. Applicable insurance laws restrict the ability of
PartnerRe's reinsurance subsidiaries to pay dividends or make other payments to
it. Under these laws, the reinsurance subsidiaries generally may only make
dividend payments out of earned surplus, and regulatory approval may be
required for payments in excess of specified amounts based on the subsidiaries'
financial condition and results of operations.
In addition, PartnerRe's right to participate in any distribution of assets
of any of its subsidiaries upon the subsidiary's liquidation or otherwise, and
thus your ability as a holder of the preferred securities to benefit indirectly
from that distribution, will be subject to the prior claims of creditors of
that subsidiary, except to the extent that any of PartnerRe's claims as a
creditor of that subsidiary may be recognized. As a result, the guarantees will
effectively be subordinated to all existing and future liabilities and
obligations of PartnerRe's subsidiaries. Therefore, you should look only to
PartnerRe's assets for payments on the guarantees. At September 30, 2001,
subsidiaries of PartnerRe had liabilities, including claims by policyholders
for benefits payable and liabilities to other creditors, of approximately $4.7
billion.
If PartnerRe Finance or PartnerRe do not make Payments on the Junior
Subordinated Debt Securities, the Trust will not be Able to Pay Distributions
on the Preferred Securities and the Preferred Securities Guarantee will not
Apply
The ability of the Trust to timely pay distributions on the preferred
securities and pay the liquidation amount of $25 per preferred security depends
solely upon PartnerRe Finance making the related payments on the junior
subordinated debt securities when due or PartnerRe making these payments under
the JSDS Guarantee. If PartnerRe Finance defaults on its obligation to pay the
principal of or interest on the junior subordinated debt securities and
PartnerRe defaults on its obligations under the JSDS Guarantee, the Trust will
not have sufficient funds to pay distributions on, or the $25 liquidation
amount per security of, the preferred securities.
In that case, you will not be able to rely upon the preferred securities
guarantee for payment of these amounts because this guarantee only applies if
the Trust has funds on hand available to make the payments due. Instead, you or
the property trustee will have to bring a legal action against PartnerRe
Finance to enforce the property trustee's rights under the indenture relating
to the junior subordinated debt securities or against PartnerRe to enforce the
property trustee's rights under the JSDS Guarantee.
You may not be Able to Enforce Your Rights Against PartnerRe Finance and
PartnerRe Directly if an Event of Default Occurs; You may have to Rely on the
Property Trustee to Enforce Your Rights
You will not always be able to directly enforce your rights against
PartnerRe Finance or PartnerRe if an event of default occurs.
If an event of default under the junior subordinated debt securities occurs
and is continuing, that event will also be an event of default under the
preferred securities. In that case, you may have to rely on the property
trustee, as the holder of the junior subordinated debt securities, to enforce
your rights against PartnerRe Finance and PartnerRe as guarantor.
You may only bring a legal action against PartnerRe Finance and PartnerRe
directly if an event of default under the trust agreement occurs because of
PartnerRe Finance's failure to pay when due interest on or the principal of the
junior subordinated debt securities.
Distributions on the Preferred Securities Could be Deferred; You may have to
Include Interest in Your Taxable Income Before you Receive Cash
As long as there is not an event of default under the junior subordinated
debt securities, and subject to certain other limitations, PartnerRe Finance
may defer interest payments on the junior subordinated debt
S-10
securities one or more times. Each extension period may last up to 20
consecutive quarters, but may not extend beyond the stated maturity date.
During an extension period, PartnerRe would not be obligated under the JSDS
Guarantee for any amounts so deferred and the Trust would defer distributions
on the preferred securities in a corresponding amount.
If PartnerRe Finance defers interest payments on the junior subordinated
debt securities and the Trust defers distributions on the preferred securities,
you will have to accrue interest income as original issue discount for United
States Federal income tax purposes on your proportionate share of the junior
subordinated debt securities held by the Trust. As a result, you would have to
include that accrued interest in your gross income for United States Federal
income tax purposes without regard to your receipt of any cash distributions.
You will also not receive the cash distribution related to any accrued and
unpaid interest from the Trust if you sell the preferred securities before the
record date for any deferred distributions, even if you held the preferred
securities on the date that the payments would normally have been paid.
PartnerRe Finance has no current intention of exercising its right to defer
payments of interest on the junior subordinated debt securities. However, if
PartnerRe Finance exercises this right, the market price of the preferred
securities may be adversely affected. If you sell your preferred securities
when distributions are being deferred, you may not receive the same return on
investment as someone who continues to hold the preferred securities. In
addition, because of PartnerRe Finance's right to defer interest payments, the
market price of the preferred securities may be more volatile than the market
prices of other securities that are not subject to interest deferrals.
See "Description of the Preferred Securities--Deferral of Distributions,"
"Description of the Junior Subordinated Debt Securities--Option to Extend
Interest Payment Date," "United States Federal Income Tax Consequences--US
Holders--Interest Income and Original Issue Discount" and "--Sales of Preferred
Securities" for more information regarding the interest payment deferral option.
The Preferred Securities may be Redeemed Prior to Stated Maturity; You may be
Taxed on the Proceeds and You may not be Able to Reinvest the Proceeds at the
Same or a Higher Rate of Return
If adverse changes in the tax laws or investment company laws discussed
under "Description of the Preferred Securities--Redemption" and "Description of
the Junior Subordinated Debt Securities--Redemption" occur and are continuing,
PartnerRe Finance may redeem the junior subordinated debt securities in whole,
but not in part, within 90 days following the occurrence of the event.
PartnerRe Finance may also redeem the junior subordinated debt securities at
its option, in whole or in part, on one or more occasions at any time on or
after November , 2006.
If the junior subordinated debt securities are redeemed, the preferred
securities will be redeemed at a redemption price equal to the $25 per
preferred security liquidation amount plus accumulated but unpaid distributions
to the redemption date. Under current United States Federal income tax law, the
redemption of the preferred securities would be a taxable event to you.
You should assume that PartnerRe Finance will exercise its redemption option
when prevailing interest rates are lower than the interest rate on the junior
subordinated debt securities, so that generally you will not be able to
reinvest the money you receive upon redemption at a rate that is equal to or
higher than the rate of return you receive on the preferred securities.
See "Description of the Junior Subordinated Debt Securities--Redemption" and
"Description of the Preferred Securities--Redemption" and "--Liquidation
Distribution Upon Dissolution" for more information on redemption of the junior
subordinated debt securities.
S-11
The Trust may Distribute the Junior Subordinated Debt Securities to the Holders
of the Preferred Securities and the Junior Subordinated Debt Securities may
Trade at a Price that is Lower than the Price You Paid for the Preferred
Securities
If PartnerRe Finance terminates the Trust before the stated maturity of the
junior subordinated debt securities, PartnerRe Finance may cause the property
trustee to distribute the junior subordinated debt securities to the holders of
the preferred securities and the common securities in liquidation of the Trust
after satisfaction of liabilities to creditors.
No one can accurately predict the market prices for the junior subordinated
debt securities that may be distributed. Accordingly, the junior subordinated
debt securities that you receive upon a distribution, or the preferred
securities you hold pending the distribution, may trade at a lower price than
what you paid to purchase the preferred securities.
Although PartnerRe Finance has agreed to use its commercially reasonable
efforts to list the junior subordinated debt securities on the New York Stock
Exchange or any other exchange on which the preferred securities are then
listed, in the event of such a distribution, PartnerRe Finance cannot assure
you that the New York Stock Exchange will approve the junior subordinated debt
securities for listing or that a trading market will exist for the junior
subordinated debt securities.
Under current United States Federal income tax law, the distribution of
junior subordinated debt securities upon the termination of the Trust would
generally not be taxable to you. If, however, the Trust is characterized for
United States Federal income tax purposes as an association taxable as a
corporation at the time of the liquidation, the distribution of the junior
subordinated debt securities may be taxable to you.
See "Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution" for more information.
PartnerRe Finance may Shorten the Stated Maturity of the Junior Subordinated
Debt Securities, which will Result in Early Redemption of the Preferred
Securities; You may be Taxed on the Proceeds and You may not be Able to
Reinvest the Proceeds at the Same or a Higher Rate of Return
If a change in tax law occurs with respect to the deductibility of interest
on the junior subordinated debt securities by ParterRe Finance, PartnerRe
Finance may shorten the stated maturity of the junior subordinated debt
securities to a date not less than 15 years from the date of issuance of the
preferred securities. In that event, the mandatory redemption date for the
preferred securities will be correspondingly shortened. Under current United
States Federal income tax law, the redemption of the preferred securities would
be a taxable event to you. In addition, you may not be able to reinvest the
money you receive upon redemption at a rate that is equal to or higher than the
rate of return you received on the preferred securities.
PartnerRe Finance may Extend the Stated Maturity Date of the Junior
Subordinated Debt Securities, which will Delay the Mandatory Redemption Date
for the Preferred Securities until November , 2050
PartnerRe Finance can extend the stated maturity date of the junior
subordinated debt securities to a date no later than November , 2050, so long
as at the time such election is made and at the time such extension commences:
. no event of default under the junior subordinated debt securities has
occurred and is continuing;
. the Trust is not in arrears on payments of distributions on the
preferred securities and no deferred interest payments on the preferred
securities are accumulated; and
S-12
. the junior subordinated debt securities are, and immediately after such
extension will be, rated at least investment grade by either Standard &
Poor's Ratings Services, Moody's Investors Service, Inc. or any other
nationally recognized statistical rating organization.
If You Sell Your Preferred Securities Between Record Dates for Distribution
Payments, You will Have to Include Accrued but Unpaid Distributions in Your
Taxable Income
The preferred securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest on the underlying junior subordinated debt
securities.
If you dispose of your preferred securities before the record date for a
distribution payment, you will have to treat a portion of your proceeds from
the disposition as ordinary income for United States Federal income tax
purposes in an amount equal to the accrued but unpaid interest on your
proportionate share of the junior subordinated debt securities through the date
of your disposition.
Upon the sale of your preferred securities you will recognize a capital loss
if the amount you receive is less than your adjusted tax basis in the preferred
securities. The amount you receive for your preferred securities may not fully
reflect the value of any accrued but unpaid interest at the time of the sale.
Normally, you may not apply capital losses to offset ordinary income for United
States Federal income tax purposes.
See "United States Federal Income Tax Consequences--US Holders--Sales of
Preferred Securities" for more information.
PartnerRe Finance Will Generally Control the Trust Because Your Voting Rights
are Extremely Limited; Your Interests may not be the Same as PartnerRe
Finance's Interests
You will have almost no voting rights. PartnerRe Finance and the
administrative trustees of the Trust, who are officers of PartnerRe Finance,
may amend the restated trust agreement without the consent of holders of
preferred securities as described under "Description of the Trust Preferred
Securities--Amendment of Restated Trust Agreements" in the accompanying
prospectus.
An Active Trading Market for the Preferred Securities may not Develop
The preferred securities constitute a new issue of securities with no
established trading market. The preferred securities are expected to be listed
on the New York Stock Exchange, subject to official notice of issuance, and
trading of the preferred securities on the New York Stock Exchange is expected
to begin within a 30-day period after the date of this prospectus supplement.
Listing of the preferred securities on the New York Stock Exchange does not
guarantee that a trading market for the preferred securities will develop or,
if a trading market for the preferred securities does develop, the depth of
that market or the ability of holders to sell their preferred securities easily.
S-13
FORWARD-LOOKING STATEMENTS
Any statements made by us or on our behalf may include forward-looking
statements, which reflect our current views with respect to future events and
financial performance. These forward-looking statements are necessarily based
on estimates and assumptions that are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which, with respect to future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in such
forward-looking statements.
These uncertainties and other factors (which we describe in more detail
elsewhere in this prospectus supplement and the accompanying prospectus and in
our SEC filings that we have incorporated by reference) include, but are not
limited to:
(1) the occurrence of catastrophic events with a frequency or severity
exceeding our expectations;
(2) a decrease in the level of demand for reinsurance and/or an increase in
the supply of reinsurance capacity;
(3) increased competitive pressures, including the consolidation and
increased globalization of reinsurance providers;
(4) actual losses and loss expenses exceeding our loss reserves, which are
necessarily based on actuarial and statistical projections of ultimate
losses;
(5) changes in the cost, availability and performance of retrocessional
reinsurance, including the ability to collect reinsurance recoverables;
(6) concentration risk in dealing with a limited number of brokers;
(7) developments in and risks associated with global financial markets which
could affect our investment portfolio;
(8) changing rates of inflation and other economic conditions;
(9) losses due to foreign currency exchange rate fluctuations; or
(10) changes in the legal or regulatory environments in which we operate,
including the passage of federal or state legislation subjecting Partner
Reinsurance Company Ltd. or PartnerRe SA to supervision or regulation,
including additional tax regulation, in the United States or other
jurisdictions in which we operate.
The foregoing review of important factors should not be construed as
exhaustive.
The words "believe," "anticipate," "estimate," "project," "plan," "expect,"
"intend," "hope," "will likely result," "outlook," "will continue" or words of
similar impact generally involve forward-looking statements. We caution readers
not to place undue reliance on these forward-looking statements, which speak
only as of their dates. We undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
S-14
USE OF PROCEEDS
The Trust will use all of the proceeds from the sale of the preferred
securities and common securities to purchase the junior subordinated debt
securities. PartnerRe Finance intends to loan the net proceeds from the sale of
the junior subordinated debt securities to its parent, PartnerRe U.S.
Corporation, on terms substantially similar to the junior subordinated debt
securities. PartnerRe U.S. Corporation intends to use the proceeds for general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS OF PARTNERRE
For purposes of computing the following ratios, earnings consist of net
income before income tax expense plus fixed charges to the extent that these
charges are included in the determination of earnings. Fixed charges consist of
interest costs plus one-third of minimum rental payments under operating leases
(estimated by our management to be the interest factor of these rentals).
Nine Months
Ended
September 30, Year Ended December 31,
------------ ------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ----- ----- ----- ------ ------- ---------
Ratio of Earnings to Fixed Charges..... NM(1) 8.48x 7.12x 4.25x 94.88x 348.86x 2,498.25x
Ratio of Earnings to Combined Fixed
Charges and Preferred Share Dividends NM(1) 3.77x 3.18x 1.87x 12.20x 27.88x 2,498.25x
Neither PartnerRe Finance nor the Trust had any operations during the
periods set forth above.
Deficiency of Earnings to Fixed Charges(2)....................................... $257.8 million
Deficiency of Earnings to Combined Fixed Charges and Preferred Share Dividends(2) $272.8 million
- --------
(1) NM: not meaningful. The ratios for the nine-month period ended September
30, 2001 are not meaningful due to the net loss which PartnerRe reported
for the period, which included the losses related to the terrorist attacks
of September 11, 2001. Further information regarding the impact of these
attacks on PartnerRe's financial results can be found in the accompanying
prospectus and the documents incorporated by reference therein.
(2) Represents earnings that would be necessary to result in a one-to-one
coverage ratio.
S-15
SELECTED FINANCIAL DATA OF PARTNERRE
The following table sets forth summary historical consolidated financial and
other data of PartnerRe. The year-end financial data has been derived from
PartnerRe's audited financial statements, which have been audited by Deloitte &
Touche. The financial data for the interim periods has been derived from
PartnerRe's unaudited financial statements and include, in the opinion of
PartnerRe's management, all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the financial data. The results
for the interim periods do not necessarily indicate the results to be expected
for the full fiscal year. You should read the following information in
conjunction with PartnerRe's financial statements and the related notes and the
other financial and statistical information that is included or incorporated by
reference in this prospectus supplement and the accompanying prospectus.
Nine Months Ended
September 30, Year Ended December 31,
------------------ ----------------------------
2001 2000 2000(3) 1999 1998
-------- -------- -------- -------- --------
(unaudited)
(in millions, except per share data)
Operations data:
Gross premiums written..................................... $1,449.3 $1,141.4 $1,439.5 $1,433.0 $ 735.8
Net premiums written....................................... 1,403.0 1,090.2 1,380.3 1,326.4 687.0
Net premiums earned........................................ 1,191.2 983.0 1,314.3 1,338.0 685.6
Net investment income...................................... 181.0 218.5 273.6 307.6 169.4
Net realized investment gains (losses)..................... 14.2 (51.9) (62.7) (15.9) 23.7
Other income............................................... 0.1 0.2 0.4 0.7 0.9
-------- -------- -------- -------- --------
Total revenues............................................. 1,386.5 1,149.8 1,525.6 1,630.4 879.6
-------- -------- -------- -------- --------
Losses and loss expenses including life policy benefits.... 1,269.0 733.6 975.7 1,130.1 396.9
Total expenses............................................. 1,644.3 1,059.9 1,427.0 1,579.4 602.5
-------- -------- -------- -------- --------
(Loss) income before taxes................................. (257.8) 89.9 98.6 51.0 277.1
Income tax expenses (benefit).............................. (40.6) (35.8) (43.7) (43.8) 10.8
-------- -------- -------- -------- --------
Net (loss) income(1)....................................... $ (217.2) $ 125.7 $ 142.3 $ 94.8 $ 266.3
======== ======== ======== ======== ========
Diluted operating (loss) earnings per common share(1)(2)... $ (4.78) $ 3.26 $ 3.79 $ 1.73 $ 4.05
======== ======== ======== ======== ========
Diluted (loss) net income per common share(1)(2)........... $ (4.63) $ 2.19 $ 2.41 $ 1.40 $ 4.34
======== ======== ======== ======== ========
Loss ratio................................................. 107.5% 68.8% 70.2% 77.1% 56.9%
Expense ratio.............................................. 30.4% 31.3% 32.3% 32.7% 28.6%
-------- -------- -------- -------- --------
Combined ratio............................................. 137.9% 100.1% 102.5% 109.8% 85.5%
======== ======== ======== ======== ========
Balance sheet data (at end of period):
Total investments, cash and cash equivalents............... $3,954.0 $3,822.1 $3,882.1 $5,494.8 $5,432.2
Total assets............................................... 6,500.0 5,968.8 6,091.3 7,560.0 7,554.0
Unpaid losses and loss expenses and policy benefits for
life and annuity contracts............................... 3,674.9 2,979.6 3,059.1 4,747.0 4,618.2
Long-term debt............................................. 220.0 220.0 220.0 220.0 220.0
Total shareholders' equity................................. 1,759.0 1,984.1 2,086.0 1,840.7 2,113.4
Diluted book value per common and common equivalent share.. $ 29.32 $ 34.14 $ 35.54 $ 31.82 $ 33.53
Weighted average number of common and common equivalent
shares outstanding....................................... 51.6 50.5 50.7 53.2 56.8
Weighted average number of common shares outstanding....... 50.1 49.2 50.1 49.3 52.8
- --------
(1) Excluding non-recurring gain for the nine-month period ended September 30,
2001 related to the cumulative effect of adopting a new accounting
standard, in the amount of $27.8 million or $0.55 per common share.
(2) Operating (loss) earnings represent net (loss) income excluding the effect
of after-tax net realized investment gain (losses).
(3) Includes the results of operations of PartnerRe Life US for the six-month
period ended June 30, 2000 after which date PartnerRe Life US was sold.
S-16
CAPITALIZATION
The following table sets forth, as of September 30, 2001, PartnerRe's
long-term debt and capitalization (1) on a historical basis, and (2) as
adjusted to give effect to the sale of $200 million of the preferred securities
of the Trust offered hereby and the PEPS Units offered concurrently herewith
(assuming no exercise by the underwriters of their over-allotment option in
connection with the offering of the PEPS Units). You should read this table in
conjunction with PartnerRe's historical consolidated financial statements and
the other financial and statistical information that is included or
incorporated by reference in this prospectus supplement and the accompanying
prospectus.
At September 30, 2001
---------------------
Actual As Adjusted
------ -----------
(unaudited)
(in millions)
Long-term debt........................................................................... $ 220 $ 220
Preferred securities offered hereby...................................................... -- 200
Series B preferred shares offered concurrently(1)........................................ -- 150
Shareholders' equity:
Common shares (par value $1.00 per share; 100,000,000 shares
authorized, 50,112,268 shares issued and outstanding)............................... 50 50
Preferred shares (8% Series A Cumulative Preferred Shares;
10,000,000 shares authorized; 10,000,000 shares issued and outstanding; liquidation
preference $25.00 per share)........................................................ 10 10
Additional paid-in capital(2)......................................................... 892 881
Other shareholders' equity............................................................ 807 807
------ ------
Total shareholders' equity........................................................ $1,759 $1,748
====== ======
Total capitalization........................................................... $1,979 $2,318
====== ======
- --------
(1) Concurrently with this offering, PartnerRe is publicly offering
$150,000,000 of its % PEPS Units (plus up to an additional $22,500,000 of
its PEPS Units if the underwriters exercise their over-allotment option in
connection with the offering of the PEPS Units in full), each PEPS Unit
consisting of a purchase contract for common shares of PartnerRe and one of
PartnerRe's % Series B Cumulative Redeemable Preferred Shares, $1.00 par
value per share. The offering described in this prospectus supplement is
not contingent on the PEPS Units offering nor is the PEPS Unit offering
contingent on the offering described herein. You should not assume that the
PEPS Units offering will be completed.
(2) Additional paid-in capital, as adjusted, includes the recognition of the
fair value of the purchase contract for common shares of PartnerRe issued
as part of each PEPS Unit.
S-17
DESCRIPTION OF THE PREFERRED SECURITIES
The following, together with "Description of the Trust Preferred Securities"
in the accompanying prospectus, is a description of the material terms of the
preferred securities. If the description of the preferred securities set forth
in this prospectus supplement differs in any way from the description set forth
in the accompanying prospectus, you should rely on the description set forth in
this prospectus supplement. You should also read the amended and restated trust
agreement, to be dated as of November , 2001 (the "trust agreement"), the
Delaware Business Trust Act and the Trust Indenture Act. A form of the trust
agreement has been filed with the SEC as an exhibit to the registration
statement pertaining to this prospectus supplement.
The Trust will issue the preferred securities under the terms of the trust
agreement. The trust agreement is qualified under the Trust Indenture Act.
JPMorgan Chase Bank will act as the property trustee for purposes of complying
with the Trust Indenture Act. JPMorgan Chase Bank USA, N.A. will act as
Delaware trustee. The terms of the preferred securities will include those
stated in the trust agreement and the Delaware Business Trust Act and those
made part of the trust agreement by the Trust Indenture Act.
General
The preferred securities will be limited to $200,000,000 aggregate
liquidation amount outstanding. The preferred securities will rank equal to,
and payments will be made on the preferred securities on a proportional basis
with, the common securities. However, the preferred securities will rank prior
to the common securities as to payment if and so long as an event of default
under the junior subordinated debt securities has occurred and is continuing as
described under "Description of the Trust Preferred Securities--Subordination
of Common Securities" in the accompanying prospectus. The trust agreement does
not permit the Trust to issue any securities other than the common securities
and the preferred securities or to incur any indebtedness.
PartnerRe Finance will register the junior subordinated debt securities in
the name of the Trust. The property trustee will hold the junior subordinated
debt securities in trust for the benefit of the holders of the preferred
securities and the common securities.
Distributions
Distributions on the preferred securities will be fixed at an annual rate of
% of the stated liquidation amount of $25 per preferred security, and will be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, beginning December 31, 2001. If the Trust is terminated and its
assets distributed, for each preferred security you own, you are entitled to
receive a like amount of junior subordinated debt securities or the liquidation
amount of $25 plus accumulated but unpaid distributions from the assets of the
Trust available for distribution, after it has paid liabilities owed to its
creditors. Distributions to which holders of the preferred securities are
entitled and that are past due will accumulate additional distributions, as
permitted by applicable law, at an annual rate of % of the unpaid
distributions, compounded quarterly. The term "distribution" includes any
additional distributions payable unless otherwise stated.
The amount of distributions payable for any period less than a full
distribution period will be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in a partial month in that
period. The amount of distributions payable for any full distribution period
will be computed by dividing the rate per annum by four.
Distributions on the preferred securities:
. will be cumulative;
. will accumulate from November , 2001, the date of initial issuance of
the preferred securities; and
S-18
. will be payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year, beginning December 31, 2001, and will be
payable to the holder of record, as described below.
Funds available for distribution will be limited to payments received from
PartnerRe Finance on the junior subordinated debt securities, or from PartnerRe
pursuant to the preferred securities guarantee and the JSDS Guarantee.
Payment of Distributions
The Trust will pay distributions on the preferred securities to DTC, which
will credit the relevant accounts at DTC on the applicable payment dates, or,
if the global securities certificate for the preferred securities is not then
held by or on behalf of DTC, the Trust will make the payments by check mailed
to the addresses of the holders as such addresses appear on the books and
records of the Trust on the relevant record dates. However, a holder of
$1,000,000 or more in aggregate liquidation amount of preferred securities may
receive distribution payments, other than distributions payable at maturity, by
wire transfer of immediately available funds upon written request to the Trust
not later than 10 calendar days prior to the date on which the distribution is
payable. The record dates will be the 10/th/ calendar day, whether or not a
business day, before the relevant payment date.
The Trust will pay distributions through the property trustee. The property
trustee will hold amounts received from the junior subordinated debt securities
in the payment account for the benefit of the holders of the preferred
securities and the common securities.
If a distribution is payable on a day that is not a business day, then that
distribution will be paid on the next day that is a business day, and without
any interest or other payment for any delay with the same force and effect as
if made on the payment date. However, if that business day is in the next
succeeding calendar year, the Trust will make the payment on the immediately
preceding business day.
A business day is a day other than a Saturday, a Sunday or any other day on
which banking institutions in New York, New York are authorized or required by
law or executive order to remain closed.
Deferral of Distributions
As long as there is no event of default under the junior subordinated debt
securities, PartnerRe Finance has the right to defer payments of interest on
the junior subordinated debt securities at any time and from time to time by
extending the interest payment period for a period (an "extension period") of
up to 20 consecutive quarters, but not beyond the maturity of the junior
subordinated debt securities.
As a consequence, during an extension period, the Trust will defer payment
of the quarterly distributions on the preferred securities. The accumulated but
unpaid distributions will continue to accumulate additional distributions, as
permitted by applicable law, at an annual rate of %, compounded quarterly,
during the extension period.
If the Trust defers distributions, the deferred distributions, including
accumulated additional distributions, will be paid on the distribution payment
date following the last day of the extension period to the holders on the
record date for that distribution payment date. Upon termination of an
extension period and payment of all amounts due on the preferred securities,
PartnerRe Finance may elect to begin a new extension period, subject to the
above conditions.
While PartnerRe Finance defers interest payments on the junior subordinated
debt securities:
. PartnerRe Finance and PartnerRe will generally not be permitted to
declare or pay any dividends or any distributions on, or redeem,
purchase, acquire or make a liquidation payment on any of their capital
stock;
S-19
. PartnerRe will generally not permit its subsidiaries to pay any
distributions on, or redeem, purchase or acquire any of, PartnerRe's
capital stock;
. PartnerRe Finance will generally not be permitted to make any payment of
principal of, or interest or premium, if any, on or repay, repurchase or
redeem debt securities of PartnerRe Finance that rank equal or junior to
the junior subordinated debt securities;
. PartnerRe will generally not be permitted to make any payment of
principal of, or interest or premium, if any, on, or repay, repurchase
or redeem debt securities of PartnerRe that rank equal or junior to the
JSDS Guarantee; and
. PartnerRe Finance and PartnerRe will generally not be permitted to make
any guarantee payments on any guarantee made by them of any debt
securities of their subsidiaries if such guarantee ranks equal or junior
in interest to the junior subordinated debt securities, in the case of
PartnerRe Finance, or to the JSDS Guarantee, in the case of PartnerRe.
If PartnerRe Finance defers payments of interest on the junior subordinated
debt securities, the preferred securities would at that time be treated as
being issued with original issue discount for United States Federal income tax
purposes. This means that you would be required to include accrued interest in
your income for United States Federal income tax purposes without regard to
your receipt of any cash distributions. See "United States Federal Income Tax
Consequences" for a more complete discussion.
PartnerRe Finance has no current intention of deferring payments of interest
by extending the interest payment period on the junior subordinated debt
securities.
Redemption
When PartnerRe Finance repays or redeems the junior subordinated debt
securities, whether at stated maturity or upon earlier redemption, the property
trustee will apply the proceeds from the repayment or redemption to redeem
preferred securities and common securities having an aggregate liquidation
amount equal to that portion of the principal amount of junior subordinated
debt securities being repaid or redeemed. The redemption price per security
will equal the $25 liquidation amount, plus accumulated but unpaid
distributions to the redemption date.
If less than all of the junior subordinated debt securities are to be repaid
or redeemed, then the aggregate liquidation amount of the preferred securities
and the common securities to be redeemed will be allocated pro rata, except if
an event of default under the junior subordinated debt securities has occurred
and is continuing. See "Description of the Trust Preferred
Securities--Subordination of Common Securities" in the accompanying prospectus.
PartnerRe Finance will have the right to redeem the junior subordinated debt
securities:
. on or after November , 2006, in whole or in part, on one or more
occasions, at any time; and
. in whole, but not in part, at any time within 90 days following the
occurrence and continuation of a Special Event relating to the preferred
securities.
A redemption of the junior subordinated debt securities will cause a
mandatory redemption of the preferred securities and the common securities. See
"Certain Provisions of the Junior Subordinated Debt Securities Issued to the
Capital Trust--Redemption" in the accompanying prospectus.
"Special Event" means either a Tax Event or an Investment Company Event.
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"Tax Event" means the receipt by the Trust or by PartnerRe Finance of an
opinion of counsel experienced in such matters to the effect that as a result
of:
. any amendment to, or change, including any announced prospective change,
in the laws, or any regulations thereunder, of the United States or any
political subdivision or taxing authority thereof or therein; or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations (including any change
in interpretation or application of law or regulation by any taxing
authority);
which amendment or change is effective or which pronouncement or decision is
announced on or after the date of original issuance of the preferred securities
of the Trust, there is more than an insubstantial risk that:
(1) the Trust is, or will be within 90 days of delivery of the opinion of
counsel, subject to United States Federal income tax with respect to
income received or accrued on the junior subordinated debt securities;
(2) interest payable by PartnerRe Finance on the junior subordinated debt
securities is not, or will not be within 90 days of the delivery of the
opinion of counsel, deductible by PartnerRe Finance, in whole or in
part, for United States Federal income tax purposes; or
(3) the Trust is, or will be within 90 days of delivery of the opinion of
counsel, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means the receipt by the Trust of an opinion of
counsel to PartnerRe Finance experienced in such matters to the effect that, as
a result of the occurrence of a change in law or regulation or a written change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in the 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" or a company "controlled" by an "investment
company" that is required to be registered under the Investment Company Act,
which Change in the 1940 Act Law becomes effective on or after the date of
original issuance of the preferred securities of the Trust.
If junior subordinated debt securities provide for the payment by PartnerRe
Finance of certain taxes, assessments or other governmental charges imposed on
the holder of any such junior subordinated debt security, PartnerRe Finance
will pay any additional sums required so that distributions on the preferred
securities will not be reduced by any additional taxes (other than withholding
taxes), duties or other governmental charges payable by the Trust. See
"Description of the Junior Subordinated Debt Securities--Payment of Additional
Amounts."
Redemption Procedures
The Trust may redeem preferred securities only in an amount equal to the
funds it has on hand and legally available to pay the redemption price. See
"Description of the Trust Preferred Securities--Subordination of Common
Securities" in the accompanying prospectus.
The property trustee will mail written notice of the redemption of the
preferred securities to the registered holders at least 30, but not more than
60, days before the date fixed for redemption. If the Trust gives a notice of
redemption, then, by 12:00 noon, New York City time, on the date of redemption,
if the funds are available for payment, the property trustee will, for
preferred securities held in book-entry form:
. irrevocably deposit with DTC funds sufficient to pay the applicable
redemption price; and
. give DTC irrevocable instructions and authority to pay the redemption
price to the holders of the preferred securities.
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With respect to the preferred securities not held in book-entry form, if
funds are available for payment, the property trustee will:
. irrevocably deposit with the paying agent funds sufficient to pay the
applicable redemption price; and
. give the paying agent irrevocable instructions and authority to pay the
redemption price to the holders of preferred securities upon surrender
of their certificates evidencing the preferred securities.
Notwithstanding the above, distributions payable on or prior to the date of
redemption for any preferred securities called for redemption will be payable
to the holders of the preferred securities on the relevant record dates. See
"Description of the Trust Preferred Securities--Redemption Procedures" in the
accompanying prospectus for a more complete discussion.
Once notice of redemption is given and funds are deposited, then all rights
of the holders of the preferred securities called for redemption will
terminate, except the right to receive the redemption price, but without any
interest or other payment for any delay in receiving it. If notice of
redemption is given and funds are deposited as required, the preferred
securities will cease to be outstanding.
If any date fixed for redemption is not a business day, then payment of the
redemption price will be made on the next day that is a business day, without
any interest or other payment for the delay. However, if that business day is
in the next succeeding calendar year, the Trust will make the payment on the
immediately preceding business day.
Unless PartnerRe Finance, PartnerRe under the JSDS Guarantee and the Trust
each default in payment of the redemption price for the junior subordinated
debt securities, on or after the redemption date, interest will cease to accrue
on such junior subordinated debt securities and distributions will cease to
accrue on the preferred securities.
Subject to the above and applicable law, including United States Federal
securities law, PartnerRe Finance may at any time and from time to time
purchase outstanding preferred securities by tender, in the open market or by
private agreement.
If less than all the preferred securities and common securities are
redeemed, then the aggregate liquidation amount of the preferred securities and
the common securities to be redeemed normally will be allocated pro rata among
the common securities and the preferred securities, based upon the relative
liquidation amounts of such classes. However, if an event of default has
occurred and is continuing under the junior subordinated debt securities,
holders of the preferred securities will be paid in full before any payments
are made to holders of the common securities. See "Description of the Trust
Preferred Securities--Subordination of Common Securities" in the accompanying
prospectus for a more complete discussion. The property trustee will select the
particular preferred securities to be redeemed on the pro rata basis described
above not more than 60 days before the date of redemption by any method the
property trustee deems fair and appropriate or, if the preferred securities are
then held in book-entry form, in accordance with DTC's customary procedures.
Liquidation Distribution Upon Dissolution
The amount payable on the preferred securities in the event of any
liquidation of the Trust is the liquidation amount of $25 per preferred
security plus accumulated but unpaid distributions, subject to certain
exceptions, which may be paid in the form of a distribution of junior
subordinated debt securities.
PartnerRe Finance can at any time dissolve the Trust. If the Trust dissolves
and it has paid the liabilities owed to its creditors, the junior subordinated
debt securities may be distributed to the holders of the preferred securities
and common securities.
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The trust agreement states that the Trust will dissolve automatically on
December 31, 2055 or earlier upon:
(1) the bankruptcy, dissolution or liquidation of PartnerRe Finance or
PartnerRe;
(2) the written direction to the property trustee from PartnerRe Finance at
any time (which direction is optional and wholly within the discretion
of PartnerRe Finance) to dissolve the Trust and distribute to holders of
preferred securities and common securities in exchange for such
securities, junior subordinated debt securities having a principal
amount equal to the liquidation amount of the preferred securities and
the common securities so exchanged;
(3) the redemption of all the preferred securities and the common securities
in connection with the redemption of all the junior subordinated debt
securities; or
(4) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If the Trust dissolves as described in clauses (1), (2) or (4) in the
preceding paragraph, after the Trust pays all amounts owed to creditors,
holders of the preferred securities and the common securities will be entitled
to receive, at the option of PartnerRe Finance,
. junior subordinated debt securities having a principal amount equal to
the liquidation amount of the preferred securities and the common
securities of the holders; or
. a cash amount equal to, in the case of holders of preferred securities,
the aggregate liquidation amount plus accumulated but unpaid
distributions to the date of payment.
If the Trust cannot pay the full amount due on the preferred securities and
the common securities because it has insufficient assets for payment, then the
amounts the Trust owes on the preferred securities will be allocated on a pro
rata basis. The holders of the common securities will be entitled to receive
distributions upon any liquidation on a pro rata basis with the holders of the
preferred securities, except that if an event of default under the junior
subordinated debt securities has occurred and is continuing, the Trust will pay
the total amounts due on the preferred securities before making any
distribution on the common securities. See "Description of the Trust Preferred
Securities--Subordination of Common Securities" in the accompanying prospectus.
After the liquidation date is fixed for any distribution of junior
subordinated debt securities, upon dissolution of the Trust:
. the preferred securities and the common securities will no longer be
deemed to be outstanding;
. DTC or its nominee, as the registered holder of preferred securities,
will receive a registered global certificate or certificates
representing the junior subordinated debt securities to be delivered
upon distribution with respect to preferred securities held by DTC or
its nominee; and
. any certificates representing preferred securities will be deemed to
represent the junior subordinated debt securities having an aggregate
principal amount equal to the liquidation amount of the preferred
securities, and bearing accrued but unpaid interest equal to accumulated
but unpaid distributions on the preferred securities, until the holder
of those certificates presents them to the security registrar for the
preferred securities for transfer or reissuance.
The Trust cannot assure you as to the market prices of the preferred
securities or the corresponding junior subordinated debt securities that may be
distributed in exchange for preferred securities if a dissolution or
liquidation of the Trust were to occur. Accordingly, the preferred securities
that you may purchase, or the corresponding junior subordinated debt securities
that you may receive on dissolution or liquidation of the Trust, may trade at a
discount to the price that you paid to purchase the preferred securities.
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Events of Default
The occurrence of an event of default in respect of the corresponding junior
subordinated debt securities (see "Description of the Junior Subordinated Debt
Securities--Events of Default") constitutes a "Debenture Event of Default"
under the trust agreement with respect to the preferred securities.
If a Debenture Event of Default has occurred and is continuing, the
preferred securities have a preference over the common securities upon
dissolution of the Trust. See "--Liquidation Distribution Upon Dissolution".
The existence of a Debenture Event of Default under the trust agreement does
not entitle the holders of preferred securities to accelerate the maturity of
the preferred securities.
Concerning the Property Trustee
From time to time, PartnerRe Finance, PartnerRe and certain of its
subsidiaries may maintain deposit accounts with and conduct other banking
transactions, including lending transactions, with the property trustee and its
affiliates in the ordinary course of business.
Under the junior subordinated indenture, the property trustee is required to
transmit annual reports to all holders regarding its eligibility and
qualifications as trustee under the junior subordinated indenture and related
matters.
The Preferred Securities Will Initially Be Issued in Book-Entry Form and Held
Through DTC
DTC will act as securities depositary for the preferred securities. The
Trust will issue one or more fully registered global securities certificates in
the name of DTC's nominee, Cede & Co. These certificates will represent the
total aggregate number of preferred securities. The Trust will deposit these
certificates with DTC or a custodian appointed by DTC. Except as set forth
below, the global securities certificates may be transferred, in whole and not
in part, only to another nominee of DTC or to a successor of DTC or its
nominee. The Trust will not issue certificates to you for the preferred
securities that you purchase, unless DTC's services are discontinued as
described below. Accordingly, you must rely on the procedures of DTC and its
participants to exercise any rights under the preferred securities. So long as
DTC or its nominee is the registered owner of a global securities certificate,
DTC or its nominee will be considered the sole owner and holder of the
preferred securities represented by that global securities certificate for all
purposes of the preferred securities.
DTC has provided the Trust and PartnerRe Finance with the following
information: DTC is a limited-purpose trust company organized under the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the provisions of Section 17A of the
Securities Exchange Act of 1934 (the "Exchange Act"). DTC holds securities that
its participants ("Direct Participants") deposit with DTC. DTC also facilitates
the settlement among Direct Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Direct Participants' accounts, thereby eliminating the
need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange LLC, and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Direct and
Indirect Participants are on file with the SEC.
When you purchase preferred securities within the DTC system, the purchase
must be made by or through a Direct Participant. The Direct Participant will
receive a credit for the preferred securities on DTC's records. You, as the
actual owner of the preferred securities, are the "beneficial owner." Your
beneficial ownership interest will
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be recorded on the Direct and Indirect Participants' records, but DTC will have
no knowledge of your individual ownership. DTC's records reflect only the
identity of the Direct Participants to whose accounts preferred securities are
credited.
You will not receive written confirmation from DTC of your purchase. The
Direct or Indirect Participants through whom you purchased the preferred
securities should send you written confirmations providing details of your
transactions, as well as periodic statements of your holdings. The Direct and
Indirect Participants are responsible for keeping accurate account of the
holdings of their customers like you.
Transfers of ownership interests held through Direct and Indirect
Participants will be accomplished by entries on the books of Direct and
Indirect Participants acting on behalf of the beneficial owners.
The laws of some states may require that specified purchasers of securities
take physical delivery of the preferred securities in definitive form. These
laws may impair the ability to transfer beneficial interests in the global
certificate representing the preferred securities.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
The Trust and PartnerRe Finance understand that, under DTC's existing
practices, if the Trust or PartnerRe Finance requests any action of holders, or
an owner of a beneficial interest in a global security such as you desires to
take any action which a holder is entitled to take under the trust agreement or
the junior subordinated debt securities, DTC would authorize the Direct
Participants holding the relevant beneficial interests to take such action, and
those Direct Participants and any Indirect Participants would authorize
beneficial owners owning through those Direct and Indirect Participants to take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
The property trustee, on behalf of the Trust, will send redemption notices
to Cede & Co. If less than all of the preferred securities are being redeemed,
DTC will reduce each Direct Participant's holdings of preferred securities in
accordance with its procedures.
In those instances where a vote is required, neither DTC nor Cede & Co.
itself will consent or vote with respect to preferred securities. Under its
usual procedures, DTC would mail an omnibus proxy to the Trust as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
preferred securities are credited on the record date, which are identified in a
listing attached to the omnibus proxy.
The property trustee, on behalf of the Trust, will make distributions on the
preferred securities directly, or indirectly through a paying agent, to DTC.
DTC's practice is to credit participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on that payment date.
The underwriters will initially designate the accounts to be credited.
Payments by Direct and Indirect Participants to beneficial owners such as
you will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name." These payments will be the responsibility of the
participant and not of DTC, PartnerRe Finance, the Trust, the trustees, the
paying agent or any other agent of PartnerRe Finance or the Trust.
Accordingly, PartnerRe Finance, PartnerRe, the Trust, the trustees and any
paying agent will have no responsibility or liability for:
. any aspect of DTC's records relating to, or payments made on account of,
beneficial ownership interests;
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. ownership interests in preferred securities represented by a global
securities certificate;
. any other aspect of the relationship between DTC and its participants or
the relationship between those participants and the owners of beneficial
interests in a global securities certificate held through those
participants; or
. the maintenance, supervision or review of any of DTC's records relating
to those beneficial ownership interests.
DTC may discontinue providing its services as securities depositary with
respect to the preferred securities at any time by giving reasonable notice to
the Trust. Additionally, the Trust may decide to discontinue the book-entry
only system of transfers with respect to the preferred securities. In that
event, the Trust will print and deliver certificates for the preferred
securities. If DTC notifies the Trust that it is unwilling to continue as
securities depositary, or if it is unable to continue or ceases to be a
clearing agency registered under the Exchange Act and a successor depositary is
not appointed by the Trust within 90 days after receiving such notice or
becoming aware that DTC is no longer so registered, the Trust will issue the
preferred securities in definitive form, at its expense, upon registration of
transfer of, or in exchange for, such global security. If an event of default
under the trust agreement has occurred and is continuing, the Trust is required
to print and deliver certificates for the preferred securities. Any
certificates delivered by the Trust will be registered in the names of the
owners of the beneficial interests in the global securities certificates as
directed by DTC.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
The Trust and PartnerRe Finance obtained the information in this section
concerning DTC and DTC's book-entry system from sources that the Trust and
PartnerRe Finance believe to be reliable, but take no responsibility for the
accuracy of the information.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
The following, together with "Description of the Debt Securities" and
"Certain Provisions of the Junior Subordinated Debt Securities Issued to the
Capital Trust" in the accompanying prospectus, is a description of the material
terms of the junior subordinated debt securities. If the description of the
junior subordinated debt securities set forth in this prospectus supplement
differs in any way from the description set forth in the accompanying
prospectus, you should rely on the description set forth in this prospectus
supplement. You should also read the PartnerRe Finance junior subordinated
indenture and the Trust Indenture Act. A form of the junior subordinated
indenture is on file at the SEC as an exhibit to the registration statement
pertaining to this prospectus supplement.
General
The junior subordinated debt securities will be unsecured obligations of
PartnerRe Finance, subordinated in right of payment to the prior payment in
full of all Senior Indebtedness of PartnerRe Finance, as described under
"Description of the Debt Securities--Subordination of the Junior Subordinated
Debt Securities" in the accompanying prospectus. The junior subordinated debt
securities will be limited in aggregate principal amount to approximately
$206,186,000.
The junior subordinated debt securities, which are issued to the Trust in
connection with the issuance of preferred securities and common securities by
the Trust, may subsequently be distributed pro rata to the holders of such
preferred securities and common securities in connection with the dissolution
of the Trust upon the occurrence of certain events.
Interest
The junior subordinated debt securities will bear interest at an annual rate
of %, from and including November , 2001 until the principal becomes due and
payable. Interest is payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, beginning December 31, 2001.
Interest payments not paid when due will accrue, as permitted by applicable
law, additional interest, compounded quarterly, at the annual rate of %.
PartnerRe Finance will pay interest on the junior subordinated debt securities
to the holders of record on the relevant record date. The record date will be
10 calendar days, whether or not a business day, before the relevant payment
date.
The amount of interest payable for any period less than a full interest
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in that period.
If any date on which interest is payable on the junior subordinated debt
securities is not a business day, then payment of the interest payable on that
date will be made on the next succeeding day that is a business day, without
any interest or other payment in respect of the delay, with the same force and
effect as if made on the date that payment was originally payable. However, if
that business day is in the next succeeding calendar year, PartnerRe Finance
will make the payment on the immediately preceding business day. Accrued
interest that is not paid on the applicable interest payment date will bear
additional interest at the rate per annum of %, compounded quarterly, and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in that period. The term "interest" as used in
this prospectus supplement and the accompanying prospectus includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable interest payment date, compounded interest and additional amounts,
as applicable.
Interest payment provisions for the junior subordinated debt securities
correspond to the distribution provisions for the preferred securities. See
"Description of the Preferred Securities--Payment of Distributions."
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Option to Extend Interest Payment Date
PartnerRe Finance can at any time and from time to time during the term of
the junior subordinated debt securities issued to the Trust defer payments of
interest (referred to as an "extension period") for up to 20 consecutive
quarterly periods, provided that, among other things, such extension period may
not extend beyond the stated maturity of the junior subordinated debt
securities. See "Certain Provisions of the Junior Subordinated Debt Securities
Issued to the Capital Trust--Option to Extend Interest Payment Date" in the
accompanying prospectus.
Option to Extend Maturity Date
PartnerRe Finance can extend the maturity of the junior subordinated debt
securities to a date no later than November , 2050 so long as at the time such
election is made and at the time such extension commences:
. no event of default under the junior subordinated debt securities has
occurred and is continuing;
. the Trust is not in arrears on payments of distributions on the
preferred securities and no deferred distributions on the preferred
securities are accumulated; and
. the junior subordinated debt securities are, and immediately after such
extension will be, rated at least investment grade by either Standard &
Poor's Rating Services, Moody's Investors Service, Inc. or any other
nationally recognized statistical rating organization.
In the event that PartnerRe Finance elects to extend the maturity date of
the junior subordinated debt securities, it shall give notice to the indenture
trustee, and the indenture trustee shall give notice of such extension to the
holders of the junior subordinated debt securities no less than 30 and no more
than 90 days prior to the effectiveness of the extension.
Conditional Right to Shorten Maturity
If a Tax Event occurs with respect to the deductibility of the interest on
the junior subordinated debt securities, PartnerRe Finance will have the right,
prior to any dissolution of the Trust, to accelerate the maturity date of the
junior subordinated debt securities to the minimum extent required so that
interest on the junior subordinated debt securities will be tax deductible for
PartnerRe Finance for United States federal income tax purposes. In no event,
however, may the resulting maturity of the junior subordinated debt securities
be less than 15 years from the date of issuance.
PartnerRe Finance may accelerate the maturity only if it has received an
opinion of counsel to PartnerRe Finance experienced in such matters to the
effect that:
. after the acceleration, interest paid on the junior subordinated debt
securities will be deductible for United States federal income tax
purposes; and
. the acceleration will not cause a taxable event to holders of the
preferred securities.
In the event that PartnerRe Finance elects to shorten the maturity date of
the junior subordinated debt securities, it shall give notice to the indenture
trustee, and the indenture trustee shall give notice of such shortening to the
holders of the junior subordinated debt securities no less than 30 and no more
than 90 days prior to the effectiveness of the shortening.
Additional Sums
If the Trust would be required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, PartnerRe Finance shall,
unless it has terminated the Trust or caused a redemption in full of the
preferred securities, pay as additional amounts on the junior subordinated debt
securities such amounts as shall be required so that the distributions payable
by the Trust shall not be reduced as a result of any such additional taxes,
duties or other governmental charges.
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Payment of Additional Amounts
PartnerRe Finance will make all payments of principal of and premium, if
any, interest and any other amounts on, or in respect of, the junior
subordinated debt securities without withholding or deduction at source for, or
on account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by or on behalf of
the jurisdiction in which PartnerRe Finance is organized (a "taxing
jurisdiction") or any political subdivision or taxing authority thereof or
therein, unless such taxes, fees, duties, assessments or governmental charges
are required to be withheld or deducted by (x) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or any political
subdivision or taxing authority thereof or therein or (y) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including, without limitation, a holding by
a court of competent jurisdiction or by a taxing authority in a taxing
jurisdiction or any political subdivision thereof). If a withholding or
deduction by PartnerRe Finance is required by the law of the jurisdiction in
which PartnerRe Finance is organized, PartnerRe Finance will, subject to
certain limitations and exceptions described below, pay to the holder of any
such junior subordinated debt security such additional amounts as may be
necessary so that every net payment of principal, premium, if any, interest or
any other amount made to such holder, after the withholding or deduction, will
not be less than the amount provided for in such junior subordinated debt
security and the junior subordinated indenture to be then due and payable.
Notwithstanding the foregoing, PartnerRe Finance will not be required to pay
any additional amounts under the junior subordinated indenture for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever nature
which would not have been imposed but for the fact that such holder (a)
was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction
other than by reason of the mere ownership of, or receipt of payment
under, such junior subordinated debt security, (b) presented such junior
subordinated debt security for payment in the relevant taxing
jurisdiction or any political subdivision thereof, unless such junior
subordinated debt security could not have been presented for payment
elsewhere, or (c) presented such junior subordinated debt security for
payment more than 30 days after the date on which the payment in respect
of such junior subordinated debt security became due and payable or
provided for, whichever is later, except to the extent that the holder
would have been entitled to such additional amounts if it had presented
such junior subordinated debt security for payment on any day within
that 30-day period;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner
of such junior subordinated debt security to comply with any reasonable
request by PartnerRe Finance addressed to the holder within 90 days of
such request (a) to provide information concerning the nationality,
residence or identity of the holder or such beneficial owner or (b) to
make any declaration or other similar claim or satisfy any information
or reporting requirement, which is required or imposed by statute,
treaty, regulation or administrative practice of the relevant taxing
jurisdiction or any political subdivision thereof as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge; or
(4) any combination of items (1), (2) and (3).
In addition, PartnerRe Finance will not pay additional amounts with respect to
any payment of principal of, or premium, if any, interest or any other amounts
on, any such junior subordinated debt security to any holder who is a fiduciary
or partnership or other than the sole beneficial owner of such junior
subordinated debt security to the extent such payment would be required by the
laws of the relevant taxing jurisdiction (or any political subdivision or
relevant taxing authority thereof or therein) to be included in the income for
tax purposes of a
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beneficiary or partner or settlor with respect to such fiduciary or a member of
such partnership or a beneficial owner who would not have been entitled to such
additional amounts had it been the holder of the junior subordinated debt
security.
Redemption
The junior subordinated debt securities are redeemable prior to maturity at
the option of PartnerRe Finance:
. on or after November , 2006, in whole at any time or in part from time to
time, at a redemption price equal to 100% of the principal amount of the
junior subordinated debt securities so redeemed plus accrued and unpaid
interest thereon to the date fixed for redemption, or
. at any time, in whole but not in part, upon the occurrence and
continuation of a Special Event, within 90 days of the occurrence of such
Special Event, at a redemption price equal to 100% of the principal amount
of the junior subordinated debt securities so redeemed plus accrued and
unpaid interest thereon to the date fixed for redemption.
Subordination of the Subordinated Debt Securities
The junior subordinated debt securities will be subordinate in right of
payment to the prior payment in full of all Senior Indebtedness of PartnerRe
Finance. In the event of:
. any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to PartnerRe Finance or to its creditors,
as such, or to its assets;
. any voluntary or involuntary liquidation, dissolution or other winding up
of PartnerRe Finance, whether or not involving insolvency or bankruptcy; or
. any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of PartnerRe Finance,
then and in any such event the holders of Senior Indebtedness will be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness, or provision will be made for such payment in cash,
before the holders of the junior subordinated debt securities are entitled to
receive or retain any payment on account of principal of, or any premium or
interest on, or any additional amounts with respect to, junior subordinated
debt securities, and to that end the holders of Senior Indebtedness will be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other Senior Indebtedness of PartnerRe Finance
being subordinated to the payment of junior subordinated debt securities, which
may be payable or deliverable in respect of junior subordinated debt securities
in any such case, proceeding, dissolution, liquidation or other winding up
event.
By reason of such subordination, in the event of PartnerRe Finance's
liquidation or insolvency, holders of Senior Indebtedness and holders of other
obligations of PartnerRe Finance that are not subordinated to Senior
Indebtedness may recover more, ratably, than the holders of junior subordinated
debt securities.
Subject to the payment in full of all Senior Indebtedness, the rights of the
holders of junior subordinated debt securities will be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of PartnerRe Finance applicable to such Senior
Indebtedness until the principal of, any premium and interest on, and any
additional amounts with respect to, junior subordinated debt securities have
been paid in full.
No payment of principal (including redemption and sinking fund payments) of
or any premium or interest on or any additional amounts with respect to the
junior subordinated debt securities, or payments to acquire such securities,
may be made (1) if any Senior Indebtedness of PartnerRe Finance is not paid
when due and such default has not been cured or waived or ceased to exist, or
(2) if the maturity of any Senior Indebtedness of PartnerRe Finance has been
accelerated because of a default.
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The junior subordinated indenture does not limit or prohibit PartnerRe
Finance from incurring additional Senior Indebtedness, which may include
Indebtedness (as defined in the junior subordinated indenture) that is senior
to junior subordinated debt securities, but subordinate to PartnerRe Finance's
other obligations.
The term "Senior Indebtedness" means all Indebtedness (as defined in the
junior subordinated indenture) of PartnerRe Finance outstanding at any time,
except:
. the junior subordinated debt securities;
. Indebtedness as to which, by the terms of the instrument creating or
evidencing the same, it is provided that such Indebtedness is subordinated
to or ranks equally with the junior subordinated debt securities or any
other Indebtedness ranking pari passu with the junior subordinated debt
securities;
. Indebtedness of PartnerRe Finance to an Affiliate (as defined in the
junior subordinated indenture);
. interest accruing after the filing of a petition initiating any
bankruptcy, insolvency or other similar proceeding unless such interest is
an allowed claim enforceable against PartnerRe Finance in a proceeding
under federal or state bankruptcy laws;
. trade accounts payable;
. liability for income, franchise, real estate or other taxes; and
. any Indebtedness, including all other debt securities and guarantees in
respect of those debt securities, initially issued to (x) the Trust or (y)
any trust, partnership or other entity affiliated with PartnerRe which is
a financing vehicle of PartnerRe or any Affiliate of PartnerRe in
connection with an issuance by such entity of preferred securities or
other securities which are similar to the preferred securities described
under "Description of the Preferred Securities" in the accompanying
prospectus.
Such Senior Indebtedness will continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
Distribution of the Junior Subordinated Debt Securities
Under certain circumstances involving the dissolution of the Trust, junior
subordinated debt securities may be distributed to the holders of the preferred
securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of preferred securities in liquidation, the junior subordinated debt securities
will initially be issued in the form of one or more global securities and DTC,
or any successor depositary for the preferred securities, will act as
depositary for the junior subordinated debt securities. It is anticipated that
the depositary arrangements for the junior subordinated debt securities would
be substantially identical to those in effect for the preferred securities. If
the junior subordinated debt securities are distributed to the holders of
preferred securities upon the liquidation of the Trust, PartnerRe Finance will
use its commercially reasonable efforts to list the junior subordinated debt
securities on the New York Stock Exchange or such other stock exchanges, if
any, on which the preferred securities are then listed. There can be no
assurance as to the market price of any junior subordinated debt securities
that may be distributed to the holders of preferred securities.
Registration of the Junior Subordinated Debt Securities
A global security will be exchangeable for junior subordinated debt
securities registered in the names of persons other than DTC or its nominee
only if
. DTC notifies PartnerRe Finance that it is unwilling or unable to continue
as a depository for such global security and no successor depositary shall
have been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act at a time when DTC is required to be so
registered to act as such depositary,
. PartnerRe Finance in its sole discretion determines that such global
security will be so exchangeable, or
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. there shall have occurred and be continuing an event of default under the
PartnerRe Finance junior subordinated indenture with respect to such
global security. Any global security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for definitive certificates
registered in such names as DTC shall direct. It is expected that such
instructions will be based upon directions received by DTC from its
participants with respect to ownership of beneficial interests in such
global security. In the event that junior subordinated debt securities are
issued in definitive form, such junior subordinated debt securities will
be in denominations of $25 and integral multiples thereof and may be
transferred or exchanged at the offices described below.
Payments on junior subordinated debt securities represented by a global
security will be made to DTC, as the depositary for the junior subordinated
debt securities. In the event junior subordinated debt securities are issued in
definitive form, principal and interest will be payable, the transfer of the
junior subordinated debt securities will be registrable, and junior
subordinated debt securities will be exchangeable for junior subordinated debt
securities of other denominations of a like aggregate principal amount, at the
corporate office of the junior subordinated debt security trustee or at the
offices of any paying agent or transfer agent appointed by PartnerRe Finance,
provided that payment of interest may be made at the option of PartnerRe
Finance by check mailed to the address of the persons entitled thereto or by
wire transfer. In addition, if the junior subordinated debt securities are
issued in certificated form, the record dates for payment of interest will be
10 calendar days, whether or not a business day, before the relevant payment
dates.
Events of Default
The following events will constitute an Event of Default under the junior
subordinated indenture with respect to the junior subordinated debt securities
(whatever the reason for such Event of Default and whether it will be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
. default in the payment of any interest on the junior subordinated debt
securities, or any additional amounts payable with respect thereto, when
such interest becomes or such additional amounts become due and payable,
and continuance of such default for a period of 30 days;
. default in the payment of the principal of or any premium on the junior
subordinated debt securities, or any additional amounts payable with
respect thereto, when such principal or premium becomes or such additional
amounts become due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise;
. default in the performance, or breach, of any covenant or warranty of
PartnerRe Finance or PartnerRe contained in the junior subordinated
indenture, and the continuance of such default or breach for a period of
60 days after there has been given written notice as provided in such
indenture;
. if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Indebtedness of PartnerRe Finance or PartnerRe
for borrowed money (other than Indebtedness which is non-recourse to
PartnerRe Finance or PartnerRe, as the case may be) happens and consists
of default in the payment of more than $100,000,000 in principal amount of
such Indebtedness when due (after giving effect to any applicable grace
period) or shall result in such Indebtedness in principal amount in excess
of $100,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable, and such default
is not cured or such acceleration is not rescinded or annulled within a
period of 30 days after there has been given written notice as provided in
the junior subordinated indenture;
. PartnerRe Finance or PartnerRe shall fail within 60 days to pay, bond or
otherwise discharge any uninsured judgment or court order for the payment
of money in excess of $100,000,000, which is not stayed on appeal or is
not otherwise being appropriately contested in good faith; and
. certain events relating to bankruptcy, insolvency or reorganization of
PartnerRe Finance or PartnerRe.
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If an Event of Default with respect to the junior subordinated debt
securities has occurred and is continuing and such event is attributable to a
default in the payment of interest or principal on the junior subordinated debt
securities on the date such interest or principal is otherwise payable, a
holder of preferred securities of the Trust may institute a legal proceeding
directly against PartnerRe Finance and/or against PartnerRe, as guarantor,
which is referred to in the accompanying prospectus as a "Direct Action," for
enforcement of payment to such holder of the principal of or interest on such
related junior subordinated debt securities having a principal amount equal to
the aggregate liquidation amount of the preferred securities of such holder.
PartnerRe Finance and PartnerRe may not amend the junior subordinated indenture
to remove the foregoing right to bring a Direct Action without the prior
written consent of the holders of all of the preferred securities. The holders
of preferred securities will not be able to exercise directly any other remedy
available to the holders of the junior subordinated debt securities.
The holders of the preferred securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the junior subordinated debt securities unless
there shall have been an event of default under the trust agreement.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
The following, together with the ''Description of the Trust Preferred
Securities Guarantee'' in the accompanying prospectus, is a description of the
material terms of the guarantee relating to the preferred securities. If the
description of this guarantee set forth in this prospectus supplement differs
in any way from the description set forth in the accompanying prospectus, you
should rely on the description set forth in this prospectus supplement. You
should read the preferred securities guarantee, to be dated as of November ,
2001, between PartnerRe and JPMorgan Chase Bank USA, N.A., as guarantee
trustee, and the Trust Indenture Act. A form of the preferred securities
guarantee is on file at the SEC as an exhibit to the registration statement
pertaining to this prospectus supplement and the accompanying prospectus.
The following payments on the preferred securities, if not fully paid by the
Trust, will be paid by PartnerRe under the preferred securities guarantee,
without duplication:
. any accrued and unpaid distributions required to be paid on the
preferred securities, to the extent the Trust has funds available to
make the payment;
. the redemption price, including all accrued and unpaid distributions to
the redemption date with respect to any preferred securities called for
redemption, to the extent the Trust has funds available to make the
payment; and
. upon a voluntary or involuntary dissolution, winding-up or liquidation
of the Trust, other than in connection with a distribution of the junior
subordinated debt securities to the holders of preferred securities, the
lesser of:
(1) the aggregate of the $25 liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of payment, to the
extent the Trust has funds available to make the payment; and
(2) the amount of assets of the Trust remaining available for distribution
to holders of the preferred securities upon liquidation of the Trust.
PartnerRe's obligation to make these payments on the preferred securities
may be satisfied by direct payment of the required amounts by PartnerRe to the
holders of the preferred securities or by causing the Trust to pay the amounts
to the holders.
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Subordination
The preferred securities guarantee of PartnerRe will be an irrevocable
guarantee on a subordinated basis of the Trust's payment obligations under the
preferred securities, but will apply only to the extent that the Trust has
funds sufficient to make such payments.
If PartnerRe Finance does not make interest payments on the corresponding
junior subordinated debt securities held by the Trust and PartnerRe does not
make these payments under the JSDS Guarantee, the Trust will not be able to pay
distributions on the preferred securities and will not have funds legally
available for payment. The preferred securities guarantee will rank subordinate
and junior in right of payment to all other Indebtedness of PartnerRe, except
Indebtedness ranking equally or subordinate by its terms. See "Description of
the Trust Preferred Securities Guarantee--Status of the Preferred Securities
Guarantees" in the accompanying prospectus.
The preferred securities guarantee will rank equally with all other similar
preferred securities guarantees issued by PartnerRe on behalf of holders of
preferred securities of any trust, partnership or other entity affiliated with
PartnerRe. The preferred securities guarantee will constitute a guarantee of
payment and not of collection. This means that the guaranteed party may
institute a legal proceeding directly against PartnerRe to enforce its rights
under the preferred securities guarantee without first instituting a legal
proceeding against any other person or entity. The preferred securities
guarantee will not be discharged except by payment of the guarantee payments in
full to the extent not paid by the Trust or upon distribution to the holders of
the preferred securities of the corresponding junior subordinated debt
securities. The preferred securities guarantee does not place a limitation on
the amount of additional Indebtedness that may be incurred by PartnerRe.
PartnerRe will from time to time incur additional Indebtedness that will rank
senior to the preferred securities guarantee.
Payment of Additional Amounts
PartnerRe will not be required to pay any additional amounts for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever nature
which would not have been imposed but for the fact that such holder (a)
was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction
other than by reason of the mere ownership of, or receipt of payment
under, the JSDS Guarantee, (b) presented such junior subordinated debt
security for payment in the relevant taxing jurisdiction or any
political subdivision thereof, unless such junior subordinated debt
security could not have been presented for payment elsewhere, or (c)
presented such junior subordinated debt security for payment more than
30 days after the date on which the payment in respect of such junior
subordinated debt security became due and payable or provided for,
whichever is later, except to the extent that the holder would have been
entitled to such additional amounts if it had presented such junior
subordinated debt security for payment on any day within that 30-day
period;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner
of such junior subordinated debt security to comply with any reasonable
request by PartnerRe Finance addressed to the holder within 90 days of
such request (a) to provide information concerning the nationality,
residence or identity of the holder or such beneficial owner or (b) to
make any declaration or other similar claim or satisfy any information
or reporting requirement, which is required or imposed by statute,
treaty, regulation or administrative practice of the relevant taxing
jurisdiction or any political subdivision thereof as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge; or
(4) any combination of items (1), (2) and (3).
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In addition, PartnerRe will not pay additional amounts with respect to any
payment of principal of, or premium, if any, interest or any other amounts on,
any such junior subordinated debt security to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such junior subordinated
debt security to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of
a beneficiary or partner or settlor with respect to such fiduciary or a member
of such partnership or a beneficial owner who would not have been entitled to
such additional amounts had it been the holder of the junior subordinated debt
security.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES GUARANTEE
The following, together with the ''Description of the Junior Subordinated
Debt Securities Guarantee'' in the accompanying prospectus, is a description of
the material terms of the guarantee relating to the junior subordinated debt
securities. If the description of this guarantee set forth in this prospectus
supplement differs in any way from the description set forth in the
accompanying prospectus, you should rely on the description set forth in this
prospectus supplement. You should read the JSDS Guarantee, to be dated as of
November , 2001, between PartnerRe and JPMorgan Chase Bank, as guarantee
trustee. A form of JSDS Guarantee is on file at the SEC as an exhibit to the
registration statement pertaining to this prospectus supplement and the
accompanying prospectus.
PartnerRe will fully and unconditionally guarantee all obligations of
PartnerRe Finance with respect to the junior subordinated debt securities. Such
JSDS Guarantee will be an unsecured obligation of PartnerRe, subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (which
term includes PartnerRe's senior debt securities).
PartnerRe is a holding company that conducts substantially all of its
operations through its reinsurance company subsidiaries. As a result,
PartnerRe's ability to make payments under the JSDS Guarantee will depend
primarily upon the receipt of dividends and other distributions from its
reinsurance subsidiaries. Applicable insurance laws restrict the ability of
PartnerRe's reinsurance subsidiaries to pay dividends or make other payments to
it. Under these laws, the reinsurance subsidiaries generally may only make
dividend payments out of earned surplus, and regulatory approval may be
required for payments in excess of specified amounts based on the subsidiaries'
financial condition and results of operations.
In addition, PartnerRe's right to participate in any distribution of assets
of any of its subsidiaries upon the subsidiary's liquidation or otherwise, and
thus your ability as a holder of the preferred securities to benefit indirectly
from that distribution, will be subject to the prior claims of creditors of
those subsidiaries, except to the extent that any of PartnerRe's claims as a
creditor of that subsidiary may be recognized. As a result, the JSDS Guarantee
will effectively be subordinated to all existing and future liabilities and
obligations of PartnerRe's subsidiaries. Therefore, you should look only to
PartnerRe's assets for payments on the JSDS Guarantee. At September 30, 2001,
subsidiaries of PartnerRe had liabilities, including claims by policyholders
for benefits payable and liabilities to other creditors, of approximately $4.7
billion.
PartnerRe will make all payments of principal of and premium, if any,
interest and any other amounts on, or in respect of, the junior subordinated
debt securities without withholding or deduction at source for, or on account
of, any present or future taxes, fees, duties, assessments, or governmental
charges of whatever nature imposed or levied by or on behalf of Bermuda (a
"taxing jurisdiction") or any political subdivision or taxing authority thereof
or therein, unless such taxes, fees, duties, assessments, or governmental
charges are required to be withheld or deducted by (x) the laws (or any
regulations or rulings promulgated thereunder) of a taxing jurisdiction or any
political subdivision or taxing authority thereof or therein or (y) an official
position regarding the application, administration, interpretation or
enforcement of any such laws, regulations or rulings (including, without
limitation, a holding by a court of competent jurisdiction or by a taxing
authority in a taxing jurisdiction
S-35
or any political subdivision thereof). If a withholding or deduction at source
is required, PartnerRe will, subject to certain limitations and exceptions
described below, pay to the holder of any such junior subordinated debt
security any such additional amounts as may be necessary so that every net
payment of principal, premium, if any, interest or any other amount made to
such holder, after the withholding or deduction, will not be less than the
amount provided for in such junior subordinated debt security and the junior
subordinated indenture to be then due and payable.
PartnerRe will not be required to pay any additional amounts for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever nature
which would not have been imposed but for the fact that such holder (a)
was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction
other than by reason of the mere ownership of, or receipt of payment
under, the JSDS Guarantee, (b) presented such junior subordinated debt
security for payment in the relevant taxing jurisdiction or any
political subdivision thereof, unless such junior subordinated debt
security could not have been presented for payment elsewhere, or (c)
presented such junior subordinated debt security for payment more than
30 days after the date on which the payment in respect of such junior
subordinated debt security became due and payable or provided for,
whichever is later, except to the extent that the holder would have been
entitled to such additional amounts if it had presented such junior
subordinated debt security for payment on any day within that 30-day
period;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner
of such junior subordinated debt security to comply with any reasonable
request by PartnerRe Finance addressed to the holder within 90 days of
such request (a) to provide information concerning the nationality,
residence or identity of the holder or such beneficial owner or (b) to
make any declaration or other similar claim or satisfy any information
or reporting requirement, which is required or imposed by statute,
treaty, regulation or administrative practice of the relevant taxing
jurisdiction or any political subdivision thereof as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge; or
(4) any combination of items (1), (2) and (3).
In addition, PartnerRe will not pay additional amounts with respect to any
payment of principal of, or premium, if any, interest or any other amounts on,
any such junior subordinated debt security to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such junior subordinated
debt security to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of
a beneficiary or partner or settlor with respect to such fiduciary or a member
of such partnership or a beneficial owner who would not have been entitled to
such additional amounts had it been the holder of the junior subordinated debt
security.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBT
SECURITIES, THE JSDS GUARANTEE AND THE PREFERRED SECURITIES GUARANTEE
PartnerRe's obligations described herein and in the accompanying prospectus,
through the preferred securities guarantee, the JSDS Guarantee, the trust
agreement and the junior subordinated indenture, taken together, constitute a
full, irrevocable and unconditional guarantee by PartnerRe on a junior
subordinated basis of payments due on the preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the preferred
securities. See "The Capital Trust," "Description of the Preferred Securities"
and "Description of the Debt Securities" in the accompanying prospectus.
As long as PartnerRe Finance pays interest and other payments when due on
the junior subordinated debt securities, or PartnerRe pays interest and other
payments when due on the junior subordinated debt securities under the JSDS
Guarantee, those payments will be sufficient to cover distributions and
redemption and liquidation payments due on the preferred securities, primarily
because:
. the aggregate principal amount of the junior subordinated debt
securities will be equal to the sum of the aggregate liquidation amount
of the preferred securities and the common securities;
. the interest rate and interest and other payment dates on the junior
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the preferred securities;
. PartnerRe will pay for any and all costs, expenses and liabilities of
the Trust; and
. the trust agreement provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
A default or event of default under any Senior Indebtedness of PartnerRe or
PartnerRe Finance would not necessarily constitute a default or event of
default under the preferred securities. However, if certain events of
bankruptcy, insolvency or reorganization occur, the junior subordinated
indenture provides that no payments may be made on the junior subordinated debt
securities until the Senior Indebtedness has been paid in full. See
"Description of the Debt Securities--Subordination of the Junior Subordinated
Debt Securities" in the accompanying prospectus.
Limited Purpose of the Trust
The preferred securities represent preferred undivided beneficial interests
in the assets of the Trust. The Trust exists for the exclusive purposes of:
. issuing and selling preferred securities and common securities that
represent undivided beneficial interests in the assets of the Trust;
. using gross proceeds from the sale of the preferred securities and the
common securities to acquire junior subordinated debt securities issued
by PartnerRe Finance; and
. engaging in only those other activities necessary or incidental to the
issuance and sale of the preferred securities and common securities.
A principal difference between the rights of a holder of a preferred
security and a holder of a junior subordinated debt security is that a holder
of a junior subordinated debt security is entitled to receive from PartnerRe
Finance, or from PartnerRe under the JSDS Guarantee, payments on junior
subordinated debt securities held by the holder, while a holder of preferred
securities is entitled to receive distributions or other
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amounts payable with respect to the preferred securities from the Trust or from
PartnerRe under the preferred securities guarantee only if and to the extent
the Trust has funds available for the payment of those distributions.
Rights Upon Dissolution
The holders of the preferred securities are entitled to receive, out of
assets held by the Trust, a distribution in cash upon any voluntary or
involuntary dissolution, winding-up or liquidation of the Trust that does not
involve the distribution of the junior subordinated debt securities, after the
Trust has paid the liabilities owed to its creditors as required by applicable
law. See "Description of the Preferred Securities--Liquidation Distribution
Upon Dissolution."
In the event of any voluntary or involuntary liquidation or bankruptcy of
PartnerRe Finance, the Trust, as registered holder of the junior subordinated
debt securities, would be a creditor of PartnerRe Finance, subordinated and
junior in right of payment to all PartnerRe Finance's Senior Indebtedness, as
defined in the accompanying prospectus, but entitled to receive payment in full
of all amounts payable with respect to the junior subordinated debt securities
before any stockholders of PartnerRe Finance receive payments or distributions.
Since PartnerRe is the guarantor under the preferred securities guarantee and
the JSDS Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Trust (other than withholding taxes), the positions of a
holder of the preferred securities and a holder of the junior subordinated debt
securities relative to other creditors and to stockholders of PartnerRe in the
event of liquidation or bankruptcy of PartnerRe Finance are expected to be
substantially the same.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Willkie Farr & Gallagher, tax counsel to PartnerRe,
PartnerRe Finance and the Trust, the following discussion summarizes the
material United States Federal income tax consequences of the purchase,
ownership and disposition of the preferred securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations under the Code, and administrative and judicial
interpretations thereof, each as of the date of this prospectus supplement, all
of which are subject to change, possibly on a retroactive basis. The
authorities on which this summary is based are subject to various
interpretations, and this summary is not binding on the Internal Revenue
Service or the courts, either of which could take a contrary position.
Moreover, no rulings have been or will be sought from the IRS with respect to
the transactions described in this prospectus supplement. Accordingly, there
can be no assurance that the IRS will not challenge the opinions expressed in
this tax section or that a court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the preferred
securities held as capital assets by a holder who or which (i) purchased the
preferred securities upon original issuance (an "Initial Holder") at their
price to the public and (ii) is a US Holder (as defined below). This summary
does not address all the tax consequences that may be relevant to a US Holder,
nor does it address the tax consequences, except as stated below, to holders
that are not US Holders ("Non-US Holders") or to holders that may be subject to
special tax treatment (such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies,
entities classified as partnerships for United States Federal income tax
purposes, brokers and dealers in securities or currencies, other financial
institutions, tax-exempt organizations, persons holding the preferred
securities as a position in a "straddle," as part of a "synthetic security,"
"hedging," "conversion" or other integrated investment, US Holders having a
functional currency other than the U.S. Dollar and certain United States
expatriates). Further, this summary does not address:
. the income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of the preferred securities;
. the United States Federal alternative minimum tax consequences of the
purchase, ownership or disposition of the preferred securities; or
. any state, local or foreign tax consequences of the purchase, ownership
and disposition of preferred securities.
A "US Holder" is a beneficial holder of the preferred securities who or
which for United States Federal income tax purposes is:
. a citizen or resident of the United States;
. a corporation (including an entity treated as a corporation for United
States Federal income tax purposes) created or organized in or under the
laws of the United States, any state thereof or the District of Columbia;
. an estate whose income is subject to United States Federal income tax
regardless of its source; or
. a trust if (a) a court within the United States is able to exercise
primary supervision over the administration of the trust and (b) one or
more United States persons have the authority to control all substantial
decisions of the trust. Notwithstanding the above, to the extent
provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as United States persons prior to such date that
have properly elected to continue to be treated as United States
persons, will also be US Holders.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL AND
FOREIGN TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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Characterization of the Junior Subordinated Debt Securities. PartnerRe,
PartnerRe Finance and the Trust will agree to treat the junior subordinated
debt securities as indebtedness for all United States Federal income tax
purposes. Under current law and based on the representations, facts and
assumptions set forth in this prospectus supplement, and assuming full
compliance with the terms of the junior subordinated indenture (and other
relevant documents), the junior subordinated debt securities will be
characterized for United States Federal income tax purposes as indebtedness of
PartnerRe Finance.
US Holders
Characterization of the Trust. Under current law and based on the
representations, facts and assumptions set forth in this prospectus supplement,
and assuming full compliance with the terms of the trust agreement (and other
relevant documents), the Trust will be characterized for United States Federal
income tax purposes as a grantor trust and will not be characterized as an
association taxable as a corporation. Accordingly, for United States Federal
income tax purposes, each holder of the preferred securities generally will be
considered the owner of an undivided portion of the junior subordinated debt
securities owned by the Trust, and each US Holder will be required to include
all income or gain recognized for United States Federal income tax purposes
with respect to its allocable share of the junior subordinated debt securities
on its own income tax return.
Interest Income and Original Issue Discount. Under the terms of the junior
subordinated debt securities, PartnerRe Finance has the ability to defer
payments of interest at any time and from time to time during the term of the
junior subordinated debt securities (referred to as an "extension period"),
provided, among other things, that such extension period may not extend beyond
the stated maturity of such series of junior subordinated debt securities.
Treasury regulations provide that debt instruments like the junior subordinated
debt securities will not be considered issued with original issue discount
("OID") by reason of their issuer's ability to defer payments of interest if
the likelihood of such deferral is "remote."
PartnerRe Finance has concluded, and this discussion assumes, that, as of
the date of this prospectus supplement, the junior subordinated debt securities
should not be treated as issued with OID by reason of PartnerRe Finance's
deferral option. Rather, stated interest on the junior subordinated debt
securities will generally be taxable to a US Holder as ordinary income when
paid or accrued in accordance with that Holder's method of accounting for
United States Federal income tax purposes. It should be noted, however, that
these Treasury regulations have not yet been interpreted in any rulings or any
other published authorities of the IRS. Accordingly, it is possible that the
IRS could take a position contrary to the interpretation described above.
In the event PartnerRe Finance exercises its option to defer payments of
interest, the junior subordinated debt securities would be treated as retired
and reissued for OID purposes and the sum of the remaining interest payments
(and any de minimis OID) on the junior subordinated debt securities would
thereafter be treated as OID, which would accrue, and be includible in a US
Holder's taxable income, on an economic accrual basis (regardless of the US
Holder's method of accounting for United States Federal income tax purposes)
over the remaining term of the junior subordinated debt securities (including
any extension period), without regard to the timing of interest payments under
the junior subordinated debt securities. Subsequent distributions of interest
on the junior subordinated debt securities generally would not, by themselves,
be taxable. The amount of OID that would accrue in any period would generally
equal the amount of interest that accrued on the junior subordinated debt
securities in that period at the stated interest rate. Consequently, during any
period of interest deferral, and any period thereafter, US Holders will include
OID in gross income without regard to the receipt of cash, and a US Holder
which disposes of a preferred security prior to the record date for payment of
distributions on the junior subordinated debt securities following that period
will be subject to income tax on OID accrued through the date of disposition
(and not previously included in income), but will not receive cash from the
Trust with respect to the OID.
If the possibility of PartnerRe Finance's exercising its option to defer
payments of interest were not treated as remote, the junior subordinated debt
securities would be treated as initially issued with OID in an amount equal to
the aggregate stated interest (plus any de minimis OID). That OID would
generally be includible in a US
S-40
Holder's taxable income, over the term of the junior subordinated debt
securities, on an economic accrual basis as described above.
Characterization of Income. Because the income underlying the preferred
securities will not be characterized as dividends for United States Federal
income tax purposes, corporate holders of the preferred securities will not be
entitled to a dividends-received deduction for any income received or accrued
on the preferred securities.
Receipt of Junior Subordinated Debt Securities or Cash Upon Liquidation of
the Trust. Under certain circumstances described herein, the Trust may
distribute the junior subordinated debt securities to holders in exchange for
their preferred securities and in liquidation of the Trust. See "Description of
the Preferred Securities--Liquidation Distribution Upon Dissolution." Except as
discussed below, a distribution of the junior subordinated debt securities
would not be a taxable event for United States Federal income tax purposes, and
each US Holder would have an aggregate adjusted basis for United States Federal
income tax purposes in the junior subordinated debt securities received equal
to the US Holder's aggregate adjusted basis in the preferred securities
exchanged. For United States Federal income tax purposes, a US Holder's holding
period in the junior subordinated debt securities received in a liquidation of
the Trust would include the period during which the preferred securities were
held by the holder. If, however, the Trust were treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the preferred securities for United States Federal
income tax purposes.
If a US Holder receives junior subordinated debt securities in exchange for
the preferred securities, the US Holder would continue to include in its gross
income interest or OID in respect of the junior subordinated debt securities
received in the manner described above under "--Interest Income and Original
Issue Discount."
Under certain circumstances described in this prospectus supplement, the
junior subordinated debt securities may be redeemed for cash with the proceeds
distributed to holders in redemption of their preferred securities. See
"Description of the Preferred Securities." A redemption of the preferred
securities would be taxable for United States Federal income tax purposes, and
a US Holder would recognize gain or loss as if it had sold the preferred
securities for such cash. See "--Sales of Preferred Securities" below.
Sales of Preferred Securities. A US Holder that sells preferred securities
will recognize gain or loss equal to the difference between its adjusted basis
in the preferred securities and the amount realized on the sale of the
preferred securities. A US Holder's adjusted basis in the preferred securities
generally will be its initial purchase price, increased by any OID previously
included (or currently includible) in the holder's gross income to the date of
disposition, and decreased by payments received on the preferred securities
(other than any interest received with respect to the periods prior to the
effective date of PartnerRe Finance's first exercise of its option to defer
payments of interest). Any gain or loss on the sale of the preferred securities
generally will be capital gain or loss, and generally will be a long-term
capital gain or loss if the preferred securities have been held by the selling
Holder for more than one year prior to the date of disposition.
A holder who disposes of its preferred securities between record dates for
payments of distributions will be required to include, as ordinary income,
accrued but unpaid interest on the junior subordinated debt securities through
the date of disposition (notwithstanding that the holder may receive a separate
payment from the purchaser with respect to accrued interest), and to reduce
that amount from the sales proceeds received (including the separate payment,
if any, with respect to accrued interest) for the preferred securities. To the
extent the selling price of the preferred securities is less than the holder's
adjusted tax basis, a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States Federal income tax purposes.
Extension or Acceleration of the Stated Maturity Date
If PartnerRe Finance exercises its option to extend or accelerate the stated
maturity date of the junior subordinated debt securities, a US Holder should
not be required to recognize taxable gain or loss as a result of such extension
or acceleration.
S-41
Non-US Holders
As used herein, the term "Non-US Holder" means a beneficial owner of the
preferred securities that is, for United States Federal income tax purposes:
. an individual who is classified as a nonresident for U.S. Federal income
tax purposes;
. a foreign corporation; or
. a nonresident alien fiduciary of a foreign estate or trust.
The following discussion applies to Non-US Holders.
Payments to a Non-US Holder of a preferred security will generally not be
subject to withholding of income tax, provided that:
. the beneficial owner of the preferred security does not (directly or
indirectly, actually or constructively) own 10% or more of the total
combined voting power of all classes of stock of PartnerRe Finance
entitled to vote;
. the beneficial owner of the preferred security is not a controlled
foreign corporation that is related to PartnerRe Finance through stock
ownership;
. the beneficial owner of the preferred security is not a bank receiving
interest described in Section 881(c)(3)(A) of the Code; and
. either (i) the beneficial owner of the preferred securities certifies to
the Trust or its agent, under penalties of perjury, that it is a Non-US
Holder and provides its name and address, or (ii) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the preferred security in such capacity,
certifies to the Trust or its agent, under penalties of perjury, that a
statement substantially similar to that in clause (i) above has been
received from the beneficial owner by it or by another Financial
Institution between it and the beneficial owner in the chain of
ownership, and furnishes the Trust or its agent with a copy of the
statement.
A Non-US Holder of a preferred security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a preferred security unless, in the case of certain Non-US
Holders who are nonresident alien individuals, the Non-US Holder is present in
the United States for 183 or more days in the taxable year of disposition and
certain other requirements are met.
A Non-US Holder which holds the preferred securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its preferred securities
in the same manner as if it was a US Holder.
Information Reporting
In general, information reporting requirements will apply to payments
(including OID) made on, and proceeds from the sale of, the preferred
securities held by a noncorporate US Holder within the United States. In
addition, payments (including OID) made on, and payments of the proceeds from
the sale of, the preferred securities to or through the United States office of
a broker are subject to information reporting unless the holder thereof
certifies as to its Non-US Holder status or otherwise establishes an exemption
from information reporting and backup withholding. See "--Backup Withholding"
below. Taxable income on the preferred securities for a calendar year should be
reported to US Holders on the appropriate form by the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the preferred securities
may be subject to a "backup" withholding tax of 30.5% (which rate is scheduled
to be reduced periodically through 2006) unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's United States Federal income tax
liability, or refunded, provided the required information is provided to the
IRS.
S-42
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE TAX
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE PREFERRED SECURITIES. POTENTIAL HOLDERS OF THE PREFERRED SECURITIES ARE
URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
to which Title I of the Employee Retirement Income Security Act of 1974
("ERISA") applies (a "Plan") should consider the fiduciary standards of ERISA
in the context of the Plan's particular circumstances before authorizing an
investment in the preferred securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the
documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit
Plans, as well as individual retirement accounts and Keogh plans to which
Section 4975 of the Internal Revenue Code applies (also "Plans"), from engaging
in specified transactions involving "plan assets" with persons who are "parties
in interest" under ERISA or "disqualified persons" under the Internal Revenue
Code (together, "Parties in Interest") with respect to such Plan. A violation
of those "prohibited transaction" rules may result in an excise tax or other
liabilities under ERISA and/or Section 4975 of the Internal Revenue Code for
such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption.
Employee benefit plans that are governmental plans, as defined in Section
3(32) of ERISA, certain church plans, as defined in Section 3(33) of ERISA, and
foreign plans, as described in Section 4(b)(4) of ERISA, are not subject to the
requirements of ERISA, or Section 4975 of the Internal Revenue Code, but
governmental and foreign plans may be subject to other legal restrictions.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor, the assets of the Trust would be deemed to be "plan
assets" of a Plan for purposes of ERISA and Section 4975 of the Internal
Revenue Code if a Plan makes an "equity" investment in the Trust and no
exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
If the assets of the Trust were deemed to be "plan assets," the persons
providing services to the assets of the Trust may become Parties in Interest
with respect to an investing Plan and may be governed by the fiduciary
responsibility provisions of Title I of ERISA and the prohibited transaction
provisions of ERISA and Section 4975 of the Internal Revenue Code with respect
to transactions involving those assets.
In this regard, if the person or persons with discretionary responsibilities
over the junior subordinated debt securities or the guarantee were affiliated
with PartnerRe, any such discretionary actions taken regarding those assets
could be deemed to constitute a prohibited transaction under ERISA or the
Internal Revenue Code (e.g., the use of such fiduciary authority or
responsibility in circumstances under which those persons have interests that
may conflict with the interests of the investing Plans and affect the exercise
of their best judgment as fiduciaries).
Under an exception contained in the Plan Assets Regulation, the assets of
the Trust would not be deemed to be "plan assets" of investing Plans if the
preferred securities are "publicly-offered securities"--that is, they are:
. widely held, i.e., owned by more than 100 investors independent of the
Trust and of each other;
S-43
. freely transferable; and
. sold to a Plan as part of an offering pursuant to an effective
registration statement under the Securities Act of 1933 (the "Securities
Act") and then timely registered under Section 12(b) or 12(g) of the
Exchange Act.
PartnerRe Finance expects that the preferred securities will meet the
criteria of "publicly-offered securities" above, although no assurance can be
given in this regard. The underwriters expect that the preferred securities
will be held by at least 100 independent investors at the conclusion of the
offering and that the preferred securities will be freely transferable. The
preferred securities will be sold as part of an offering under an effective
registration statement under the Securities Act, and then will be timely
registered under the Exchange Act. All of the common securities will be
purchased and held by PartnerRe Finance.
Even if the assets of the Trust are not deemed to be "plan assets" of Plans
investing in the Trust, investments by Plans in preferred securities could be
deemed to constitute direct or indirect prohibited transactions under ERISA and
Section 4975 of the Internal Revenue Code with respect to an investing Plan.
For example, if PartnerRe were a Party in Interest with respect to an
investing Plan, either directly or by reason of the activities of one or more
of its affiliates, sale of the preferred securities by the Trust to the Plan
and/or extensions of credit between PartnerRe and the Trust, as represented by
the junior subordinated debt securities and the guarantee, would likely be
prohibited by Section 406(a)(1) of ERISA and Section 4975(c)(1) of the Internal
Revenue Code, unless exemptive relief were available under an applicable
administrative exemption.
The U.S. Department of Labor has issued five prohibited transaction class
exemptions ("PTCEs") that may provide exemptive relief for direct or indirect
prohibited transactions resulting from the purchase or holding of the preferred
securities by Plans. Those class exemptions are:
. PTCE 96-23, for specified transactions determined by in-house asset
managers;
. PTCE 95-60, for specified transactions involving insurance company
general accounts;
. PTCE 91-38, for specified transactions involving bank collective
investment funds;
. PTCE 90-1, for specified transactions involving insurance company
separate accounts; and
. PTCE 84-14, for specified transactions determined by independent
qualified professional asset managers.
The preferred securities may not be purchased or held by or on behalf of any
Plan, any entity whose underlying assets include "plan assets" by reason of any
Plan's investment in the entity (a "Plan Asset Entity") or any person investing
"plan assets" of any Plan, unless the purchaser or holder is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Any purchaser or holder of the preferred securities or any interest in the
preferred securities will be deemed to have represented by its purchase and
holding that it either:
. is not a Plan or a Plan Asset Entity and is not purchasing such
securities on behalf of or with "plan assets" of any Plan; or
. is eligible for the exemptive relief available under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 with respect to such purchase or holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the
preferred securities on behalf of or with "plan assets" of any Plan consult
with their counsel regarding the potential consequences if the assets of the
Trust were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Purchasers of the preferred securities have the exclusive responsibility for
ensuring that their purchase and holding of the preferred securities does not
violate the prohibited transaction rules of ERISA or Section 4975 of the Code.
S-44
UNDERWRITERS
Under the terms and subject to the conditions of an underwriting agreement
dated as of the date of this prospectus supplement, the underwriters named
below, for whom Morgan Stanley & Co. Incorporated, First Union Securities,
Inc., Salomon Smith Barney, Inc. and UBS Warburg LLC are acting as
representatives, have severally agreed to purchase, and the Trust has agreed to
sell to them, severally, the respective number of preferred securities set
forth opposite their names.
Number of
Name Preferred Securities
- ---- --------------------
Morgan Stanley & Co. Incorporated
First Union Securities, Inc......
Salomon Smith Barney, Inc........
UBS Warburg LLC..................
--------------------
Total.....................
====================
The underwriters are offering the preferred securities subject to their
acceptance of the securities from the Trust and subject to prior sale. The
underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the preferred securities are
conditioned upon the delivery of legal opinions by their counsel. The
underwriters are obligated to purchase all the preferred securities, if any
preferred securities are purchased.
The underwriters initially propose to offer part of the preferred securities
directly to the public at the public offering price set forth on the cover page
of this prospectus supplement. The underwriters may also offer the preferred
securities to securities dealers at a price that represents a concession not in
excess of $ per preferred security. Any underwriter may allow, and dealers
may reallow, a concession not in excess of $ per preferred security to
certain other dealers. After the initial offering of the preferred securities,
the offering price and other selling terms may from time to time be changed by
the underwriters.
Because the proceeds from the sale of the preferred securities will be used
to purchase the junior subordinated debt securities issued by PartnerRe
Finance, the underwriting agreement provides that PartnerRe or one of its
affiliates will pay to the underwriters as compensation for their services $
per preferred security, or $ in the aggregate.
PartnerRe, PartnerRe Finance and the Trust have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated, on behalf of the
underwriters, they will not, during the period beginning on the date of the
underwriting agreement and continuing to and including the closing under the
underwriting agreement, offer, sell, contract to sell or otherwise dispose of,
any securities that are substantially similar to the preferred securities. The
PEPS Units offered concurrently herewith are not substantially similar to the
preferred securities.
Prior to this offering, there has been no public market for the preferred
securities. The preferred securities are expected to be listed on the New York
Stock Exchange, subject to official notice of issuance, and trading of the
preferred securities on the New York Stock Exchange is expected to commence
within 30 days after they are first issued. The underwriters have advised the
Trust that they presently intend to make a market in the preferred securities
prior to the commencement of trading on the New York Stock Exchange. The
underwriters are not obligated to make a market in the preferred securities,
however, and may discontinue market making activities at any time without
notice. No assurance can be given as to the liquidity of any trading market for
the preferred securities.
PartnerRe, PartnerRe Finance and the Trust have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act and to contribute to payments the underwriters may be required
to make under the Securities Act.
S-45
In order to facilitate the offering of the preferred securities, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the preferred securities. Specifically, the underwriters
may over-allot in connection with the offering, creating a short position in
the preferred securities for their own account. The underwriters can close out
a short position by purchasing preferred securities in the open market. As an
additional means of facilitating the offering of preferred securities, the
underwriters may bid for and purchase these preferred securities in the open
market to stabilize the price of these preferred securities. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the preferred securities in the
offering, if the syndicate repurchases previously distributed preferred
securities in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the preferred securities above independent market levels or
prevent or retard a decline in the market price of the preferred securities.
The underwriters are not required to engage in these activities, and may end
any of these activities at any time.
Each underwriter has agreed that it will, to the best of its knowledge and
belief, comply with all applicable securities laws and regulations in force in
any jurisdiction in which it purchases, offers, sells or delivers the preferred
securities or possesses or distributes this prospectus supplement or the
accompanying prospectus and will obtain any required consent, approval or
permission for its purchase, offer, sale or delivery of the preferred
securities under the laws and regulations in force in any jurisdiction to which
it is subject or in which it makes purchases, offers, sales or deliveries.
Neither the Trust nor PartnerRe or PartnerRe Finance have any responsibility
for an underwriter's compliance with applicable securities laws.
The underwriters and any dealers utilized in the sale of the preferred
securities do not intend to confirm sales to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.
Certain of the underwriters and their affiliates engage in various general
financing and banking transactions with PartnerRe and its affiliates.
First Union Securities, Inc. ("FUSI"), a subsidiary of Wachovia Corporation,
conducts its investment banking, institutional, and capital markets businesses
under the trade name of Wachovia Securities. Any references to "Wachovia
Securities" in this prospectus supplement, however, do not include Wachovia
Securities, Inc., a separate broker-dealer subsidiary of Wachovia Corporation
and sister affiliate of FUSI which may or may not be participating as a
separate selling dealer in the distribution of the preferred securities.
LEGAL MATTERS
Certain legal matters with respect to United States and New York law with
respect to the validity of the offered securities will be passed upon for us by
Willkie Farr & Gallagher, New York, New York. Certain legal matters of Delaware
law with respect to the validity of the preferred securities will be passed
upon by Morris, Nichols, Arght & Tunnell, special Delaware counsel to the
Trust, PartnerRe and PartnerRe Finance. Certain legal matters with respect to
Bermuda law will be passed upon for the Trust, PartnerRe and PartnerRe Finance
by Appleby, Spurling & Kempe, Hamilton, Bermuda. Certain legal matters may be
passed on for the underwriters by Davis Polk & Wardwell.
S-46
PROSPECTUS
$600,000,000
PartnerRe Ltd.
Common Shares, Preferred Shares, Debt Securities, Depositary Shares, Warrants
to Purchase Common Shares, Warrants to Purchase Preferred Shares, Warrants to
Purchase Debt Securities, Share Purchase Contracts and Share Purchase Units
PartnerRe Finance I Inc.
Junior Subordinated Debt Securities Fully and Unconditionally Guaranteed on a
Junior Subordinated Basis
by
PartnerRe Ltd.
PartnerRe Capital Trust I
Preferred Securities Fully and Unconditionally Guaranteed to the Extent
Provided in this Prospectus
by
PartnerRe Ltd.
We, PartnerRe Finance and the Capital Trust may offer and sell from time to
time:
. common shares;
. preferred shares;
. senior, subordinated or junior subordinated debt securities;
. depositary shares representing preferred shares or common shares;
. warrants to purchase common shares, preferred shares or debt securities;
. junior subordinated debt securities of PartnerRe Finance which we will
guarantee;
. preferred securities of the Capital Trust which we will guarantee; and
. share purchase contracts and share purchase units.
We will provide the specific terms and initial public offering prices of
these securities in supplements to this prospectus. You should read this
prospectus and any supplement carefully before you invest. We will not use this
prospectus to confirm sales of any securities unless it is attached to a
prospectus supplement.
We may sell these securities to or through underwriters and also to other
purchasers or through agents. The names of any underwriters or agents will be
stated in an accompanying prospectus supplement.
Our common shares are traded on the New York Stock Exchange under the symbol
"PRE." On October 24, 2001, the closing price of the common shares, as reported
by the New York Stock Exchange, was $50.73 per share.
Investing in our securities involves certain risks. See "Risk Factors" on
page 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is November 1, 2001.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY SUPPLEMENT. NEITHER WE, PARTNERRE FINANCE
NOR PARTNERRE CAPITAL TRUST I HAS AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE, PARTNERRE FINANCE AND PARTNERRE CAPITAL TRUST I ARE
OFFERING THESE SECURITIES ONLY IN STATES WHERE THE OFFER IS PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE
CHANGED SINCE THAT DATE.
For North Carolina investors: the offered securities have not been approved
or disapproved by the Commissioner of Insurance for the State of North
Carolina, nor has the Commissioner of Insurance ruled upon the accuracy or the
adequacy of this document. Buyers in North Carolina understand that neither we
nor our subsidiaries are licensed in North Carolina pursuant to chapter 58 of
the North Carolina General Statutes, nor could we or our subsidiaries meet the
basic admissions requirements imposed by such chapter at the present time.
Except as expressly provided in an underwriting agreement, no offered
securities may be offered or sold in Bermuda (although offers may be made to
persons in Bermuda from outside Bermuda) and offers may only be accepted from
persons resident in Bermuda, for Bermuda exchange control purposes, where such
offers have been delivered outside of Bermuda. Persons resident in Bermuda, for
Bermuda exchange control purposes, may require the prior approval of the
Bermuda Monetary Authority in order to acquire any offered securities.
In this prospectus, references to "dollar" and "$" are to United States
currency, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
TABLE OF CONTENTS
Page
----
WHERE YOU CAN FIND MORE INFORMATION........................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 2
ABOUT THIS PROSPECTUS...................................................... 2
PARTNERRE LTD.............................................................. 3
PARTNERRE FINANCE.......................................................... 4
THE CAPITAL TRUST.......................................................... 4
RISK FACTORS............................................................... 6
FORWARD LOOKING STATEMENTS................................................. 6
USE OF PROCEEDS............................................................ 7
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS OF
PARTNERRE................................................................ 7
GENERAL DESCRIPTION OF THE OFFERED SECURITIES.............................. 7
DESCRIPTION OF OUR CAPITAL SHARES.......................................... 8
DESCRIPTION OF THE DEPOSITARY SHARES....................................... 13
DESCRIPTION OF THE DEBT SECURITIES......................................... 16
CERTAIN PROVISIONS OF THE JUNIOR SUBORDINATED DEBT SECURITIES ISSUED TO THE
CAPITAL TRUST............................................................ 30
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES GUARANTEE........... 33
DESCRIPTION OF THE WARRANTS TO PURCHASE COMMON SHARES OR PREFERRED
SHARES................................................................... 35
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES.................... 37
DESCRIPTION OF THE TRUST PREFERRED SECURITIES.............................. 38
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE.................... 47
DESCRIPTION OF THE SHARE PURCHASE CONTRACTS AND THE SHARE PURCHASE UNITS... 50
PLAN OF DISTRIBUTION....................................................... 51
LEGAL OPINIONS............................................................. 53
EXPERTS.................................................................... 53
ENFORCEMENT OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES
LAWS..................................................................... 53
i
WHERE YOU CAN FIND MORE INFORMATION
General
We have filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the common shares, preferred
shares, debt securities, junior subordinated debt securities guarantees,
depositary shares, warrants, share purchase contracts, share purchase units,
trust preferred securities and preferred securities guarantees described in
this prospectus. This prospectus is a part of the Registration Statement, but
the Registration Statement also contains additional information and exhibits.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Accordingly, we file annual,
quarterly and current reports, proxy statements and other information with the
Commission. You may inspect and copy any of these materials at the Commission's
public reference room located at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549. Please call the Commission's toll-free telephone number at
1-800-SEC-0330 if you need further information about the operation of the
Commission's public reference room. Our filings with the Commission are also
available from the Commission's website located at http://www.sec.gov.
Additionally, our common shares and our 8% Series A Cumulative Preferred
Shares are each listed on the New York Stock Exchange, so our reports can also
be inspected at the offices of the New York Stock Exchange located at 20 Broad
Street, 17th Floor, New York, New York 10005.
PartnerRe Finance
There are no separate financial statements of PartnerRe Finance in this
prospectus. We do not believe the financial statements would be helpful to the
holders of the debt securities of PartnerRe Finance because:
. we, a reporting company under the Exchange Act, own indirectly all of the
outstanding capital stock of PartnerRe Finance;
. PartnerRe Finance has no independent operations or proposals to engage in
any activity other than issuing junior subordinated debt securities to the
Capital Trust and applying the proceeds as described in "Use of Proceeds;"
and
. the obligations of PartnerRe Finance under the junior subordinated debt
securities will be fully and unconditionally guaranteed by us. See
"Description of the Junior Subordinated Debt Securities Guarantee."
PartnerRe Finance is not currently subject to the information reporting
requirements of the Exchange Act and will not become subject to the
requirements upon the effectiveness of the registration statement that contains
this prospectus.
The Capital Trust
There are no separate financial statements of the Capital Trust in this
prospectus. We do not believe the financial statements would be helpful to the
holders of the preferred securities of the Capital Trust because:
. We, a reporting company under the Exchange Act, will directly or
indirectly own all of the voting securities of the Capital Trust;
. The Capital Trust has no independent operations or proposals to engage in
any activity other than issuing securities representing undivided
beneficial interests in the assets of the Capital Trust and investing the
proceeds in junior subordinated debt securities issued by PartnerRe
Finance which will be guaranteed by us; and
1
. The obligations of the Capital Trust under the preferred securities will
be fully and unconditionally guaranteed by us. See "Description of the
Trust Preferred Securities Guarantee."
The Capital Trust is not currently subject to the information reporting
requirements of the Exchange Act and will not become subject to the
requirements upon the effectiveness of the registration statement that contains
this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. The Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus. Any
statement contained in a document which is incorporated by reference in this
prospectus is automatically updated and superseded if information contained in
this prospectus, or information that we later file with the Commission,
modifies or replaces this information. All documents we subsequently file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to
the termination of this offering (including any documents filed after the date
of this prospectus and prior to the effectiveness of the Registration
Statement) shall be deemed to be incorporated by reference into this
prospectus. We incorporate by reference the following previously filed
documents:
(1) Our Annual Report on Form 10-K for the year ended December 31, 2000;
(2) Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2001 and June 30, 2001;
(3) The description of our common shares set forth in our registration
statements filed under the Exchange Act on Form 8-A on October 4, 1993 and
October 24, 1996, including any amendment or report for the purpose of
updating such description;
(4) The description of our 8% Series A Cumulative Preferred Shares set
forth in our registration statement filed under the Exchange Act on Form
8-Aon June 20, 1997, including any amendment or report for the purpose of
updating such description;
(5) Our Current Reports on Form 8-K dated September 24, 2001 and October
3,2001.
To receive a free copy of any of the documents incorporated by reference in
this prospectus (other than exhibits) call or write us at the following
address: PartnerRe Ltd., Attn: Christine Patton, 96 Pitts Bay Road, Pembroke
HM08, Bermuda, (441) 292-0888.
ABOUT THIS PROSPECTUS
This prospectus is part of two registration statements that we, the Capital
Trust and PartnerRe Finance (which is a filer only with respect to the most
recently filed registration statement) have filed with the Commission using a
"shelf" registration process, relating to the common shares, preferred shares,
depositary shares, debt securities, junior subordinated debt securities
guarantees, warrants, share purchase contracts, share purchase units, preferred
securities and preferred securities guarantees described in this prospectus.
This means:
. we, PartnerRe Finance and the Capital Trust may issue any combination of
securities covered by this prospectus from time to time, up to a total
initial offering price of $600,000,000;
2
. we, PartnerRe Finance or the Capital Trust, as the case may be, will
provide a prospectus supplement each time these securities are offered
pursuant to this prospectus; and
. the prospectus supplement will provide specific information about the
terms of that offering and also may add, update or change information
contained in this prospectus.
This prospectus provides you with a general description of the securities
we, PartnerRe Finance or the Capital Trust may offer. This prospectus does not
contain all of the information set forth in the registration statement as
permitted by the rules and regulations of the Commission. For additional
information regarding us, PartnerRe Finance, the Capital Trust and the offered
securities, please refer to the registration statement. Each time we, PartnerRe
Finance or the Capital Trust sells securities, we, PartnerRe Finance or the
Capital Trust will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this prospectus. You should
read both this prospectus and any prospectus supplement together with
additional information described under the heading "Where You Can Find More
Information." All references to "we," "us," "our" or "PartnerRe" refer to
PartnerRe Ltd.
PARTNERRE LTD.
Overview
PartnerRe Ltd., also referred to as "PartnerRe," is a Bermuda company with
its registered and principal executive offices located at 96 Pitts Bay Road,
Pembroke HM 08, Bermuda. Our telephone number is (441) 292-0888. We provide
multi-line reinsurance to insurance companies on a worldwide basis through our
wholly owned subsidiaries, Partner Reinsurance Company Ltd., PartnerRe SA
(formerly known as SAFR PartnerRe) and Partner Reinsurance Company of the U.S.
("PartnerRe U.S."). Risks insured include property, catastrophe, agriculture,
automobile, casualty, marine, aviation and space, credit and surety, technical
and miscellaneous lines and life/annuity and health.
We currently have approximately 1,900 clients in 122 countries who are
principally served from locations in Bermuda, Hong Kong, Greenwich
(Connecticut), Oslo, Paris, Seoul, Singapore, Tokyo, Toronto and Zurich. Our
reinsurance operations are carried out by Partner Reinsurance Company Ltd. in
Bermuda (which also operates branches in Switzerland, Singapore and Labuan),
PartnerRe SA in Paris and PartnerRe U.S. in Greenwich (Connecticut).
Recent Significant Events
On September 21, 2001, we issued a press release relating to the September
11, 2001 terrorist attacks in the United States, which press release was
subsequently filed as an exhibit to our Current Report on Form 8-K, dated
September 24, 2001. In this press release we reaffirmed that our expected loss
from these events should fall within our initial estimated range of $375-$400
million.
Our gross losses from these events are estimated to be $425-$450 million. Of
our expected recoveries from retrocessions, approximately 60% are with
companies rated "AA" or better. The estimate of net losses includes a reserve
for potentially non-recoverable retrocessions. Our losses will be principally
in property, aviation, and catastrophe treaties. We do not have large exposure
to casualty lines, nor do we provide life or accident and health coverage in
the U.S.
We anticipate that these events will reduce after tax earnings by $350-$375
million.
Other Information
For further information regarding PartnerRe including financial information,
you should refer to our recent filings with the Commission.
3
PARTNERRE FINANCE
PartnerRe Finance I Inc., also referred to as "PartnerRe Finance", is a
newly formed Delaware corporation, with its principal executive offices located
at One Greenwich Plaza, Greenwhich, Connecticut 06830-6352. PartnerRe Finance's
telephone number is (203) 485-4200. PartnerRe Finance is an indirect,
wholly-owned subsidiary of PartnerRe that was created solely for the purpose of
issuing the junior subordinated debt securities to the Capital Trust and
providing financing to other subsidiaries of PartnerRe.
THE CAPITAL TRUST
PartnerRe Capital Trust I, also referred to as the "Capital Trust", is a
statutory business trust created under Delaware law pursuant to (1) a trust
agreement executed by us, as original sponsor of the Capital Trust, and the
Capital Trustees for the Capital Trust and (2) the filing of a certificate of
trust with the Delaware Secretary of State on October 2, 2001. On October 26,
2001, PartnerRe assigned its rights and obligations as sponsor of the Capital
Trust to PartnerRe Finance. The trust agreement will be amended and restated in
its entirety substantially in the form filed as an exhibit to the registration
statement of which this prospectus forms a part. The restated trust agreement
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Capital Trust exists for the exclusive
purposes of:
. issuing and selling the preferred securities and common securities that
represent undivided beneficial interests in the assets of the CapitalTrust;
. using the gross proceeds from the sale of the preferred securities and
common securities to acquire junior subordinated debt securities issued by
PartnerRe Finance and guaranteed by us; and
. engaging in only those other activities necessary or incidental to the
issuance and sale of the preferred securities and common securities.
PartnerRe Finance will directly or indirectly own all of the common
securities of the Capital Trust. The common securities of the Capital Trust
will rank equally, and payments will be made thereon pro rata, with the
preferred securities of the Capital Trust, except that, if an event of default
under the restated trust agreement has occurred and is continuing, the rights
of the holders of the common securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the preferred securities. Unless otherwise
disclosed in the applicable prospectus supplement, PartnerRe Finance will,
directly or indirectly, acquire common securities in an aggregate liquidation
amount equal to at least 3% of the total capital of the Capital Trust. The
Capital Trust is a legally separate entity.
Unless otherwise disclosed in the related prospectus supplement, the Capital
Trust will have a term of approximately 55 years, but may dissolve earlier as
provided in the restated trust agreement of the Capital Trust. Unless otherwise
disclosed in the applicable prospectus supplement, the Capital Trust's business
and affairs will be conducted by the trustees (the "Capital Trustees")
appointed by PartnerRe Finance, as the direct or indirect holder of all of the
common securities. The holder of the common securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
Capital Trustees of the Capital Trust. The duties and obligations of the
Capital Trustees of the Capital Trust will be governed by the restated trust
agreement of the Capital Trust.
Unless otherwise disclosed in the related prospectus supplement, two of the
Capital Trustees (the "Administrative Trustees") of the Capital Trust will be
persons who are employees or officers of or affiliated with PartnerRe Finance.
One Capital Trustee of the Capital Trust will be a financial institution (the
"Property Trustee") that is not affiliated with PartnerRe Finance and has a
minimum amount of combined capital and surplus of not less than $50,000,000,
which shall act as property trustee and as indenture trustee for the purposes
of compliance with the provisions of the Trust Indenture Act, pursuant to the
terms set forth in the applicable
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prospectus supplement. In addition, one Capital Trustee of the Capital Trust
(which may be the Property Trustee, if it otherwise meets the requirements of
applicable law) will have its principal place of business or reside in the
State of Delaware (the "Delaware Trustee"). We will pay all fees and expenses
related to the Capital Trust and the offering of preferred securities and
common securities.
The office of the Delaware Trustee for the Capital Trust in the State of
Delaware is located at c/o Chase Manhattan Bank USA, National Association, 500
Stanton Christiana Road, OPS4--3rd Floor, Newark, Delaware 19173. The principal
executive offices for the Capital Trust is located at c/o PartnerRe U.S.
Corporation, One Greenwich Plaza, Greenwich, CT 06830-6352. The telephone
number of the Capital Trust is (203) 485-4200.
5
RISK FACTORS
Before you invest in our securities or those issued by PartnerRe Finance or
the Capital Trust, you should carefully consider the risks involved.
Accordingly, you should carefully consider:
. the information contained in or incorporated by reference into this
prospectus;
. information contained in or incorporated by reference into any prospectus
supplement relating to specific offerings of securities;
. the risks described in our Current Report on Form 8-K filed with
theSecurities and Exchange Commission on October 3, 2001, which is
incorporated by reference in this prospectus; and
. other risks and other information that may be contained in, or
incorporated by reference from, other filings we make with theCommission.
FORWARD LOOKING STATEMENTS
We caution readers regarding certain forward-looking statements contained
herein. Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which, with respect to
future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to
differ materially from those expressed in any forward-looking statements made
by, or on behalf of, us. In particular, statements using verbs such as
"expect," "anticipate," "intend," "believe" or words of similar impact
generally involve forward-looking statements. In light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be considered as a
representation by us or any other person that our objectives or plans will be
achieved.
Numerous factors could cause our actual results to differ materially from
those in the forward-looking statements, including the following:
(1) the occurrence of catastrophic events with a frequency or severity
exceeding our expectations;
(2) a decrease in the level of demand for reinsurance and/or an increase
in the supply of reinsurance capacity;
(3) increased competitive pressures, including the consolidation and
increased globalization of reinsurance providers;
(4) actual losses and loss expenses exceeding our loss reserves, which
are necessarily based on actuarial and statistical projections of ultimate
losses;
(5) changing rates of inflation and other economic conditions;
(6) losses due to foreign currency exchange rate fluctuations; or
(7) changes in the legal or regulatory environments in which we
operate,including the passage of federal or state legislation subjecting
Partner Reinsurance Company Ltd. or PartnerRe SA to supervision or
regulation, including additional tax regulation, in the United States or
other jurisdictions in which we operate.
The foregoing review of important factors should not be construed as
exhaustive. We undertake no obligation to release publicly the results of any
future revisions we may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
6
USE OF PROCEEDS
The net proceeds from the sale of preferred securities by the Capital Trust
will be used to purchase junior subordinated debt securities of PartnerRe
Finance. Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of securities offered by PartnerRe or PartnerRe Finance
will be used for working capital, capital expenditures, acquisitions and other
general corporate purposes. Until the net proceeds are used in this manner, we
may temporarily use them to make short-term investments or reduce short-term
borrowings.
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED SHARE DIVIDENDS OF PARTNERRE
For purposes of computing the following ratios, earnings consist of net
income before income tax expense plus fixed charges to the extent that such
charges are included in the determination of earnings. Fixed charges consist of
interest costs plus one-third of minimum rental payments under operating leases
(estimated by management to be the interest factor of such rentals).
Six Months
Ended June 30, Fiscal Year Ended December 31,
-------------- ------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ----- ----- ----- ------ ------- ---------
Ratio of Earnings to Fixed Charges..... 14.11x 6.80x 7.12x 4.25x 94.88x 348.86x 2,498.25x
Ratio of Earnings to Combined Fixed
Charges and Preferred Share Dividends 6.28x 3.02x 3.18x 1.87x 12.20x 27.88x 2,498.25x
Neither PartnerRe Finance nor the Capital Trust had any operations during
the periods set forth above.
GENERAL DESCRIPTION OF THE OFFERED SECURITIES
We may from time to time offer under this prospectus, separately or together:
. common shares,
. preferred shares,
. depositary shares, each representing a fraction of a share of common
shares or a particular series of preferred shares,
. unsecured senior or subordinated debt securities,
. warrants to purchase common shares,
. warrants to purchase preferred shares,
. warrants to purchase debt securities,
. share purchase contracts to purchase common shares, and
. share purchase units, each representing ownership of a share purchase
contract and, as security for the holder's obligation to purchase common
shares under the share purchase contract, any of (1) our debt obligations,
(2) debt obligations of third parties, including U.S.Treasury securities,
or (3) preferred securities of the Capital Trust.
PartnerRe Finance may from time to time offer unsecured junior subordinated
debt securities, which will be fully and unconditionally guaranteed by us to
the extent described in this prospectus.
The Capital Trust may offer preferred securities representing undivided
beneficial interests in its assets, which will be fully and unconditionally
guaranteed by us to the extent described in this prospectus.
The aggregate initial offering price of these offered securities will not
exceed $600,000,000.
7
DESCRIPTION OF OUR CAPITAL SHARES
The following is a summary of certain provisions of (i) our Memorandum of
Association and Bye-Laws, which documents set forth certain terms of our
capital stock, and (ii) the Certificate of Designation, Preferences and Rights
(the "Certificate") setting forth certain terms of our 8% Series A Cumulative
Preferred Shares (the "Series A Preferred Shares"). Because this summary is not
complete, you should refer to our Memorandum of Association and Bye-Laws and
the Certificate for complete information regarding the provisions of these
governing documents, including the definitions of some of the terms used below.
Copies of our Memorandum of Association and Bye-Laws and the Certificate are
incorporated by reference as exhibits to the registration statement of which
this prospectus forms a part. Whenever we refer to particular sections or
defined terms of our Memorandum of Association, Bye-Laws or the Certificate,
such sections or defined terms are incorporated herein by reference, and the
statement in connection with which such reference is made is qualified in its
entirety by such reference.
General
Our authorized share capital consists of 100,000,000 common shares, par
value $1.00 per share, 10,000,000 Series A Preferred Shares, and 10,000,000 un
designated shares, par value $1.00 per share. As of September 30, 2001,
approximately 50,112,268 common shares were issued and outstanding and
10,000,000 Series A Preferred Shares were issued and outstanding. We also have
issued and outstanding Class B warrants (the "Warrants") to purchase 1,355,746
common shares. See "Description of Our Capital Stock--Warrants."
Common Shares
Our common shares are listed on the New York Stock Exchange under the symbol
"PRE." The common shares currently issued and outstanding are fully paid and
non assessable within the meaning of applicable Bermuda law. Our common shares
offered by a prospectus supplement, upon issuance against full consideration,
will be fully paid and non assessable within the meaning of applicable Bermuda
law. There are no provisions of Bermuda law or the Memorandum of Association or
the Bye-Laws which impose any limitation on the rights of shareholders to hold
or vote common shares by reason of their not being residents of Bermuda.
Under the Bye-Laws, the holders of common shares have no redemption,
conversion or sinking fund rights. Subject to the voting restrictions set forth
above, holders of common shares are entitled to one vote per share on all
matters submitted to a vote of holders of common shares and do not have any
cumulative voting rights. In the event of our liquidation, dissolution, or
winding-up, the holders of common shares are entitled to share equally and
ratably in the assets of PartnerRe, if any, remaining after the payment of all
of our debts and liabilities and the liquidation preference of any outstanding
preferred shares.
Other than as required by Bermuda law or in respect of alteration of class
rights and reporting requirements and certain procedural matters, all actions
by our shareholders are decided by a simple majority of votes cast.
The holders of common shares will receive such dividends, if any, as may be
declared by our board of directors out of funds legally available for such
purposes.
A more detailed description of our common shares is set forth in our
registration statements filed under the Exchange Act on Form 8-A on October 4,
1993 and October 24, 1996, including any amendment or report for the purpose of
updating such description.
Undesignated Shares
Under our Bye-Laws, we have authorized 10,000,000 shares, par value $1.00
per share, the rights and preferences of which are un designated. Without
further action of our shareholders, our board of directors may fix the relative
rights, preferences and limitations of such shares. Such determination may
include fixing the
8
dividend rates and payment dates, the extent of voting rights, if any, the
terms and prices of redemption, the amount payable thereon in the event of
liquidation, sinking fund provisions, and the terms and conditions on which
shares may be converted if the shares are to be issued with the privilege of
conversion.
Warrants
Each of the Warrants is currently exercisable at an exercise price of $20.00
per share, which exercise price will be reduced to $17.00 per share in November
2001. The exercise price is also subject to adjustment upon the occurrence of
certain events relating principally to changes in the number of common shares,
options or warrants outstanding. Each of the Warrants expires in November 2004.
The Warrant holders have been granted certain registration rights with
respect to the Warrants and any common shares acquired upon exercise of the
Warrants.
Series A Preferred Shares
The Series A Preferred Shares are listed on the New York Stock Exchange
under the symbol "PRE A." The Series A Preferred Shares currently issued and
outstanding are fully paid and nonassessable within the meaning of applicable
Bermuda law.
The holders of the Series A Preferred Shares will have no preemptive rights
with respect to any of our common shares or any of our other securities
convertible into or carrying rights or options to purchase any such shares. The
Series A Preferred Shares will not be subject to any sinking fund or other
obligation of PartnerRe to redeem or retire the Series A Preferred Shares.
Unless redeemed by PartnerRe, the Series A Preferred Shares will have a
perpetual term with no maturity. At present, we do not have any issued shares
which are senior to or in parity with respect to payment of dividends and
distribution of assets in liquidation with the Series A Preferred Shares.
Dividends. Holders of Series A Preferred Shares are entitled to receive,
when, as and if declared by our board of directors out of funds legally
available for the payment of dividends, cumulative preferential cash dividends
in an amount per share equal to 8% of the liquidation preference per annum
(equivalent to $2.00 per share). Such dividends are payable quarterly, when, as
and if declared by our board of directors.
If any Series A Preferred Shares are outstanding, unless full cumulative
dividends on the Series A Preferred Shares have been paid, we generally may not
(i) declare or pay any dividends upon any other capital shares ranking pari
passu with the Series A Preferred Shares as to dividends and as to the
distribution of assets upon any liquidation, dissolution or winding-up of
PartnerRe ("Parity Shares"), unless all dividends are declared upon the Series
A Preferred Shares and the Parity Shares are declared pro rata, (ii) declare or
pay any dividends upon the common shares or any other capital shares ranking
junior to the Series A Preferred Shares as to dividends or as to the
distribution of assets upon any liquidation, dissolution or winding-up of
PartnerRe (together with Common Shares, "Junior Shares") or (iii) redeem any
common shares or other Junior Shares.
Liquidation. Upon any voluntary liquidation, dissolution or winding-up of
the affairs of PartnerRe, the holders of Series A Preferred Shares will be
entitled to receive from our assets legally available for distribution to
shareholders $25.00 per share, plus all dividends accrued and unpaid to the
date fixed for distribution, before any distribution is made to holders of
common shares and any other Junior Shares.
Redemption. The Series A Preferred Shares are generally not redeemable prior
to July 10, 2002. On or after such date, we may redeem the Series A Preferred
Shares for cash at a redemption price of $25.00 per share, plus all accrued and
unpaid dividends.
Voting. Generally, the Series A Preferred Shares have no voting rights.
However, whenever dividends payable on Series A Preferred Shares shall be in
arrears in an amount equivalent to dividends for six full dividend periods
(whether or not consecutive), then the holders of Series A Preferred Shares
shall have the right
9
to elect two directors to our board of directors. Whenever all arrearages in
dividends on the Series A Preferred Shares then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been paid or declared and set apart for payment, then the right of holders of
the Series A Preferred Shares to be represented by directors shall cease.
In addition, without the written consent of the holders of at least 75% of
the outstanding Series A Preferred Shares, we may not:
. make any amendment to or repeal any of the provisions of our Memorandum of
Association, Bye-Laws or the Certificate of Designation relating to the
Series A Preferred Shares that would vary the rights, preferences or
voting powers of the holders of the Series A Preferred Shares;
. authorize any amalgamation, consolidation, merger or statutory share
exchange that affects the Series A Preferred Shares, unless in each such
case each Series A Preferred Share shall remain outstanding with no
variation in its rights, preferences or voting powers, or shall be
converted into or exchanged for preferred shares of the surviving entity
having rights, preferences and voting powers identical to that of a Series
A Preferred Share;
. authorize any creation of any shares of any class or series or any
security convertible into shares of any class or series ranking prior to
the Series A Preferred Shares in payment of dividend or the distribution
of assets on any liquidation, dissolution or winding up of PartnerRe; or
. enter into any transaction or take any action which would amount to a
variation of the rights, preferences or voting powers of the holders of
the Series A Preferred Shares.
We may create and issue additional classes or series of Parity Shares and
Junior Shares without the consent of any holder of Series A Preferred Shares.
A more detailed description of our Series A Preferred Shares is set forth in
our registration statement filed under the Exchange Act on Form 8-A on June 20,
1997, including any amendment or report for the purpose of updating such
description.
Other Preferred Shares
From time to time, pursuant to the authority granted by the Bye-Laws, our
board of directors may create and issue one or more series of preferred shares.
The preferred shares, upon issuance against full consideration, will be fully
paid and nonassessable. The particular rights and preferences of the preferred
shares offered by any prospectus supplement and the extent, if any, to which
the general provisions described below may apply to the offered preferred
shares, will be described in the prospectus supplement.
Because the following summary of the terms of preferred shares is not
complete, you should refer to the Memorandum of Association, the Bye-Laws and
any applicable Certificate of Designation, Preferences and Rights or other
governing instrument for complete information regarding the terms of the class
or series of preferred shares described in a prospectus supplement. Whenever we
refer to particular sections or defined terms of the Memorandum, the Bye-Laws
and any applicable Certificate of Designation, Preferences and Rights or other
governing instrument, such sections or defined terms are incorporated herein by
reference, and the statement in connection with which such reference is made is
qualified in its entirety by such reference.
A prospectus supplement will specify the terms of a particular class or
series of preferred shares as follows:
. the number of shares to be issued and sold and the distinctive designation
thereof;
. the dividend rights of the preferred shares, whether dividends will be
cumulative and, if so, from which date or dates and the relative rights or
priority, if any, of payment of dividends on preferred shares and any
limitations, restrictions or conditions on the payment of such dividends;
10
. the voting powers, if any, of the preferred shares, equal to or greater
than one vote per share, which may include the right to vote, as a class
or with other classes of capital stock, to elect one or more of our
directors;
. the terms and conditions (including the price or prices, which may vary
under different conditions and at different redemption dates), if any,
upon which all or any part of the preferred shares may be redeemed, at
whose option such a redemption may occur, and any material limitations,
restrictions or conditions on such redemption;
. the terms, if any, upon which the preferred shares will be convertible
into or exchangeable for our shares of any other class, classes or series;
. the relative amounts, and the relative rights or priority, if any, of
payment in respect of preferred shares, which the holders of the preferred
shares will be entitled to receive upon our liquidation, dissolution or
winding up;
. the terms, if any, of any purchase, retirement or sinking fund to be
provided for the preferred shares;
. the restrictions, limitations and conditions, if any, upon the issuance of
our indebtedness so long as any preferred shares are outstanding; and
. any other relative rights, preferences, limitations and powers not
inconsistent with applicable law, the Memorandum of Association or the
Bye-Laws.
Subject to the specification of the above terms of preferred shares in a
supplement to this prospectus, we anticipate that the terms of such preferred
shares will correspond to those set forth below.
Transfer of Shares
Our Bye-Laws contain various provisions affecting the transferability of our
shares. Under the Bye-Laws, our board of directors has absolute discretion to
decline to register a transfer of shares:
(1) unless the appropriate instrument of transfer is submitted along with
such evidence as our board of directors may reasonably require showing the
right of the transferor to make the transfer,
(2) unless, where applicable, the consent of the Bermuda Monetary
Authority has been obtained, or
(3) if our board of directors determines that such transfer would result
in a person (other than Swiss Reinsurance Company ("Swiss Re") or its
affiliates) controlling in excess of 9.9% of all of our outstanding shares.
One of the primary purposes of the restriction on a holder of our shares
from controlling more than 9.9% of our outstanding shares is to reduce the
likelihood that we will be deemed a foreign personal holding company within the
meaning of the Internal Revenue Code of 1986, as amended. This limit may also
have the effect of deterring purchases of large blocks of common shares or
proposals to acquire us, even if some or a majority of the shareholders might
deem these purchases or acquisition proposals to be in their best interests.
With respect to this issue, also see the provisions discussed below under
"Anti-Takeover Effects of Certain Bye-Laws Provisions."
We entered into a standstill agreement, dated as of July 10, 1997, with
Swiss Re pursuant to which Swiss Re agreed to limit its and its affiliates
ownership in PartnerRe to 30% of the voting power of our outstanding shares,
unless we otherwise consent. Swiss Re also has a right of first refusal under
the standstill agreement with respect to certain issuances or sales by us of
our voting shares, in an amount equal to its percentage ownership of our voting
shares prior to such issuance or sale, subject to certain exceptions. The
standstill agreement terminates on July 10, 2004.
If our board of directors refuses to register any transfer of shares, it
shall send notice of such refusal to the transferee within three months of the
date on which the transfer was lodged with us.
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Our Bermuda counsel has advised us that while the precise form of the
restrictions on transfers contained in the Bye-Laws is untested, as a matter of
general principle, restrictions on transfers are enforceable under Bermuda law
and are not uncommon.
Anti-Takeover Effects of Certain Bye-Laws Provisions
In addition to those provisions of the Bye-Laws discussed above under
"Transfers of Shares," our Bye-Laws contain certain provisions that make it
more difficult to acquire control of us by means of a tender offer, open market
purchase, a proxy fight or otherwise. These provisions are designed to
encourage persons seeking to acquire control of us to negotiate with our
directors. We believe that, as a general rule, the interests of our
shareholders would be best served if any change in control results from
negotiations with our directors. Our directors would negotiate based upon
careful consideration of the proposed terms, such as the price to be paid to
shareholders, the form of consideration to be paid and the anticipated tax
effects of the transaction. However, these provisions could have the effect of
discouraging a prospective acquiror from making a tender offer or otherwise
attempting to obtain control of us. To the extent these provisions discourage
takeover attempts, they could deprive shareholders of opportunities to realize
takeover premiums for their shares or could depress the market price of the
shares.
Board Provisions. Our Bye-laws provide for a classified board, to which
approximately one-third of our board of directors is elected each year at our
annual general meeting of shareholders. Accordingly, our directors serve
three-year terms rather than one-year terms. Each class of directors is
required to have a minimum of one director and a maximum of four directors.
The classification of directors will have the effect of making it more
difficult for shareholders to change the composition of our board of directors.
At least two annual meetings of shareholders, instead of one, will generally be
required to effect a change in a majority of our board of directors. Such a
delay may help ensure that our directors, if confronted by a holder attempting
to force a proxy contest, a tender or exchange offer, or an extraordinary
corporate transaction, would have sufficient time to review the proposal as
well as any available alternatives to the proposal and to act in what they
believe to be the best interests of PartnerRe, including the shareholders. The
classification provisions will apply to every election of directors, however,
regardless of whether a change in the composition of our board of directors
would be beneficial to PartnerRe and its shareholders and whether or not a
majority of our shareholders believe that such a change would be desirable.
The classification provisions could also have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to PartnerRe and its shareholders. The classification of our
board of directors could thus increase the likelihood that incumbent directors
will retain their positions. In addition, because the classification provisions
may discourage accumulations of large blocks of our stock by purchasers whose
objective is to take control of PartnerRe and remove a majority of our board of
directors, the classification of our board of directors could tend to reduce
the likelihood of fluctuations in the market price of the shares that might
result from accumulations of large blocks for such a purpose. Accordingly,
shareholders could be deprived of certain opportunities to sell their shares at
a higher market price than might otherwise be the case.
Availability of Shares for Future Issuances. We have available for issuance
a large number of authorized but unissued common shares. Generally, these
shares may be issued by action of our directors without further action by
shareholders (except as may be required by applicable stock exchange
requirements). The availability of these shares for issue could be viewed as
enabling the directors to make more difficult a change in our control. For
example, the directors could determine to issue warrants or rights to acquire
shares. In addition, we have authorized a sufficient amount of our shares such
that we could put in place a shareholder rights plan without further action by
shareholders. A shareholder rights plan could serve to dilute or deter stock
ownership of persons seeking to obtain control of us.
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Our ability to take these actions makes it more difficult for a third party
to acquire us without negotiating with our board of directors, even if some or
a majority of the shareholders desired to pursue a proposed transaction.
Moreover, these powers could discourage or defeat unsolicited stock
accumulation programs and acquisition proposals.
DESCRIPTION OF THE DEPOSITARY SHARES
General
We may, at our option, elect to offer depositary shares, each representing a
fraction (to be set forth in the prospectus supplement relating to our common
shares or a particular series of preferred shares) of a share of a common share
or a particular series of preferred shares as described below. In the event we
elect to do so, depositary receipts evidencing depositary shares will be issued
to the public.
The shares of common shares or a class or series of preferred shares
represented by depositary shares will be deposited under a deposit agreement
among us, a depositary selected by us and the holders of the depositary
receipts. The depositary will be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000. Subject to the terms of the deposit agreement, each owner of
a depositary share will be entitled, in proportion to the applicable fraction
of a common share or preferred share represented by such depositary share, to
all the rights and preferences of the common shares or preferred shares
represented thereby (including dividend, voting, redemption and liquidation
rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of the common shares or related
class or series of preferred shares in accordance with the terms of the
offering described in the related prospectus supplement. If we issue depositary
shares we will file copies of the forms of deposit agreement and depositary
receipt as exhibits to the registration statement of which this prospectus
forms a part, and the following summary is qualified in its entirety by
reference to such exhibits.
The following description of the depositary shares sets forth the material
terms and provisions of the depositary shares to which any prospectus
supplement may relate. The particular terms of the depositary shares offered by
any prospectus supplement, and the extent to which the general provisions
described below may apply to the offered securities, will be described in the
prospectus supplement.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other distributions
received in respect of the related common shares or class or series of
preferred shares to the record holders of depositary shares relating to such
common shares or class or series of preferred shares in proportion to the
number of such depositary shares owned by such holders.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the depositary determines that it is not feasible to
make such distribution, in which case the depositary may, with our approval,
sell such property and distribute the net proceeds from such sale to such
holders.
Withdrawal of Shares
Upon surrender of the depositary receipts at the corporate trust office of
the depositary (unless the related depositary shares have previously been
called for redemption), the holder of the depositary shares evidenced thereby
is entitled to delivery of the number of whole shares of the related common
shares or class or series of preferred shares and any money or other property
represented by such depositary shares. Holders of depositary
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shares will be entitled to receive whole shares of the related common shares or
class or series of preferred shares on the basis set forth in the prospectus
supplement for such common shares or class or series of preferred shares, but
holders of such whole common shares or preferred shares will not thereafter be
entitled to exchange them for depositary shares. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number of depositary shares representing the number of whole common shares or
preferred shares to be withdrawn, the depositary will deliver to such holder at
the same time a new depositary receipt evidencing such excess number of
depositary shares. In no event will fractional common shares or preferred
shares be delivered upon surrender of depositary receipts to the depositary.
Redemption of Depositary Shares
Whenever we redeem common shares or preferred shares held by the depositary,
the depositary will redeem as of the same redemption date the number of
depositary shares representing shares of common shares or the related class or
series of preferred shares so redeemed. The redemption price per depositary
share will be equal to the applicable fraction of the redemption price per
share payable with respect to such class or series of the common shares or
preferred shares. If less than all the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected by lot or pro rata as may
be determined by the depositary.
Voting the Common Shares or Preferred Shares
Upon receipt of notice of any meeting at which the holders of the common
shares or preferred shares are entitled to vote, the depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary shares relating to such common shares or preferred shares. Each
record holder of such depositary shares on the record date (which will be the
same date as the record date for the common shares or preferred shares, as
applicable) will be entitled to instruct the depositary as to the exercise of
the voting rights pertaining to the amount of the class or series of preferred
shares or common shares represented by such holder's depositary shares. The
depositary will endeavor, insofar as practicable, to vote the number of the
common shares or preferred shares represented by such depositary shares in
accordance with such instructions, and we will agree to take all action which
the depositary deems necessary in order to enable the depositary to do so.
Amendment of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of depositary receipts will not be
effective unless such amendment has been approved by the holders of depositary
receipts representing at least a majority of the depositary shares then
outstanding.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the related
common shares or class or series of preferred shares and any redemption of such
common shares or preferred shares. Holders of depositary receipts will pay all
other transfer and other taxes and governmental charges and such other charges
as are expressly provided in the deposit agreement to be for their accounts.
Miscellaneous
The depositary will forward all reports and communications from us which are
delivered to the depositary and which we are required to furnish to the holders
of the common shares or preferred shares.
Neither we nor the depositary will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
obligations under the deposit agreement. Our obligations and
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the obligations of the depositary under the deposit agreement will be limited
to performance in good faith of their duties thereunder and neither we nor the
depositary will be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or class or series of preferred shares unless
satisfactory indemnity is furnished. We and the depositary may rely on written
advice of counsel or accountants, or information provided by persons presenting
preferred shares for deposit, holders of depositary shares or other persons
believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary; Termination of the Deposit Agreement
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary, any such
resignation or removal to take effect upon the appointment of a successor
depositary and its acceptance of such appointment. Such successor depositary
will be appointed by us within 60 days after delivery of the notice of
resignation or removal. The deposit agreement may be terminated at our
direction or by the depositary if a period of 90 days shall have expired after
the depositary has delivered to us written notice of its election to resign and
a successor depositary shall not have been appointed. Upon termination of the
deposit agreement, the depositary will discontinue the transfer of depositary
receipts, will suspend the distribution of dividends to the holders thereof,
and will not give any further notices (other than notice of such termination)
or perform any further acts under the deposit agreement except that the
depositary will continue to deliver common or preferred share certificates,
together with such dividends and distributions and the net proceeds of any
sales of rights, preferences, privileges or other property in exchange for
depositary receipts surrendered. Upon our request, the depositary shall deliver
all books, records, certificates evidencing common or preferred shares,
depositary receipts and other documents relating to the subject matter of the
depositary agreement to us.
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DESCRIPTION OF THE DEBT SECURITIES
We or PartnerRe Finance may, at the option of the issuer, elect to offer
debt securities. The following description of debt securities sets forth the
material terms and provisions of the debt securities to which any prospectus
supplement may relate. Our senior debt securities would be issued under a
senior indenture between us and The Chase Manhattan Bank, as trustee, the form
of which is filed as an exhibit to the registration statement of which this
prospectus forms a part. Our subordinated debt securities would be issued under
a subordinated indenture between us and The Chase Manhattan Bank, as trustee,
the form of which is filed as an exhibit to the registration statement of which
this prospectus forms a part. In addition, PartnerRe Finance may issue junior
subordinated debt securities to the Capital Trust in connection with the
issuance of preferred securities and common securities by the Capital Trust.
These junior subordinated debt securities would be issued under a separate
junior subordinated indenture between PartnerRe Finance, us, as guarantor of
these junior subordinated debt securities, and The Chase Manhattan Bank, as
trustee, the form of which is filed as an exhibit to the registration statement
of which this prospectus forms a part. The senior indenture, the subordinated
indenture and the junior subordinated indenture are sometimes referred to
herein collectively as the "indentures" and each individually as an
"indenture." The particular terms of the debt securities offered by any
prospectus supplement, and the extent to which the general provisions described
below may apply to the offered debt securities, will be described in the
prospectus supplement.
Because the following summaries of the material terms and provisions of the
indentures and the related debt securities are not complete, you should refer
to the forms of the indentures and the debt securities for complete information
regarding the terms and provisions of the indentures, including the definitions
of some of the terms used below, and the debt securities. Wherever we refer to
particular articles, sections or defined terms of an indenture, those articles,
sections or defined terms are incorporated herein by reference, and the
statement in connection with which such reference is made is qualified in its
entirety by such reference. Whenever we refer to particular articles, sections
or defined terms of an indenture, without specific reference to a indenture,
those articles, sections or defined terms are contained in all indentures. The
senior indenture and the subordinated indenture are substantially identical,
except for certain covenants of ours and provisions relating to subordination.
The subordinated indenture and the junior subordinated indenture are
substantially identical, except for certain rights and covenants and provisions
relating to the issuance of securities to the Capital Trust and for the
provisions relating to our guarantee of PartnerRe Finance's obligations under
its junior subordinated debt securities
General
The indentures do not limit the aggregate principal amount of the debt
securities which we or PartnerRe Finance may issue thereunder and provide that
we or PartnerRe Finance may issue the debt securities thereunder from time to
time in one or more series. (Section 3.1) The senior indenture and subordinated
indenture do not limit the amount of other Indebtedness or the debt securities
which we or our subsidiaries may issue. The junior subordinated indenture does
not limit the amount of other Indebtedness or the junior subordinated debt
securities that PartnerRe Finance or its subsidiaries may issue.
Unless otherwise provided in the related prospectus supplement, our senior
debt securities will be unsecured obligations of ours and will rank equally
with all of our other unsecured and unsubordinated indebtedness. The
subordinated debt securities will be unsecured obligations of ours,
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (which term includes the senior debt securities) of ours as
described below under "Subordination of the Subordinated Debt Securities" and
in the applicable prospectus supplement. The junior subordinated debt
securities will be unsecured obligations of PartnerRe Finance, subordinated in
right of payment to the prior payment in full of all of PartnerRe Finance's
Senior Indebtedness as described below under "Subordination of the Junior
Subordinated Debt Securities".
Because we are a holding company, our rights and the rights of our creditors
(including the holders of our debt securities) and shareholders to participate
in any distribution of assets of any of our subsidiaries upon that
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subsidiary's liquidation or reorganization or otherwise would be subject to the
prior claims of that subsidiary's creditors, except to the extent that we may
ourselves be a creditor with recognized claims against that subsidiary. The
rights of our creditors (including the holders of our debt securities) to
participate in the distribution of stock owned by us in certain of our
subsidiaries, including our insurance subsidiaries, may also be subject to
approval by certain insurance regulatory authorities having jurisdiction over
such subsidiaries.
In the event PartnerRe Finance's junior subordinated debt securities are
issued to the Capital Trust in connection with the issuance of preferred
securities and common securities by the Capital Trust, such junior subordinated
debt securities subsequently may be distributed pro rata to the holders of such
preferred securities and common securities in connection with the dissolution
of the Capital Trust upon the occurrence of certain events. These events will
be described in the prospectus supplement relating to such preferred securities
and common securities. Only one series of junior subordinated debt securities
will be issued by PartnerRe Finance to the Capital Trust in connection with the
issuance of preferred securities and common securities by the Capital Trust.
The prospectus supplement relating to the particular debt securities offered
thereby will describe the following terms of the offered debt securities:
. the title of such debt securities and the series in which such debt
securities will be included, which may include medium-term notes;
. the aggregate principal amount of such debt securities and any limit upon
such principal amount;
. the date or dates, or the method or methods, if any, by which such date or
dates will be determined, on which the principal of such debt securities
will be payable;
. the rate or rates at which such debt securities will bear interest, if
any, which rate may be zero in the case of certain debt securities issued
at an issue price representing a discount from the principal amount
payable at maturity, or the method by which such rate or rates will be
determined (including, if applicable, any remarketing option or similar
method), and the date or dates from which such interest, if any, will
accrue or the method by which such date or dates will be determined;
. the date or dates on which interest, if any, on such debt securities will
be payable and any regular record dates applicable to the date or dates on
which interest will be so payable;
. any right to extend or defer the interest payment period and the duration
of the extension;
. the portion of the principal amount of the debt securities that will be
payable if the maturity is accelerated, if other than the entire principal
amount;
. if other than as set forth in this prospectus, the place or places where
the principal of, any premium or interest on or any additional amounts
with respect to such debt securities will be payable, any of such debt
securities that are issued in registered form may be surrendered for
registration of transfer or exchange, and any such debt securities may be
surrendered for conversion or exchange;
. whether any of such debt securities are to be redeemable at the issuer's
option and, if so, the date or dates on which, the period or periods
within which, the price or prices at which and the other material terms
and conditions upon which such debt securities may be redeemed, in whole
or in part, at the issuer's option;
. whether the issuer will be obligated to redeem or purchase any of such
debt securities pursuant to any sinking fund or analogous provision or at
the option of any holder thereof and, if so, the date or dates on which,
the period or periods within which, the price or prices at which and the
material other terms and conditions upon which such debt securities will
be redeemed or purchased, in whole or in part, pursuant to such
obligation, and any provisions for the remarketing of such debt securities
so redeemed or purchased;
. if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which any debt securities to be issued in registered
form will be issuable and, if other than a denomination of $5,000, the
denominations in which any debt securities to be issued in bearer form
will be issuable;
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. whether the debt securities will be convertible into common shares and/or
exchangeable for other securities, whether or not issued by the issuer of
such debt securities, and, if so, the terms and conditions upon which such
debt securities will be so convertible or exchangeable;
. any index, formula or other method used to determine the amount of
payments of principal of, any premium or interest on or any additional
amounts with respect to such debt securities;
. whether such debt securities are to be issued in the form of one or more
temporary or permanent global securities and, if so, the identity of the
depositary for such global security or securities;
. whether such debt securities are senior debt securities or subordinated
debt securities and, if subordinated debt securities, the specific
subordination provisions applicable thereto;
. in the case of junior subordinated debt securities issued by PartnerRe
Finance to the Capital Trust, the terms and conditions of any obligation
or right of PartnerRe Finance or the Capital Trust to convert or exchange
such junior subordinated debt securities into or for preferred securities
of that trust;
. in the case of junior subordinated debt securities issued by PartnerRe
Finance to the Capital Trust, the form of restated trust agreement and, if
applicable, the agreement relating to our guarantee of the preferred
securities of the Capital Trust and our guarantee of the junior
subordinated debt securities;
. any deletions from, modifications of or additions to the Events of Default
or covenants of the issuer with respect to such debt securities; and
. any other material terms of such debt securities and any other deletions
from or modifications or additions to the applicable indenture in respect
of such debt securities. (Section 3.1)
The issuer will have the ability under the indentures to "reopen" a
previously issued series of the debt securities and issue additional debt
securities of that series or establish additional terms of that series. The
issuer is also permitted to issue debt securities with the same terms as
previously issued debt securities. (Section 3.1)
Unless otherwise provided in the related prospectus supplement, principal,
premium, interest and additional amounts, if any, with respect to any debt
securities will be payable at the office or agency maintained by the issuer for
such purposes (initially the corporate trust office of the trustee). In the
case of debt securities issued in registered form, interest may be paid by
check mailed to the persons entitled thereto at their addresses appearing on
the security register or by transfer to an account maintained by the payee with
a bank located in the United States. Interest on debt securities issued in
registered form will be payable on any interest payment date to the persons in
whose names the debt securities are registered at the close of business on the
regular record date with respect to such interest payment date. Interest on
such debt securities which have a redemption date after a regular record date,
and on or before the following interest payment date, will also be payable to
the persons in whose names the debt securities are so registered. All paying
agents initially designated by the issuer for the debt securities will be named
in the related prospectus supplement. The issuer may at any time designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts, except that
the issuer will be required to maintain a paying agent in each place where the
principal of, any premium or interest on or any additional amounts with respect
to the debt securities are payable. (Sections 3.7, 10.2 and 11.6)
Unless otherwise provided in the related prospectus supplement, the debt
securities may be presented for transfer (duly endorsed or accompanied by a
written instrument of transfer, if so required by the issuer or the security
registrar) or exchanged for other debt securities of the same series
(containing identical terms and provisions, in any authorized denominations,
and of a like aggregate principal amount) at the office or agency maintained by
the issuer for such purposes (initially the corporate trust office of the
trustee). Such transfer or exchange will be made without service charge, but
the issuer may require payment of a sum sufficient to cover any tax or other
governmental charge and any other expenses then payable. The issuer will not be
required to (1) issue, register the transfer of, or exchange, the debt
securities during a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption of any such debt securities and
ending at the
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close of business on the day of such mailing, (2) register the transfer of or
exchange any debt security so selected for redemption in whole or in part,
except the unredeemed portion of any debt security being redeemed in part or
(3) register the transfer of or exchange any debt security which, in accordance
with its terms, has been surrendered for repayment at the option of the holder,
except the portion, if any, of such debt security not to be so repaid. (Section
3.5) We and PartnerRe Finance have appointed the trustee as security registrar.
Any transfer agent (in addition to the security registrar) initially designated
by either issuer for any debt securities will be named in the related
prospectus supplement. The issuer may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts, except that the issuer will
be required to maintain a transfer agent in each place where the principal of,
any premium or interest on or any additional amounts with respect to the debt
securities are payable. (Section 10.2)
Unless otherwise provided in the related prospectus supplement, the debt
securities will be issued only in fully registered form without coupons in
minimum denominations of $1,000 and any integral multiple thereof. (Section
3.2) The debt securities may be represented in whole or in part by one or more
global debt securities registered in the name of a depositary or its nominee
and, if so represented, interests in such global debt security will be shown
on, and transfers thereof will be effected only through, records maintained by
the designated depositary and its participants as described below. Where the
debt securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special United States Federal income tax considerations, applicable to such
debt securities and to payment on and transfer and exchange of such debt
securities will be described in the related prospectus supplement.
The debt securities may be issued as original issue discount securities
(bearing no interest or bearing interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below
their principal amount. Special United States Federal income tax and other
considerations applicable to original issue discount securities will be
described in the related prospectus supplement.
If the purchase price of any debt securities is payable in one or more
foreign currencies or currency units or if any debt securities are denominated
in one or more foreign currencies or currency units or if the principal of, or
any premium or interest on, or any additional amounts with respect to, any debt
securities is payable in one or more foreign currencies or currency units, the
restrictions, elections, certain United States Federal income tax
considerations, specific terms and other information with respect to such debt
securities and such foreign currency or currency units will be set forth in the
related prospectus supplement. The issuer will comply with Section 14(e) under
the Exchange Act, and any other tender offer rules under the Exchange Act which
may then be applicable, in connection with any obligation of the issuer to
purchase debt securities at the option of the holders. Any such obligation
applicable to a series of debt securities will be described in the related
prospectus supplement.
Unless otherwise described in a prospectus supplement relating to any debt
securities, the indentures do not contain any provisions that would limit the
issuer's ability to incur indebtedness or that would afford holders of the debt
securities protection in the event of a sudden and significant decline in the
issuer's credit quality or a takeover, recapitalization or highly leveraged or
similar transaction involving the issuer. Accordingly, the issuer could in the
future enter into transactions that could increase the amount of indebtedness
outstanding at that time or otherwise affect its capital structure or credit
rating. You should refer to the prospectus supplement relating to a particular
series of debt securities for information regarding any deletions from,
modifications of or additions to the Events of Defaults described below or
covenants contained in the indentures, including any addition of a covenant or
other provisions providing event risk or similar protection.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common shares, preferred shares or other securities,
whether or not issued by PartnerRe or PartnerRe Finance, property or cash, or a
combination of any of the foregoing, will be set forth in the related
prospectus supplement. Such terms may include provisions for conversion or
exchange, either mandatory, at the option of the holder, or at the option
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of the issuer, in which the securities, property or cash to be received by the
holders of the debt securities would be calculated according to the factors and
at such time as described in the related prospectus supplement. Any such
conversion or exchange will comply with applicable law and the issuer's
organizational documents.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities that will be deposited with, or on
behalf of, a depositary identified in the prospectus supplement relating to
such series.
The specific terms of the depositary arrangement with respect to a series of
the debt securities will be described in the prospectus supplement relating to
such series. We and PartnerRe Finance anticipate that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a global security, the depositary for such global
security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the debt securities
represented by such global security. Such accounts will be designated by the
underwriters or agents with respect to such debt securities or by the issuer if
such debt securities are offered and sold directly by the issuer. Ownership of
beneficial interests in a global security will be limited to persons that may
hold interests through participants. Ownership of beneficial interests in such
global security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the depositary or its nominee
(with respect to interests of participants) and on the records of participants
(with respect to interests of persons other than participants). The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the debt
securities represented by such global security for all purposes under the
applicable indenture. Except as described below, owners of beneficial interests
in a global security will not be entitled to have the debt securities of the
series represented by such global security registered in their names and will
not receive or be entitled to receive physical delivery of the debt securities
of that series in definitive form.
Principal of, any premium and interest on, and any additional amounts with
respect to, the debt securities registered in the name of a depositary or its
nominee will be paid to the depositary or its nominee, as the case may be, as
the registered owner of the global security representing such debt securities.
None of the trustee, any paying agent, the security registrar or the issuer
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of
the global security for such debt securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The issuer expects that the depositary for a series of the debt securities
or its nominee, upon receipt of any payment with respect to such debt
securities, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of the global security for such debt securities as shown on the records
of such depositary or its nominee. We and PartnerRe Finance also expect that
payments by participants to owners of beneficial interests in such global
security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.
The indentures provide that if:
(1) the depositary for a series of the debt securities notifies the
issuer that it is unwilling or unable to continue as depositary or if such
depositary ceases to be eligible under the applicable indenture and a
successor depositary is not appointed by the issuer within 90 days of
written notice,
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(2) the issuer determines that the debt securities of a particular series
will no longer be represented by global securities and execute and deliver
to the trustee a company order to such effect, or
(3) an Event of Default with respect to a series of the debt securities
has occurred and is continuing, the global securities will be exchanged for
the debt securities of such series in definitive form of like tenor and of
an equal aggregate principal amount, in authorized denominations.
Such definitive debt securities will be registered in such name or names as
the depositary shall instruct the trustee. (Section 3.5) It is expected that
such instructions may be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in global
securities.
Payment of Additional Amounts
Unless otherwise provided in the related prospectus supplement, the issuer
will make all payments of principal of and premium, if any, interest and any
other amounts on, or in respect of, the debt securities of any series without
withholding or deduction at source for, or on account of, any present or future
taxes, fees, duties, assessments or governmental charges of whatever nature
imposed or levied by or on behalf of the jurisdiction in which the issuer is
organized (a "taxing jurisdiction") or any political subdivision or taxing
authority thereof or therein, unless such taxes, fees, duties, assessments or
governmental charges are required to be withheld or deducted by (x) the laws
(or any regulations or rulings promulgated thereunder) of a taxing jurisdiction
or any political subdivision or taxing authority thereof or therein or (y) an
official position regarding the application, administration, interpretation or
enforcement of any such laws, regulations or rulings (including, without
limitation, a holding by a court of competent jurisdiction or by a taxing
authority in a taxing jurisdiction or any political subdivision thereof). If a
withholding or deduction by the issuer is required by the law of the
jurisdiction in which the issuer is organized, the issuer will, subject to
certain limitations and exceptions described below or in the applicable
prospectus supplement, pay to the holder of any such debt security such
additional amounts as may be necessary so that every net payment of principal,
premium, if any, interest or any other amount made to such holder, after the
withholding or deduction, will not be less than the amount provided for in such
debt security and the applicable indenture to be then due and payable.
Notwithstanding the foregoing, we will not be required to pay any additional
amounts under the senior indenture and the subordinated indenture for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such holder
(a) was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of, or receipt of payment under, such
debt security, (b) presented such debt security for payment in the relevant
taxing jurisdiction or any political subdivision thereof, unless such debt
security could not have been presented for payment elsewhere, or (c)
presented such debt security for payment more than 30 days after the date on
which the payment in respect of such debt security became due and payable or
provided for, whichever is later, except to the extent that the holder would
have been entitled to such additional amounts if it had presented such debt
security for payment on any day within that 30-day period;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner of
such debt security to comply with any reasonable request by us addressed to
the holder within 90 days of such request (a) to provide information
concerning the nationality, residence or identity of the holder or such
beneficial owner or (b) to make any declaration or other similar claim or
satisfy any information or reporting requirement, which is required or
imposed by
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statute, treaty, regulation or administrative practice of the relevant
taxing jurisdiction or any political subdivision thereof as a precondition
to exemption from all or part of such tax, assessment or other governmental
charge; or
(4) any combination of items (1), (2) and (3).
In addition, we will not pay additional amounts with respect to any payment
of principal of, or premium, if any, interest or any other amounts on, any such
debt security to any holder who is a fiduciary or partnership or other than the
sole beneficial owner of such debt security to the extent such payment would be
required by the laws of the relevant taxing jurisdiction (or any political
subdivision or relevant taxing authority thereof or therein) to be included in
the income for tax purposes of a beneficiary or partner or settlor with respect
to such fiduciary or a member of such partnership or a beneficial owner who
would not have been entitled to such additional amounts had it been the holder
of the debt security. (Section 10.4 of the senior indenture and the
subordinated indenture)
Consolidation, Amalgamation, Merger and Sale of Assets
Each indenture provides that the issuer may not (1) consolidate or
amalgamate with or merge into any Person or convey, transfer or lease the
properties and assets of the issuer as an entirety or substantially as an
entirety to any Person, or (2) permit any Person to consolidate or amalgamate
with or merge into the issuer, or convey, transfer or lease such Person's
properties and assets as an entirety or substantially as an entirety to the
issuer, unless (a) in the case of (1) above, such Person is a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia, Bermuda or any country which is, on
the date of the indenture, a member of the Organization of Economic Cooperation
and Development and such Person will expressly assume, by supplemental
indenture satisfactory in form to the trustee, the due and punctual payment of
the principal of, any premium and interest on and any additional amounts with
respect to all of the debt securities issued thereunder, and the performance of
the issuer's obligations under such indenture and the debt securities issued
thereunder, and provides for conversion or exchange rights in accordance with
the provisions of the debt securities of any series that are convertible or
exchangeable into common shares or other securities; (b) immediately after
giving effect to such transaction and treating any indebtedness which becomes
an obligation of the issuer or a Designated Subsidiary as a result of such
transaction as having been incurred by the issuer or such subsidiary at the
time of such transaction, no Event of Default, and no event which after notice
or lapse of time or both would become an Event of Default, will have happened
and be continuing; and (c) certain other conditions are met. (Section 8.1)
The junior subordinated indenture includes a like restriction on
consolidation, amalgamation and mergers involving PartnerRe, as guarantor of
PartnerRe Finance's obligations under the junior subordinated debt securities.
(Section 8.3 of the junior subordinated indenture)
Events of Default
Unless the issuer provides other or substitute Events of Default in a
prospectus supplement, the following events will constitute an Event of Default
under the applicable indenture with respect to any series of debt securities
issued thereunder (whatever the reason for such Event of Default and whether it
will be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest on any debt security of such
series, or any additional amounts payable with respect thereto, when such
interest becomes or such additional amounts become due and payable, and
continuance of such default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any debt
security of such series, or any additional amounts payable with respect
thereto, when such principal or premium becomes or such additional amounts
become due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise;
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(3) default in the performance, or breach, of any covenant or warranty of
the issuer contained in the applicable indenture for the benefit of such
series or in the debt securities of such series, and the continuance of such
default or breach for a period of 60 days after there has been given written
notice as provided in such indenture;
(4) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be secured
or evidenced, any Indebtedness of the issuer for borrowed money (other than
Indebtedness which is non-recourse to the issuer) happens and consists of
default in the payment of more than $100,000,000 in principal amount of such
Indebtedness when due (after giving effect to any applicable grace period)
or shall result in such Indebtedness in principal amount in excess of
$100,000,000 becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, and such default is not
cured or such acceleration is not rescinded or annulled within a period of
30 days after there has been given written notice as provided in the
applicable indenture;
(5) the issuer shall fail within 60 days to pay, bond or otherwise
discharge any uninsured judgment or court order for the payment of money in
excess of $100,000,000, which is not stayed on appeal or is not otherwise
being appropriately contested in good faith; and
(6) certain events relating to bankruptcy, insolvency or reorganization
of the issuer.
In the junior subordinated indenture, the Events of Default described in
clauses (3)-(6) above also include references to PartnerRe, as guarantor
thereunder. See "Certain Provisions of the Junior Subordinated Debt Securities
Issued to the Capital Trust--Events of Default."
If an Event of Default with respect to the debt securities of any series
(other than an Event of Default described in (6) of the preceding paragraph)
occurs and is continuing, either the trustee or the holders of at least 25% in
principal amount of the outstanding debt securities of such series by written
notice as provided in the applicable indenture may declare the principal amount
(or such lesser amount as may be provided for in the debt securities of such
series) of all outstanding debt securities of such series to be due and payable
immediately. At any time after a declaration of acceleration has been made, but
before a judgment or decree for payment of money has been obtained by the
trustee, and subject to applicable law and certain other provisions of the
applicable indenture, the holders of a majority in aggregate principal amount
of the debt securities of such series may, under certain circumstances, rescind
and annul such acceleration. An Event of Default described in (6) of the
preceding paragraph will cause the principal amount and accrued interest (or
such lesser amount as provided for in the debt securities of such series) to
become immediately due and payable without any declaration or other act by the
trustee or any holder. (Section 5.2)
Each indenture provides that, within 90 days after the occurrence of any
event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to the debt securities of any series (a "default"), the
trustee will transmit, in the manner set forth in such indenture, notice of
such default to the holders of the debt securities of such series unless such
default has been cured or waived; provided, however, that except in the case of
a default in the payment of principal of, or premium, if any, or interest, if
any, on, or additional amounts or any sinking fund or purchase fund installment
with respect to, any debt security of such series, the trustee may withhold
such notice if and so long as the issuer's board of directors, its executive
committee or a trust committee of directors and/or responsible officers of the
trustee in good faith determine that the withholding of such notice is in the
best interest of the holders of the debt securities of such series; and
provided, further, that in the case of any default of the character described
in (4) of the second preceding paragraph, no such notice to holders will be
given until at least 30 days after the default occurs. (Section 6.2)
If an Event of Default occurs and is continuing with respect to the debt
securities of any series, the trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of the debt securities of
such series by all appropriate judicial proceedings. (Section 5.3) Each
indenture provides that, subject to the duty of the trustee during any default
to act with the required standard of care, the trustee will be under no
obligation
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to exercise any of its rights or powers under such indenture at the request or
direction of any of the holders of the debt securities, unless such holders
shall have offered to the trustee reasonable indemnity. (Section 6.1) Subject
to such provisions for the indemnification of the trustee, and subject to
applicable law and certain other provisions of the applicable indenture, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to debt
securities of such series. (Section 5.12)
Modification and Waiver
The issuer and the trustee may modify or amend any of the indentures with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding debt securities of each series affected thereby;
provided, however, that each affected holder must consent to certain
modifications or amendments, including modifications or amendments that:
. change the stated maturity of the principal of, or any premium or
installment of interest on, or any additional amounts with respect to, any
debt security, or
. reduce the principal amount of, or the rate (or modify the calculation of
such principal amount or rate) of interest on, or any additional amounts
with respect to, or any premium payable upon the redemption of, any debt
security.
In addition, no supplemental indenture may directly or indirectly modify or
eliminate the subordination provisions of the subordinated indenture in any
manner which might terminate or impair the subordination of the subordinated
debt securities to Senior Indebtedness without the prior written consent of the
holders of the Senior Indebtedness. (Section 9.7 of the subordinated indenture)
The issuer and the trustee may modify or amend any of the indentures and
debt securities of any series without the consent of any holder in order to,
among other things:
. provide for the issuer's successor pursuant to a
consolidation,amalgamation, merger or sale of assets;
. provide for a successor trustee with respect to debt securities of all or
any series;
. cure any ambiguity or correct or supplement any provision in any indenture
which may be defective or inconsistent with any other provision, or to
make any other provisions with respect to matters or questions arising
under any indenture which will not adversely affect the interests of the
holders of debt securities of any series; or
. make any other change that does not materially adversely affect the
interests of the holders of any debt securities then outstanding under the
applicable indenture. (Section 9.1)
The holders of at least a majority in aggregate principal amount of debt
securities of any series may, on behalf of the holders of all debt securities
of that series, waive compliance by the issuer with certain restrictive
provisions of the applicable indenture. (Section 10.6) The holders of not less
than a majority in aggregate principal amount of the outstanding debt
securities of any series may, on behalf of the holders of all debt securities
of that series, waive any past default and its consequences under the
applicable indenture with respect to debt securities of that series, except a
default (1) in the payment of principal of, any premium or interest on or any
additional amounts with respect to debt securities of that series or (2) in
respect of a covenant or provision of the applicable indenture that cannot be
modified or amended without the consent of the holder of each debt security of
any series. (Section 5.13)
Under each indenture, the issuer is required to furnish the trustee annually
a statement as to its performance of certain of its obligations under that
indenture and as to any default in such performance. The issuer is also
required to deliver to the trustee, within five days after occurrence thereof,
written notice of any Event of Default or any event which after notice or lapse
of time or both would constitute an Event of Default. (Section 10.7)
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Discharge, Defeasance and Covenant Defeasance
The issuer may discharge certain obligations to holders of any series of
debt securities that have not already been delivered to the trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
depositing with the trustee, in trust, funds in U.S. dollars or in the Foreign
Currency in which such debt securities are payable in an amount sufficient to
pay the entire indebtedness on such debt securities with respect to principal
and any premium, interest and additional amounts to the date of such deposit
(if such debt securities have become due and payable) or to the maturity
thereof, as the case may be. (Section 4.1)
Each indenture provides that, unless the provisions of Section 4.2 thereof
are made inapplicable to debt securities of or within any series pursuant to
Section 3.1 thereof, the issuer may elect either (1) to defease and be
discharged from any and all obligations with respect to such debt securities
(except for, among other things, the obligation of the issuer to pay additional
amounts, if any, upon the occurrence of certain events of taxation, assessment
or governmental charge with respect to payments on such debt securities and
other obligations to register the transfer or exchange of such debt securities,
to replace temporary or mutilated, destroyed, lost or stolen debt securities,
to maintain an office or agency with respect to such debt securities and to
hold moneys for payment in trust) ("defeasance") or (2) to be released from its
obligations with respect to such debt securities under certain covenants as
described in the related prospectus supplement, and any omission to comply with
such obligations will not constitute a default or an Event of Default with
respect to such debt securities ("covenant defeasance"). Defeasance or covenant
defeasance, as the case may be, will be conditioned upon the irrevocable
deposit by the issuer with the Trustee, in trust, of an amount in U.S. dollars
or in the Foreign Currency in which such debt securities are payable at stated
maturity, or Government Obligations (as defined below), or both, applicable to
such debt securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of, any premium and interest on, and any
additional amounts with respect to, such debt securities on the scheduled due
dates. (Section 4.2)
Such a trust may only be established if, among other things:
(1) the applicable defeasance or covenant defeasance does not result in a
breach or violation of, or constitute a default under or any material
agreement or instrument to which the issuer is a party or by which it is
bound,
(2) no Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the debt securities to
be defeased will have occurred and be continuing on the date of
establishment of such a trust after giving effect to such establishment and,
with respect to defeasance only, no bankruptcy proceeding will have occurred
and be continuing at any time during the period ending on the 91st day after
such date,
(3) with respect to registered securities and any bearer securities for
which the place of payment is within the United States, the issuer has
delivered to the trustee an opinion of counsel (as specified in each
indenture) to the effect that the holders of such debt securities will not
recognize income, gain or loss for United States Federal income tax purposes
as a result of such defeasance or covenant defeasance and will be subject to
United States Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the issuer, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable United States Federal
income tax law occurring after the date of the applicable indenture, and
(4) with respect to defeasance, the issuer has delivered to the trustee
an officers' certificate as to solvency and the absence of intent of
preferring holders over other creditors. (Section 4.2)
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the euro, issued by the government of one or
more countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 1.1)
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"Government Obligations" means debt securities which are (1) direct
obligations of the United States of America or the government or the
governments which issued the Foreign Currency in which the debt securities of a
particular series are payable, for the payment of which its full faith and
credit is pledged or (2) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
debt securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case
of clauses (1) and (2), are not callable or redeemable at the option of the
issuer or issuers thereof, and will also include a depository receipt issued by
a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or any other
amount with respect to any such Government Obligation held by such custodian
for the account of the holder of such depository receipt, provided that (except
as required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian with respect to the Government Obligation or the
specific payment of interest on or principal of or any other amount with
respect to the Government Obligation evidenced by such depository receipt.
(Section 1.1)
If after the issuer has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to debt securities of any
series, (1) the holder of a debt security of that series is entitled to, and
does, elect pursuant to Section 3.1 of the applicable indenture or the terms of
such debt security to receive payment in a currency other than that in which
such deposit has been made in respect of such debt security, or (2) a
Conversion Event (as defined below) occurs in respect of the Foreign Currency
in which such deposit has been made, the indebtedness represented by such debt
security will be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of, any premium and interest on,
and any additional amounts with respect to, such debt security as such debt
security becomes due out of the proceeds yielded by converting the amount or
other properties so deposited in respect of such debt security into the
currency in which such debt security becomes payable as a result of such
election or such Conversion Event based on (a) in the case of payments made
pursuant to clause (1) above, the applicable market exchange rate for such
currency in effect on the second business day prior to such payment date, or
(b) with respect to a Conversion Event, the applicable market exchange rate for
such Foreign Currency in effect (as nearly as feasible) at the time of the
Conversion Event. (Section 4.2)
"Conversion Event" means the cessation of use of (1) a Foreign Currency both
by the government of the country or countries which issued such Foreign
Currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community or (2) any
currency unit or composite currency for the purposes for which it was
established. (Section 1.1)
In the event the issuer effects covenant defeasance with respect to any of
its debt securities and such debt securities are declared due and payable
because of the occurrence of any Event of Default other than an Event of
Default with respect to any covenant as to which there has been covenant
defeasance, the amount in such Foreign Currency in which such debt securities
are payable, and Government Obligations on deposit with the trustee, will be
sufficient to pay amounts due on such debt securities at the time of the stated
maturity but may not be sufficient to pay amounts due on such debt securities
at the time of the acceleration resulting from such Event of Default. However,
the issuer would both remain liable to make payment of such amounts due at the
time of acceleration.
Subordination of Our Subordinated Debt Securities
Our subordinated debt securities will, to the extent set forth in the
subordinated indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. (Section 16.1 of the subordinated
indenture). In the event of:
(1) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to us or to our creditors, as such, or to our
assets, or
26
(2) any voluntary or involuntary liquidation, dissolution or other
winding up of ours, whether or not involving insolvency or bankruptcy, or
(3) any assignment for the benefit of creditors or any other marshalling
of assets and liabilities of ours,
then and in any such event the holders of Senior Indebtedness will be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness, or provision will be made for such payment in cash,
before the holders of the subordinated debt securities are entitled to receive
or retain any payment on account of principal of, or any premium or interest
on, or any additional amounts with respect to, subordinated debt securities,
and to that end the holders of Senior Indebtedness will be entitled to receive,
for application to the payment thereof, any payment or distribution of any kind
or character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of ours being subordinated to the payment of
subordinated debt securities, which may be payable or deliverable in respect of
subordinated debt securities in any such case, proceeding, dissolution,
liquidation or other winding up event. (Section 16.3 of the subordinated
indenture)
By reason of such subordination, in the event of our liquidation or
insolvency, holders of Senior Indebtedness and holders of other obligations of
ours that are not subordinated to Senior Indebtedness may recover more,
ratably, than the holders of subordinated debt securities.
Subject to the payment in full of all Senior Indebtedness, the rights of the
holders of subordinated debt securities will be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of ours applicable to such Senior Indebtedness until the
principal of, any premium and interest on, and any additional amounts with
respect to, subordinated debt securities have been paid in full. (Section 16.4
of the subordinated indenture)
No payment of principal (including redemption and sinking fund payments) of
or any premium or interest on or any additional amounts with respect to the
subordinated debt securities, or payments to acquire such securities (other
than pursuant to their conversion), may be made (1) if any Senior Indebtedness
of ours is not paid when due and any applicable grace period with respect to
such default has ended and such default has not been cured or waived or ceased
to exist, or (2) if the maturity of any Senior Indebtedness of ours has been
accelerated because of a default. (Section 16.2 of the subordinated indenture)
The subordinated indenture does not limit or prohibit us from incurring
additional Senior Indebtedness, which may include Indebtedness that is senior
to subordinated debt securities, but subordinate to our other obligations. The
senior debt securities will constitute Senior Indebtedness under the
subordinated indenture.
For purposes of this section, the term "Senior Indebtedness" means all
Indebtedness of ours outstanding at any time, except:
(1) the subordinated debt securities,
(2) Indebtedness as to which, by the terms of the instrument creating or
evidencing the same, it is provided that such Indebtedness is subordinated
to or ranks equally with the subordinated debt securities or any other
Indebtedness ranking pari passu with the subordinated debt securities,
(3) Indebtedness of ours to an Affiliate of ours,
(4) interest accruing after the filing of a petition initiating any
bankruptcy, insolvency or other similar proceeding unless such interest is
an allowed claim enforceable against us in a proceeding under federal or
state bankruptcy laws,
(5) trade accounts payable,
(6) liability for income, franchise, real estate or other taxes, and
27
(7) any Indebtedness, including all other debt securities and guarantees
in respect of those debt securities, initially issued to (x) the Capital
Trust or (y) any trust, partnership or other entity affiliated with us which
is a financing vehicle of ours or any Affiliate of ours in connection with
an issuance by such entity of preferred securities or other securities which
are similar to the preferred securities described under "Description of the
Trust Preferred Securities" below.
Such Senior Indebtedness will continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
(Sections 1.1 and 16.8 of the subordinated indenture)
The subordinated indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of subordinated debt
securities, may be changed prior to such issuance. Any such change would be
described in the related prospectus supplement.
Subordination of the Junior Subordinated Debt Securities
The junior subordinated debt securities issued by PartnerRe Finance will, to
the extent set forth in the junior subordinated indenture, be subordinate in
right of payment to the prior payment in full of all Senior Indebtedness of
PartnerRe Finance. (Section 16.1 of the junior subordinated indenture). In the
event of:
(1) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to PartnerRe Finance or to its creditors, as
such, or to its assets, or
(2) any voluntary or involuntary liquidation, dissolution or other
winding up of PartnerRe Finance, whether or not involving insolvency or
bankruptcy, or
(3) any assignment for the benefit of creditors or any other marshalling
of assets and liabilities of PartnerRe Finance,
then and in any such event the holders of Senior Indebtedness of PartnerRe
Finance will be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Senior Indebtedness of PartnerRe Finance, or
provision will be made for such payment in cash, before the holders of the
junior subordinated debt securities are entitled to receive or retain any
payment on account of principal of, or any premium or interest on, or any
additional amounts with respect to, junior subordinated debt securities, and to
that end the holders of such Senior Indebtedness will be entitled to receive,
for application to the payment thereof, any payment or distribution of any kind
or character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of PartnerRe Finance being subordinated to
the payment of junior subordinated debt securities, which may be payable or
deliverable in respect of junior subordinated debt securities in any such case,
proceeding, dissolution, liquidation or other winding up event. (Section 16.3
of the junior subordinated indenture)
By reason of such subordination, in the event of the liquidation or
insolvency of PartnerRe Finance, holders of Senior Indebtedness of PartnerRe
Finance and holders of other obligations of PartnerRe Finance that are not
subordinated to such Senior Indebtedness may recover more, ratably, than the
holders of junior subordinated debt securities.
Subject to the payment in full of all Senior Indebtedness of PartnerRe
Finance, the rights of the holders of junior subordinated debt securities will
be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of PartnerRe
Finance applicable to such Senior Indebtedness until the principal of, any
premium and interest on, and any additional amounts with respect to, junior
subordinated debt securities have been paid in full. (Section 16.4 of the
junior subordinated indenture)
No payment of principal (including redemption and sinking fund payments) of
or any premium or interest on or any additional amounts with respect to the
junior subordinated debt securities, or payments to acquire such
28
securities (other than pursuant to their conversion), may be made (1) if any
Senior Indebtedness of PartnerRe Finance is not paid when due and any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (2) if the maturity of any
Senior Indebtedness of PartnerRe Finance has been accelerated because of a
default. (Section 16.2 of the junior subordinated indenture)
The junior subordinated indenture does not limit or prohibit PartnerRe
Finance from incurring additional Senior Indebtedness, which may include
Indebtedness that is senior to the junior subordinated debt securities, but
subordinate to other obligations of PartnerRe Finance.
For purposes of this section, the term "Senior Indebtedness" means all
Indebtedness of PartnerRe Finance outstanding at any time, except:
(1) the junior subordinated debt securities,
(2) Indebtedness as to which, by the terms of the instrument creating or
evidencing the same, it is provided that such Indebtedness is subordinated
to or ranks equally with the junior subordinated debt securities or any
other Indebtedness ranking pari passu with the junior subordinated debt
securities,
(3) Indebtedness of PartnerRe Finance to an Affiliate of PartnerRe
Finance,
(4) interest accruing after the filing of a petition initiating any
bankruptcy, insolvency or other similar proceeding unless such interest is
an allowed claim enforceable against PartnerRe Finance in a proceeding under
federal or state bankruptcy laws,
(5) trade accounts payable,
(6) liability for income, franchise, real estate or other taxes, and
(7) any Indebtedness, including all other debt securities and guarantees
in respect of those debt securities, initially issued to (x) the Capital
Trust or (y) any trust, partnership or other entity affiliated with
PartnerRe which is a financing vehicle of PartnerRe or any Affiliate of
PartnerRe in connection with an issuance by such entity of preferred
securities or other securities which are similar to the preferred securities
described under "Description of the Trust Preferred Securities" below.
Such Senior Indebtedness will continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
(Sections 1.1 and 16.8 of the junior subordinated indenture)
The junior subordinated indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of junior
subordinated debt securities, may be changed prior to such issuance. Any such
change would be described in the related prospectus supplement.
New York Law to Govern
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements
made or instruments entered into and, in each case, performed in that state.
(Section 1.13)
Information Concerning the Trustee
Either PartnerRe or PartnerRe Finance may from time to time borrow from,
maintain deposit accounts with and conduct other banking transactions with The
Chase Manhattan Bank and its affiliates in the ordinary course of business.
Under each indenture, The Chase Manhattan Bank is required to transmit
annual reports to all holders regarding its eligibility and qualifications as
trustee under the applicable indenture and related matters. (Section 7.3)
29
CERTAIN PROVISIONS OF THE JUNIOR SUBORDINATED DEBT SECURITIES
ISSUED TO THE CAPITAL TRUST
Option to Extend Interest Payment Date
Unless provided otherwise in the related prospectus supplement, PartnerRe
Finance will have the right at any time and from time to time during the term
of any series of junior subordinated debt securities issued to the Capital
Trust to defer payment of interest for such number of consecutive interest
payment periods as may be specified in the related prospectus supplement
(referred to as an "extension period"), subject to the terms, conditions and
covenants, if any, specified in such prospectus supplement and herein, provided
that such extension period may not extend beyond the stated maturity of such
series of junior subordinated debt securities.
Option to Extend Maturity Date
Unless provided otherwise in the related prospectus supplement, PartnerRe
Finance will have the right to (a) change the stated maturity of the principal
of the junior subordinated debt securities of any series issued to the Capital
Trust upon the liquidation of the Capital Trust and the exchange of the junior
subordinated debt securities for the preferred securities of the Capital Trust
or (b) extend the stated maturity of the principal of the junior subordinated
debt securities of any series, provided that, at the time such election is made
and at the time such election commences:
(1) PartnerRe Finance is not in bankruptcy, otherwise insolvent or in
liquidation,
(2) no event of default on the junior subordinated debt securities has
occurred and is continuing and no deferred interest payments are accruing,
(3) the Capital Trust is not in arrears on payments of distributions on
its preferred securities and no deferred distributions have accumulated,
(4) the junior subordinated debt securities of such series are rated
investment grade by Standard & Poor's Ratings Services, Moody's Investors
Service, Inc. or another nationally recognized statistical rating
organization, and
(5) the extended stated maturity is no later than the 49th anniversary of
the initial issuance of the preferred securities of the Capital Trust.
If PartnerRe Finance exercises its right to liquidate the Capital Trust and
exchange the junior subordinated debt securities for the preferred securities
of the Capital Trust as described above, any changed stated maturity of the
principal of the junior subordinated debt securities shall be no earlier than
the date that is five years after the initial issue date of the preferred
securities and no later than the date 30 years (plus an extended term of up to
an additional 19 years if the conditions described above are satisfied) after
the initial issue date of the preferred securities of the Capital Trust.
(Section 3.14 of the junior subordinated indenture)
Redemption
Except as otherwise provided in the related prospectus supplement, in the
case of any series of junior subordinated debt securities issued to the Capital
Trust, if an Investment Company Event or a Tax Event (each, a "Special Event")
shall occur and be continuing, PartnerRe Finance may, at its option, redeem
such series of junior subordinated debt securities, in whole but not in part,
at any time within 90 days of the occurrence of the Special Event, at a
redemption price equal to 100% of the principal amount of such junior
subordinated debt securities then outstanding plus accrued and unpaid interest
to the date fixed for redemption. (Section 11.8 of the junior subordinated
indenture)
For purposes of the junior subordinated indenture, "Investment Company
Event" means, in respect of the Capital Trust, the receipt by the Capital Trust
of an opinion of counsel experienced in such matters to the effect
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that, as a result of the occurrence of a change in law or regulation or a
change in the interpretation or application of law or regulation by any
legislative body, court or governmental agency or regulatory authority, there
is more than an insubstantial risk that the Capital Trust is or will be
considered an investment company, or a company controlled by an investment
company, that is required to be registered under the Investment Company Act,
which change becomes effective on or after the date of original issuance of the
preferred securities of the Capital Trust. (Section 1.1 of the junior
subordinated indenture)
"Tax Event" means, in respect of the Capital Trust, the receipt by the
Capital Trust or PartnerRe Finance of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulation
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations (including any change in interpretation or application of law or
regulation by any applicable taxing authority), which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the preferred securities of the Capital Trust, there is more
than an insubstantial risk that (i) the Capital Trust is or will be subject to
United States Federal income tax with respect to income received or accrued on
the corresponding series of junior subordinated debt securities, (ii) interest
payable by PartnerRe Finance on such junior subordinated debt securities has
not been or will not be classified as interest, in whole or in part, for United
States Federal income tax purposes or (iii) the Capital Trust is or will be
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. (Section 1.1 of the junior subordinated indenture)
Payment of Additional Amounts
If junior subordinated debt securities issued to the Capital Trust in
connection with the issuance of preferred securities and common securities by
the Capital Trust provide for the payment by PartnerRe Finance of certain
taxes, assessments or other governmental charges imposed on the holder of any
such debt security, PartnerRe Finance will pay to the holder of any such debt
security such additional amounts as provided in the junior subordinated
indenture. (Section 10.4 of the junior subordinated indenture)
Certain Covenants
PartnerRe and PartnerRe Finance will covenant, as to each series of its
junior subordinated debt securities issued to the Capital Trust in connection
with the issuance of preferred securities and common securities by the Capital
Trust, that if:
(1) there shall have occurred any event of which PartnerRe Finance has
actual knowledge that (A) with the giving of notice or lapse of time or
both, would constitute an Event of Default under the junior subordinated
indenture and (B) in respect of which PartnerRe Finance shall not have taken
reasonable steps to cure,
(2) PartnerRe shall be in default with respect to its payment of
obligations under the preferred securities guarantee relating to such
preferred securities, or
(3) PartnerRe Finance shall have given notice of its election to begin an
Extension Period as provided in the junior subordinated indenture with
respect to the junior subordinated debt securities of such series and shall
not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing,
PartnerRe will not, and will not permit any of its Subsidiaries to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its outstanding capital stock or
(ii) make any payment of principal, or interest or premium, if any, on or
repay, repurchase or redeem any of its debt securities that rank junior in
interest to the junior subordinated debt securities of such series or make any
guarantee payments with respect to any guarantee by it of the debt securities
of any of its Subsidiaries if such guarantee ranks junior in interest to the
junior subordinated debt securities of such series, except in each case for the
transactions described in the immediately following sentence. Notwithstanding
the preceding sentence and
31
regardless of whether any event described in clauses (1)-(3) above shall have
occurred or be continuing, PartnerRe shall not be restricted from making or
effecting the following dividends, distributions, redemptions, purchases,
declarations, payments, exchanges and conversions:
. dividends or distributions in the common shares or options or other rights
to acquire the common shares of PartnerRe;
. redemptions or purchases of any rights outstanding under a shareholder
rights plan of PartnerRe, or the declaration of a dividend of such rights
or the issuance of shares under such plan in the future;
. payments under any preferred securities guarantee of PartnerRe;
. purchases of common shares related to the issuance of common shares under
any of PartnerRe's benefit plans for its directors, officers or employees;
. the purchase of fractional shares resulting from a reclassification of the
capital stock of PartnerRe;
. the exchange or conversion of any class or series of the capital stock of
PartnerRe (or any of its subsidiary's) for another class or series of the
capital stock of PartnerRe (or any of its subsidiary's) or of any class or
series of its (or any of its subsidiary's) indebtedness pursuant to the
terms of the capital stock or indebtedness as originally issued; and
. the purchase of fractional interests in shares of the capital of PartnerRe
(or any of its subsidiary's) stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged. (Section 10.9 of the junior subordinated indenture)
In the event the junior subordinated debt securities are issued by PartnerRe
Finance to the Capital Trust in connection with the issuance of preferred
securities and common securities of the Capital Trust, for so long as such
series of junior subordinated debt securities remain outstanding, PartnerRe
Finance will also covenant:
(1) to maintain directly or indirectly 100% ownership of the common
securities of the Capital Trust; provided, however, that any permitted
successor of PartnerRe Finance under the junior subordinated indenture may
succeed to its ownership of such common securities,
(2) not to voluntarily dissolve, wind-up or liquidate such trust, except
in connection with the distribution of its junior subordinated debt
securities to the holders of preferred securities and common securities in
liquidation of the Capital Trust, the redemption of all of the preferred
securities and common securities of the Capital Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the restated trust
agreement of the Capital Trust, and
(3) to cause the Capital Trust to remain classified as a grantor trust
for United States Federal income tax purposes. (Section 10.12 of the junior
subordinated indenture)
Events of Default
Unless PartnerRe Finance provides other or substitute Events of Default in a
prospectus supplement, the following events will constitute an Event of Default
under the junior subordinated indenture with respect to any junior subordinated
debt securities issued there under (whatever the reason for such Event of
Default and whether it will be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest on any junior subordinated
debt securities, or any additional amounts payable with respect thereto,
when such interest becomes or such additional amounts become due and
payable, and continuance of such default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
junior subordinated debt securities, or any additional amounts payable with
respect thereto, when such principal or premium becomes or such additional
amounts become due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise;
32
(3) default in the performance, or breach, of any covenant or warranty of
PartnerRe Finance or PartnerRe contained in the junior subordinated
indenture, and the continuance of such default or breach for a period of 60
days after there has been given written notice as provided in such indenture;
(4) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be secured
or evidenced, any Indebtedness of PartnerRe Finance or PartnerRe for
borrowed money (other than Indebtedness which is non-recourse to PartnerRe
Finance or PartnerRe, as the case may be) happens and consists of default in
the payment of more than $100,000,000 in principal amount of such
Indebtedness when due (after giving effect to any applicable grace period)
or shall result in such Indebtedness in principal amount in excess of
$100,000,000 becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, and such default is not
cured or such acceleration is not rescinded or annulled within a period of
30 days after there has been given written notice as provided in the junior
subordinated indenture;
(5) PartnerRe Finance or PartnerRe shall fail within 60 days to pay, bond
or otherwise discharge any uninsured judgment or court order for the payment
of money in excess of $100,000,000, which is not stayed on appeal or is not
otherwise being appropriately contested in good faith; and
(6) certain events relating to bankruptcy, insolvency or reorganization
of PartnerRe Finance or PartnerRe.
If an Event of Default with respect to a series of junior subordinated debt
securities issued to the Capital Trust has occurred and is continuing and such
event is attributable to a default in the payment of interest or principal on
the related junior subordinated debt securities on the date such interest or
principal is otherwise payable, a holder of preferred securities of the Capital
Trust may institute a legal proceeding directly against PartnerRe Finance
and/or against PartnerRe, as guarantor, which is referred to in this prospectus
as a "Direct Action," for enforcement of payment to such holder of the
principal of or interest on such related junior subordinated debt securities
having a principal amount equal to the aggregate liquidation amount of the
related preferred securities of such holder. PartnerRe Finance and PartnerRe
may not amend the applicable junior subordinated indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the preferred securities of such trust. If the right to
bring a Direct Action is removed, the Capital Trust may become subject to the
reporting obligations under the Exchange Act. PartnerRe Finance will have the
right under the junior subordinated indenture to set-off any payment made to
such holder of preferred securities by PartnerRe Finance, in connection with a
Direct Action. (Section 3.12 of the junior subordinated indenture) The holders
of preferred securities will not be able to exercise directly any other remedy
available to the holders of the related junior subordinated debt securities.
The holders of the preferred securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the junior subordinated debt securities unless
there shall have been an event of default under the applicable restated trust
agreement. See "Description of the Trust Preferred Securities--Events of
Default; Notice." (Section 5.8 of the junior subordinated indenture)
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES GUARANTEE
Concurrently with any issuance by PartnerRe Finance of its junior
subordinated debt securities, we will execute and deliver a junior subordinated
debt securities guarantee for the benefit of the holders from time to time of
such junior subordinated debt securities. The Chase Manhattan Bank will act as
indenture trustee ("Guarantee Trustee") under the junior subordinated debt
securities guarantee for the purposes of compliance with the Trust Indenture
Act, and the junior subordinated debt securities guarantee will be qualified as
an indenture under the Trust Indenture Act.
The following summary sets forth the material terms and provisions of the
junior subordinated debt securities guarantee. Because the following summary of
certain provisions of the junior subordinated debt
33
securities guarantee is not complete, you should refer to the form of junior
subordinated debt securities guarantee and the Trust Indenture Act for more
complete information regarding the provisions of the junior subordinated debt
securities guarantee, including the definitions of some of the terms used
below. The form of the junior subordinated debt securities guarantee has been
filed as an exhibit to the registration statement of which this prospectus
forms a part and is incorporated by reference in this summary. Whenever we
refer to particular sections or defined terms of the junior subordinated debt
securities guarantee, such sections or defined terms are incorporated herein by
reference, and the statement in connection with which such reference is made is
qualified in its entirety by such reference. The Guarantee Trustee will hold
the junior subordinated debt securities guarantee for the benefit of the
holders of the junior subordinated debt securities.
General
PartnerRe will fully and unconditionally guarantee all obligations of
PartnerRe Finance under the junior subordinated indenture and the junior
subordinated debt securities. Unless otherwise provided in a prospectus
supplement, the junior subordinated debt securities guarantee will be an
unsecured obligation of PartnerRe, subordinated in right of payment to the
prior payment in full of all PartnerRe Senior Indebtedness (which term includes
the senior debt securities and the subordinated securities).
Since PartnerRe is a holding company, its rights and the rights of its
creditors (including the holders of junior subordinated debt securities who are
creditors of PartnerRe by virtue of the junior subordinated debt securities
guarantee) and shareholders to participate in any distribution of the assets of
any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise would be subject to prior claims of the subsidiary's creditors,
except to the extent that PartnerRe may itself be a creditor with recognized
claims against the subsidiary. The right of creditors of PartnerRe (including
the holders of junior subordinated debt securities who are creditors of
PartnerRe by virtue of the junior subordinated debt securities guarantee) to
participate in the distribution of the stock owned by PartnerRe in certain of
its subsidiaries, including PartnerRe's insurance subsidiaries, may also be
subject to approval by certain insurance regulatory authorities having
jurisdiction over such subsidiaries.
PartnerRe will make all payments of principal of and premium, if any,
interest and any other amounts on, or in respect of, the junior subordinated
debt securities without withholding or deduction at source for, or on account
of, any present or future taxes, fees, duties, assessments, or governmental
charges of whatever nature imposed or levied by or on behalf of Bermuda (a
"taxing jurisdiction") or any political subdivision or taxing authority thereof
or therein, unless such taxes, fees, duties, assessments or governmental
charges are required to be withheld or deducted by (x) the laws (or any
regulations or rulings promulgated thereunder) of a taxing jurisdiction or any
political subdivision or taxing authority thereof or therein or (y) an official
position regarding the application, administration, interpretation or
enforcement of any such laws, regulations or rulings (including, without
limitation, a holding by a court of competent jurisdiction or by a taxing
authority in a taxing jurisdiction or any political subdivision thereof). If a
withholding or deduction at source is required, PartnerRe will, subject to
certain limitations and exceptions described below, pay to the holder of any
such junior subordinated debt security any such additional amounts as may be
necessary so that every net payment of principal, premium, if any, interest or
any other amount made to such holder, after the withholding or deduction, will
not be less than the amount provided for in such junior subordinated debt
security and the junior subordinated indenture to be then due and payable.
PartnerRe will not be required to pay any additional amounts for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such holder
(a) was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of, or receipt of payment under, such
junior subordinated debt security, (b) presented such junior subordinated
debt security for payment in the relevant
34
taxing jurisdiction or any political subdivision thereof, unless such junior
subordinated debt security could not have been presented for payment
elsewhere, or (c) presented such junior subordinated debt security for
payment more than 30 days after the date on which the payment in respect of
such junior subordinated debt security became due and payable or provided
for, whichever is later, except to the extent that the holder would have
been entitled to such additional amounts if it had presented such junior
subordinated debt security for payment on any day within that 30-dayperiod;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner of
such junior subordinated debt security to comply with any reasonable request
by PartnerRe Finance addressed to the holder within 90 days of such request
(a) to provide information concerning the nationality, residence or identity
of the holder or such beneficial owner or (b) to make any declaration or
other similar claim or satisfy any information or reporting requirement,
which is required or imposed by statute, treaty, regulation or
administrative practice of the relevant taxing jurisdiction or any political
subdivision thereof as a precondition to exemption from all or part of such
tax, assessment or other governmental charge; or
(4) any combination of items (1), (2) and (3).
In addition, PartnerRe will not pay additional amounts with respect to any
payment of principal of, or premium, if any, interest or any other amounts on,
any such junior subordinated debt security to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such junior subordinated
debt security to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of
a beneficiary or partner or settler with respect to such fiduciary or a member
of such partnership or a beneficial owner who would not have been entitled to
such additional amounts had it been the holder of the junior subordinated debt
security. (Section 10.4 of the junior subordinated indenture)
Waiver of Events of Default
The holders of a majority in liquidation preference of the preferred
securities issued by the Capital Trust may, by vote, waive any past event of
default of PartnerRe on any of its payment or other obligations under the
junior subordinated debt securities guarantee agreement.
Amendments
Except with respect to any changes that do not adversely affect the rights
of the holders of the junior subordinated debt securities in any material
respect (in which case no consent of such holders will be required), the terms
of the junior subordinated debt securities guarantee may only be amended with
the prior approval of the holders of at least a majority in liquidation
preference of the outstanding preferred securities issued by the Capital Trust.
DESCRIPTION OF THE WARRANTS TO PURCHASE
COMMON SHARES OR PREFERRED SHARES
The following statements with respect to the common share warrants and
preferred share warrants are summaries of, and subject to, the detailed
provisions of a share warrant agreement to be entered into by us and a share
warrant agent to be selected at the time of issue. The particular terms of any
warrants offered by any prospectus supplement, and the extent to which the
general provisions described below may apply to the offered securities, will be
described in the prospectus supplement.
35
General
The share warrants, evidenced by share warrant certificates, may be issued
under the share warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be attached to or
separate from such other offered securities. If share warrants are offered, the
related prospectus supplement will describe the designation and terms of the
share warrants, including without limitation the following:
. the offering price, if any;
. the designation and terms of the common shares or preferred shares
purchasable upon exercise of the share warrants;
. if applicable, the date on and after which the share warrants and the
related offered securities will be separately transferable;
. the number of common shares or preferred shares purchasable upon exercise
of one share warrant and the initial price at which such shares may be
purchased upon exercise;
. the date on which the right to exercise the share warrants shall commence
and the date on which such right shall expire;
. a discussion of certain United States Federal income tax considerations;
. the call provisions, if any;
. the currency, currencies or currency units in which the offering price, if
any, and exercise price are payable;
. the antidilution provisions of the share warrants; and
. any other material terms of the share warrants.
The common shares or preferred shares issuable upon exercise of the share
warrants will, when issued in accordance with the share warrant agreement, be
fully paid and non assessable.
Exercise of Stock Warrants
Stock warrants may be exercised by surrendering to the share warrant agent
the share warrant certificate with the form of election to purchase on the
reverse thereof duly completed and signed by the warrantholder, or its duly
authorized agent (such signature to be guaranteed by a bank or trust company,
by a broker or dealer which is a member of the National Association of
Securities Dealers, Inc. or by a member of a national securities exchange),
indicating the warrantholder's election to exercise all or a portion of the
share warrants evidenced by the certificate. Surrendered share warrant
certificates shall be accompanied by payment of the aggregate exercise price of
the share warrants to be exercised, as set forth in the related prospectus
supplement, in lawful money of the United States, unless otherwise provided in
the related prospectus supplement. Upon receipt thereof by the share warrant
agent, the share warrant agent will requisition from the transfer agent for the
common shares or the preferred shares, as the case may be, for issuance and
delivery to or upon the written order of the exercising warrantholder, a
certificate representing the number of common shares or preferred shares
purchased. If less than all of the share warrants evidenced by any share
warrant certificate are exercised, the share warrant agent shall deliver to the
exercising warrant holder a new share warrant certificate representing the
unexercised share warrants.
Antidilution and Other Provisions
The exercise price payable and the number of common shares or preferred
shares purchasable upon the exercise of each share warrant and the number of
share warrants outstanding will be subject to adjustment in certain events,
including the issuance of a stock dividend to holders of common shares or
preferred shares, respectively, or a combination, subdivision or
reclassification of common shares or preferred shares, respectively. In lieu of
adjusting the number of common shares or preferred shares purchasable upon
exercise of
36
each share warrant, we may elect to adjust the number of share warrants. No
adjustment in the number of shares purchasable upon exercise of the share
warrants will be required until cumulative adjustments require an adjustment of
at least 1% thereof. We may, at our option, reduce the exercise price at any
time. No fractional shares will be issued upon exercise of share warrants, but
we will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of our consolidation, merger, or sale or
conveyance of our property as an entirety or substantially as an entirety, the
holder of each outstanding share warrant shall have the right to the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of common shares or preferred shares into
which such share warrants were exercisable immediately prior thereto.
No Rights as Shareholders
Holders of share warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
our directors or any other matter, or to exercise any rights whatsoever as our
shareholders.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the debt warrants are summaries of,
and subject to, the detailed provisions of a debt warrant agreement to be
entered into by us and a debt warrant agent to be selected at the time of
issue. The particular terms of any warrants offered by any prospectus
supplement, and the extent to which the general provisions described below may
apply to the offered securities, will be described in the prospectus supplement.
General
The debt warrants, evidenced by debt warrant certificates, may be issued
under the debt warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be attached to or
separate from such other offered securities. If debt warrants are offered, the
related prospectus supplement will describe the designation and terms of the
debt warrants, including without limitation the following:
. the offering price, if any;
. the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants;
. if applicable, the date on and after which the debt warrants and the
related offered securities will be separately transferable;
. the principal amount of debt securities purchasable upon exercise of one
debt warrant and the price at which such principal amount of debt
securities may be purchased upon exercise;
. the date on which the right to exercise the debt warrants shall commence
and the date on which such right shall expire;
. a discussion of certain United States Federal income tax considerations;
. whether the warrants represented by the debt warrant certificates will be
issued in registered or bearer form;
. the currency, currencies or currency units in which the offering price, if
any, and exercise price are payable;
. the antidilution provisions of the debt warrants; and
. any other material terms of the debt warrants.
Warrantholders will not have any of the rights of holders of debt
securities, including the right to receive the payment of principal of, any
premium or interest on, or any additional amounts with respect to, the debt
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securities or to enforce any of the covenants of the debt securities or the
applicable indenture except as otherwise provided in the applicable indenture.
Exercise of Debt Warrants
Debt warrants may be exercised by surrendering the debt warrant certificate
at the office of the debt warrant agent, with the form of election to purchase
on the reverse side of the debt warrant certificate properly completed and
executed (with signature(s) guaranteed by a bank or trust company, by a broker
or dealer which is a member of the National Association of Securities Dealers,
Inc. or by a member of a national securities exchange), and by payment in full
of the exercise price, as set forth in the related prospectus supplement. Upon
the exercise of debt warrants, we will issue the debt securities in authorized
denominations in accordance with the instructions of the exercising
warrantholder. If less than all of the debt warrants evidenced by the debt
warrant certificate are exercised, a new debt warrant certificate will be
issued for the remaining number of debt warrants.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Capital Trust will be governed by the terms of the trust agreement.
Under the trust agreement of the Capital Trust, the Capital Trust may issue,
from time to time, only one series of preferred securities. The preferred
securities will have the terms set forth in the trust agreement or made a part
of the trust agreement by the Trust Indenture Act, and described in the related
prospectus supplement. These terms will mirror the terms of the junior
subordinated debt securities issued by PartnerRe Finance and purchased by the
Capital Trust using the proceeds from the sale of its preferred securities and
its common securities. The junior subordinated debt securities issued by
PartnerRe Finance to the Capital Trust will be guaranteed by PartnerRe on a
subordinated basis and are referred to as the "corresponding junior
subordinated debt securities" relating to the Capital Trust.
The following summary sets forth the material terms and provisions of the
trust agreement and the preferred securities to which any prospectus supplement
relates. Because this summary is not complete, you should refer to the form of
trust agreement and to the Trust Indenture Act for complete information
regarding the terms and provisions of that agreement and of the preferred
securities, including the definitions of some of the terms used below. The form
of trust agreement filed as an exhibit to the registration statement of which
this prospectus forms a part is incorporated by reference in this summary.
Whenever we refer to particular sections or defined terms of a trust agreement,
such sections or defined terms are incorporated herein by reference, and the
statements in connection with which such reference is made is qualified in its
entirety by such reference.
Issuance, Status and Guarantee of Preferred Securities
Under the terms of the trust agreement for the Capital Trust, the
Administrative Trustees will issue the preferred securities on behalf of the
Capital Trust. The preferred securities will represent preferred beneficial
interests in the Capital Trust and the holders of the preferred securities will
be entitled to a preference in certain circumstances as regards distributions
and amounts payable on redemption or liquidation over the common securities of
the Capital Trust, as well as other benefits under the corresponding trust
agreement. The preferred securities of the Capital Trust will rank equally, and
payments will be made on the preferred securities pro rata, with the common
securities of the Capital Trust except as described under "--Subordination of
Common Securities." The Property Trustee will hold legal title to the
corresponding junior subordinated debt securities in trust for the benefit of
the holders of the related preferred securities and common securities. The
common securities and the preferred securities of the Capital Trust are
collectively referred to as the "trust securities" of the Capital Trust.
PartnerRe will issue a guarantee agreement for the benefit of the holders of
the Capital Trust's preferred securities (the "preferred securities guarantee"
for those preferred securities). Under each preferred securities guarantee, we
will guarantee on a subordinated basis payment of distributions on the related
preferred securities
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and amounts payable on redemption or liquidation of such preferred securities,
but only to the extent that the Capital Trust has funds on hand to make such
payments. See "Description of the Trust Preferred Securities Guarantee."
Distributions
Distributions on the preferred securities will be cumulative, will
accumulate from the original issue date and will be payable on the dates as
specified in the related prospectus supplement. Distributions on each preferred
security will be payable at a rate specified in the related prospectus
supplement. The amount of distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the related prospectus supplement. Distributions to which holders
of preferred securities are entitled will accumulate additional distributions
at the rate per annum if and as specified in the related prospectus supplement.
(Section 4.1) References to "distributions" include any such additional
distributions unless otherwise stated.
If provided for in the applicable prospectus supplement, PartnerRe Finance
has the right under the junior subordinated indenture to defer the payment of
interest at any time or from time to time on any series of corresponding junior
subordinated debt securities for an Extension Period which will be specified in
the related prospectus supplement, subject to the terms, conditions and
covenants specified in this prospectus and such prospectus supplement. No
Extension Period may extend beyond the stated maturity of the corresponding
junior subordinated debt securities. See "Certain Provisions of the Junior
Subordinated Debt Securities Issued to the Capital Trust." As a consequence of
any such extension, distributions on the corresponding preferred securities
would be deferred (but would continue to accumulate additional distributions at
the rate per annum set forth in the prospectus supplement for such preferred
securities) by the Capital Trust which issued such preferred securities during
any such Extension Period. (Section 4.1)
The funds of the Capital Trust available for distribution to holders of its
preferred securities will be limited to payments under the corresponding junior
subordinated debt securities in which the Capital Trust will invest the
proceeds from the issuance and sale of its trust securities. If neither
PartnerRe Finance nor PartnerRe, as guarantor, makes interest payments on those
corresponding junior subordinated debt securities, the Property Trustee will
not have funds available to pay distributions on the related preferred
securities. The payment of distributions (if and to the extent the Capital
Trust has funds legally available for the payment of such distributions and
cash sufficient to make such payments) is guaranteed by us on a limited basis
as set forth herein under "Description of the Trust Preferred Securities
Guarantee."
Distributions on the preferred securities will be payable to the holders
thereof as they appear on the register of the Capital Trust on the relevant
record dates. Subject to any applicable laws and regulations and the provisions
of the applicable restated trust agreement, as long as the preferred securities
remain in book-entry form, the record dates will be one day prior to the
relevant distribution dates and each distribution payment will be made as
described under "Global Preferred Securities." In the event any preferred
securities are not in book-entry form, the relevant record date for such
preferred securities will be the date 15 days prior to the relevant
distribution date, as specified in the related prospectus supplement. (Section
4.1)
Redemption or Exchange
Mandatory Redemption. Upon any repayment or redemption, in whole or in part,
of any corresponding junior subordinated debt securities held by the Capital
Trust, whether at stated maturity, upon earlier redemption or otherwise, the
proceeds from such repayment or redemption shall simultaneously be applied by
the Property Trustee, upon not less than 30 nor more than 60 days notice to
holders of trust securities, to redeem, on a pro rata basis, preferred
securities and common securities having an aggregate stated liquidation amount
equal to the aggregate principal amount of the corresponding junior
subordinated debt securities so repaid or redeemed. The redemption price per
trust security will be equal to the stated liquidation amount thereof plus
accumulated and unpaid distributions thereon to the date of redemption, plus
the related amount of premium, if any, and any
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additional amounts paid by us upon the concurrent repayment or redemption of
the corresponding junior subordinated debt securities (the "redemption price").
(Section 4.2) If less than all of any series of corresponding junior
subordinated debt securities are to be repaid or redeemed on a redemption date,
then the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the related preferred securities and the common
securities. (Section 4.2)
PartnerRe Finance will have the right to redeem any series of corresponding
junior subordinated debt securities (1) at any time, in whole but not in part,
upon the occurrence of a Special Event and subject to the further conditions
described under "Certain Provisions of the Junior Subordinated Debt Securities
Issued to the Capital Trust--Redemption," or (2) as may be otherwise specified
in the applicable prospectus supplement.
Special Event Redemption or Distribution of Corresponding Junior
Subordinated Debt Securities. If a Special Event relating to the preferred
securities and common securities of the Capital Trust shall occur and be
continuing, PartnerRe Finance has the right to redeem the corresponding junior
subordinated debt securities, in whole but not in part, and thereby cause a
mandatory redemption of such preferred securities and common securities, in
whole but not in part, at the redemption price within 90 days following the
occurrence of the Special Event. At any time, PartnerRe Finance has the right
to dissolve the Capital Trust and after satisfaction of the liabilities of
creditors of the Capital Trust as provided by applicable law, cause such
corresponding junior subordinated debt securities to be distributed to the
holders of such preferred securities and common securities in liquidation of
the Capital Trust. If PartnerRe Finance does not elect to redeem the
corresponding junior subordinated debt securities upon the occurrence of a
Special Event, the applicable preferred securities will remain outstanding, and
in the event a Tax Event has occurred and is continuing, Additional Sums may be
payable on the corresponding junior subordinated debt securities. "Additional
Sums" means the additional amounts as may be necessary in order that the amount
of distributions then due and payable by the Capital Trust on the outstanding
preferred securities and common securities of the Capital Trust shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the Capital Trust has become subject as a result of a Tax
Event. (Section 1.1)
Except with respect to certain other circumstances, on and after the date on
which junior subordinated debt securities are distributed to holders of
preferred securities and common securities in connection with the dissolution
and liquidation of the Capital Trust as a result of an early termination event:
(1) the trust securities will no longer be deemed to be outstanding,
(2) certificates representing a like amount of junior subordinated debt
securities will be issued to the holders of trust securities certificates,
upon surrender of such certificates to the administrative trustees or their
agent for exchange,
(3) PartnerRe Finance will use its reasonable efforts to have the junior
subordinated debt securities listed or traded on such stock exchange,
interdealer quotation system and/or other self-regulatory organization as
the preferred securities are then listed or traded,
(4) any trust securities certificates not so surrendered for exchange
will be deemed to represent a like amount of junior subordinated debt
securities, accruing interest at the rate provided for in the junior
subordinated indenture from the last distribution date on which a
distribution was made on such trust securities certificates until such
certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to holders of
trust securities certificates with respect to such junior subordinated debt
securities), and
(5) all rights of securityholders holding trust securities will cease,
except the right of such securityholders to receive junior subordinated debt
securities upon surrender of trust securities certificates. (Section9.4(d))
An early termination event, within the meaning of this section, means (1)
certain events relating to the dissolution or bankruptcy of PartnerRe Finance
or PartnerRe, as guarantor, (2) the written direction of the
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property trustee to dissolve the Capital Trust and exchange the trust
securities for junior subordinated debt securities, (3) the redemption of the
trust securities in connection with the redemption of all junior subordinated
debt securities or (4) a court order to dissolve the Capital Trust.
There can be no assurance as to the market prices for the preferred
securities or the corresponding junior subordinated debt securities that may be
distributed in exchange for preferred securities if a dissolution and
liquidation of the Capital Trust were to occur. Accordingly, the preferred
securities that you may purchase, or the corresponding junior subordinated debt
securities that you may receive on dissolution and liquidation of the Capital
Trust, may trade at a discount to the price that you paid to purchase the
preferred securities.
Redemption Procedures
Preferred securities redeemed on each redemption date shall be redeemed at
the redemption price with the applicable proceeds from the contemporaneous
redemption of the corresponding junior subordinated debt securities.
Redemptions of the preferred securities shall be made and the redemption price
shall be payable on each redemption date only to the extent that the Capital
Trust has funds on hand available for the payment of such redemption price. See
also "--Subordination of Common Securities."
If notice of redemption shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, all rights of the holders of such preferred securities so called for
redemption will cease, except the right of the holders of such preferred
securities to receive the redemption price, but without interest, and such
preferred securities will cease to be outstanding. In the event that payment of
the redemption price in respect of preferred securities called for redemption
is improperly withheld or refused and not paid either by the Capital Trust or
by us pursuant to the preferred securities guarantee as described under
"Description of the Trust Preferred Securities Guarantee," distributions on
such preferred securities will continue to accumulate at the then applicable
rate, from the redemption date originally established by the Capital Trust for
such preferred securities to the date such redemption price is actually paid,
in which case the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
Federal securities law), we or our subsidiaries (including PartnerRe Finance)
may at any time and from time to time purchase outstanding preferred securities
by tender, in the open market or by private agreement.
Payment of the redemption price on the preferred securities shall be made to
the applicable record holders as they appear on the register for such preferred
securities on the relevant record date. Subject to any applicable laws and
regulations and the provisions of the applicable restated trust agreement, as
long as the preferred securities remain in book-entry form, the record date
shall be one day prior to the relevant redemption date. In the event that any
preferred securities are not in book-entry form, the record date for such
preferred securities shall be the date 15 days prior to the relevant redemption
date, as specified in the applicable prospectus supplement. If less than all of
the preferred securities and common securities issued by the Capital Trust are
to be redeemed on a redemption date, then the aggregate liquidation amount of
such preferred securities and common securities to be redeemed shall be
allocated pro rata to the preferred securities and the common securities based
upon the relative liquidation amounts of such classes.
Unless we each default in payment of the redemption price on the
corresponding junior subordinated debt securities, on and after the redemption
date interest will cease to accrue on such subordinated debt securities or
portions thereof (and distributions will cease to accrue on the related
preferred securities or portions thereof) called for redemption. (Section 4.2)
Subordination of Common Securities
Payment of distributions on, and the redemption price of, the Capital
Trust's preferred securities and common securities, as applicable, shall be
made pro rata based on the liquidation amount of such preferred securities and
common securities; provided, however, that if on any distribution date or
redemption date an event
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of default under the corresponding junior subordinated debt securities shall
have occurred and be continuing, no payment of any distribution on, or
redemption price of, any of the Capital Trust's common securities, and no other
payment on account of the redemption, liquidation or other acquisition of such
common securities, shall be made unless payment in full in cash of all
accumulated and unpaid distributions on all of the Capital Trust's outstanding
preferred securities for all distribution periods terminating on or prior
thereto, or in the case of payment of the redemption price the full amount of
such redemption price on all of the Capital Trust's outstanding preferred
securities then called for redemption, shall have been made or provided for,
and all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all distributions on, or redemption
price of, the Capital Trust's preferred securities then due and payable.
In the case of any Event of Default under the restated trust agreement
resulting from an event of default under the corresponding junior subordinated
debt securities, the holder of the Capital Trust's common securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the applicable restated trust agreement until the effect of all
such Events of Default with respect to such preferred securities have been
cured, waived or otherwise eliminated. Until any such Events of Default under
the applicable restated trust agreement with respect to the preferred
securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the holders of such preferred securities
and not on behalf of the holder of the Capital Trust's common securities, and
only the holders of such preferred securities will have the right to direct the
Property Trustee to act on their behalf. (Section 4.3)
Liquidation Distribution Upon Dissolution of the Capital Trust
Pursuant to the restated trust agreement, the Capital Trust shall
automatically dissolve upon expiration of its term and shall dissolve on the
first to occur of:
(1) certain events of the bankruptcy, dissolution or liquidation of
PartnerRe or PartnerRe Finance;
(2) the distribution to the holders of its trust securities of
corresponding junior subordinated debt securities having an aggregate
principal amount equal to the aggregate stated liquidation amount of the
trust securities, if PartnerRe Finance, as Depositor, has given written
direction to the Property Trustee to dissolve the Capital Trust (which
direction is optional and wholly within the discretion of Partner ReFinance,
as Depositor);
(3) the redemption of all of the Capital Trust's trust securities in
connection with the redemption of all the junior subordinated debt
securities; or
(4) the entry of an order for the dissolution of the Capital Trust by a
court of competent jurisdiction. (Section 9.2)
If an early dissolution occurs as described in clause (1), (2) or (4) above
or upon the date designated for automatic dissolution of the Capital Trust, the
Capital Trust shall be liquidated by the Capital Trustees as expeditiously as
the Capital Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Capital Trust as provided by
applicable law, to the holders of such trust securities corresponding junior
subordinated debt securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of the trust securities. However, if such
distribution is determined by the Property Trustee not to be practical, such
holders will be entitled to receive out of the assets of the Capital Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of the Capital Trust as provided by applicable law, an amount equal
to, in the case of holders of preferred securities, the aggregate of the
liquidation amount plus accumulated and unpaid distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Capital Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Capital Trust on its
preferred securities shall be paid on a pro rata basis. Holders of the Capital
Trust's common securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of its preferred securities, except
that if an event of default under the corresponding junior subordinated debt
securities has occurred and is continuing, the preferred securities shall have
a priority over the common securities. (Section 9.4)
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Events of Default; Notice
The occurrence of an event of default in respect of the corresponding junior
subordinated debt securities (see "Description of the Debt Securities--Events
of Default") shall constitute a "Debenture Event of Default" under each
restated trust agreement with respect to the applicable preferred securities.
Within five Business Days after the occurrence of any Debenture Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Debenture Event of Default to the holders of the
Capital Trust's preferred securities, the Administrative Trustees and to
PartnerRe Finance, as Depositor, unless such Debenture Event of Default shall
have been cured or waived. PartnerRe Finance, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under each restated trust
agreement. (Sections 8.15 and 8.16)
If a Debenture Event of Default has occurred and is continuing, the
preferred securities shall have a preference over the common securities upon
dissolution of the Capital Trust as described above. See "--Liquidation
Distribution Upon Dissolution of Capital Trust." The existence of a Debenture
Event of Default under the restated trust agreement does not entitle the
holders of preferred securities to accelerate the maturity thereof.
Removal of Capital Trustees
Unless a Debenture Event of Default shall have occurred and be continuing,
any Capital Trustee may be removed at any time by the holder of the common
securities. If a Debenture Event of Default under the corresponding junior
subordinated debt securities has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of
a majority in liquidation amount of the outstanding preferred securities. In no
event will the holders of the preferred securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the holder of the common securities. No resignation or
removal of a Capital Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the applicable restated trust agreement.
(Section 8.10)
Co-Trustees and Separate Property Trustee
Unless a Debenture Event of Default shall have occurred and be continuing,
at any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the property of
the Capital Trust may at the time be located, the holder of the common
securities and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the property of the Capital Trust, or to act as separate
trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of the applicable restated trust
agreement. In case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone shall have power to make such appointment. (Section
8.9)
Mergers, Consolidations, Amalgamations or Replacements of the Capital Trust
The Capital Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity, except
as described below or as described in "Liquidation Distribution Upon
Dissolution of the Capital Trust." The Capital Trust may, at the request of
PartnerRe Finance, with the consent of only the Administrative Trustees and
without the consent of the holders of the preferred securities, merge with or
into, convert into, consolidate, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any state, provided, that:
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(1) such successor entity either (a) expressly assumes all of the
obligations of the Capital Trust with respect to the preferred securities or
(b) substitutes for the preferred securities other securities having
substantially the same terms as the preferred securities so long as such
successor securities rank the same as the preferred securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise,
(2) PartnerRe Finance expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the corresponding junior subordinated debt securities,
(3) the successor securities are listed or traded, or any successor
securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the preferred securities
are then listed or traded, if any,
(4) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the preferred securities
(including any successor securities) to be downgraded by any nationally
recognized statistical rating organization,
(5) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred securities
(including any successor securities) in any material respect,
(6) such successor entity has a purpose substantially identical to that
of the Capital Trust,
(7) prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, PartnerRe Finance has received
an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the preferred
securities (including any successor securities) in any material respect, and
(b) following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Capital Trust nor
any successor entity will be required to register as an "investment company"
under the Investment Company Act, and
(8) PartnerRe Finance or any permitted successor or assignee owns all of
the common securities of such successor entity and guarantees the
obligations of such successor entity under the successor securities at least
to the extent provided by the preferred securities guarantee.
However, the Capital Trust may not, except with the consent of holders of
100% in liquidation amount of the preferred securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if it would cause the Capital Trust or the successor entity to be
classified as other than a grantor trust for federal income tax purposes or
cause any other material adverse tax consequences to the holders of the
preferred securities.
Voting and Preemptive Rights
Except as provided below and under "Description of the Trust Preferred
Securities Guarantee--Amendments and Assignment" and as otherwise required by
law and the applicable restated trust agreement, the holders of the preferred
securities will have no voting rights. Holders of the preferred securities have
no preemptive or similar rights. (Section 6.1)
Amendment of Restated Trust Agreements
Each restated trust agreement may be amended from time to time by PartnerRe
Finance and the Capital Trustees, without the consent of the holders of the
trust securities:
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(1) to cure any ambiguity, correct or supplement any provisions in such
restated trust agreement that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions arising
under such restated trust agreement, which shall not be inconsistent with
the other provisions of such restated trust agreement, or
(2) to modify, eliminate or add to any provisions of such restated trust
agreement to such extent as shall be necessary to ensure that the Capital
Trust will be classified for United States Federal income tax purposes as a
grantor trust at all times that any trust securities are outstanding or to
ensure that the Capital Trust will not be required to register as an
"investment company" under the Investment Company Act;
provided, however, that in the case of clause (1), such action shall not
adversely affect in any material respect the interests of any holder of trust
securities. Any such amendments of a restated trust agreement shall become
effective when notice thereof is given to the holders of trust securities of
the Capital Trust.
Each restated trust agreement may be amended by PartnerRe Finance and the
Capital Trustees with the consent of holders representing not less than a
majority (based upon liquidation amounts) of the outstanding trust securities,
and receipt by the Capital Trustees of an opinion of counsel to the effect that
such amendment or the exercise of any power granted to the Capital Trustees in
accordance with such amendment will not affect the Capital Trust's status as a
grantor trust for United States Federal income tax purposes or the Capital
Trust's exemption from status as an "investment company" under the Investment
Company Act. However, without the consent of each holder of trust securities,
such restated trust agreement may not be amended to:
(1) change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust securities as of a specified
date, or
(2) restrict the right of a holder of trust securities to institute suit
for the enforcement of any such payment on or after such date. (Section 10.2)
So long as any corresponding junior subordinated debt securities are held by
the Property Trustee, the Capital Trustees shall not:
(1) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such corresponding junior
subordinated debt securities,
(2) waive any past default that is savable under Section 5.13 of the
junior subordinated indenture (as described in "Description of the
DebtSecurities--Modification and Waiver"),
(3) exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debt securities shall be due and
payable, or
(4) consent to any amendment, modification or termination of the junior
subordinated indenture or such corresponding junior subordinated debt
securities, where consent shall be required,
without, in each case, obtaining the prior approval of the holders of a
majority in aggregate liquidation amount of all outstanding preferred
securities.
Global Preferred Securities
The preferred securities of the Capital Trust may be issued in whole or in
part in the form of one or more global preferred securities that will be
deposited with, or on behalf of, the depositary identified in the prospectus
supplement.
The specific terms of the depositary arrangement with respect to the
preferred securities of the Capital Trust will be described in the related
prospectus supplement.
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Unless otherwise specified in the applicable prospectus supplement, the
restated trust agreement of the Capital Trust will provide that (1) if
PartnerRe Finance advises the Capital Trustees in writing that the depositary
is no longer willing or able to act as depositary and PartnerRe Finance fails
to appoint a qualified successor within 90 days, (2) PartnerRe Finance at its
option advises the Capital Trustees in writing that it elects to terminate the
book-entry system through the depositary or (3) after the occurrence of a
Debenture Event of Default under the corresponding junior subordinated debt
securities, owners of preferred securities representing at least a majority of
liquidation amount of such preferred securities advise the Property Trustee in
writing that the continuation of a book-entry system through the depositary is
no longer in their best interests, then the global preferred securities will be
exchanged for preferred securities in definitive form in accordance with the
instructions of the depositary.
Payment and Paying Agency
Payments in respect of the preferred securities shall be made to the
depositary, which shall credit the relevant accounts at the depositary on the
applicable distribution dates or, if the Capital Trust's preferred securities
are not held by the depositary, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
register of the Capital Trust. Unless otherwise specified in the applicable
prospectus supplement, the paying agent shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to
PartnerRe Finance and the Administrative Trustees. The paying agent shall be
permitted to resign as paying agent upon 30 days' written notice to PartnerRe
Finance and the Property Trustee. In the event the Property Trustee shall no
longer be the paying agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and PartnerRe Finance) to act as paying agent. (Section
5.9)
Registrar and Transfer Agent
The initial registrar and transfer agent for the preferred securities will
be designated by PartnerRe Finance and specified in the applicable prospectus
supplement. PartnerRe Finance has the right to change the registrar and
transfer agent for the preferred securities at any time in its sole discretion.
Registration of transfers of preferred securities will be effected without
charge by or on behalf of the Capital Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Capital Trust will not be required to register or cause to be
registered the transfer of their preferred securities after such preferred
securities have been called for redemption. (Section 5.4)
Administrative Trustees
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Capital Trust in such a way that the Capital
Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or classified as an association
taxable as a corporation for United States Federal income tax purposes and so
that the corresponding junior subordinated debt securities will be treated as
PartnerRe Finance's indebtedness for United States Federal income tax purposes.
In this connection, PartnerRe Finance and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Capital Trust or each restated trust agreement,
that PartnerRe Finance and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
related preferred securities.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE
Concurrently with any issuance by the Capital Trust of its preferred
securities, we will execute and deliver a preferred securities guarantee for
the benefit of the holders from time to time of such preferred securities. The
Chase Manhattan Bank will act as indenture trustee ("Guarantee Trustee") under
the preferred securities guarantee for the purposes of compliance with the
Trust Indenture Act, and the preferred securities guarantee will be qualified
as an indenture under the Trust Indenture Act.
The following summary sets forth the material terms and provisions of the
preferred securities guarantee. Because the following summary of certain
provisions of the preferred securities guarantee is not complete, you should
refer to the form of preferred securities guarantee and the Trust Indenture Act
for more complete information regarding the provisions of the preferred
securities guarantee, including the definitions of some of the terms used
below. The form of the preferred securities guarantee has been filed as an
exhibit to the registration statement of which this prospectus forms a part and
is incorporated by reference in this summary. Whenever we refer to particular
sections or defined terms of a preferred securities guarantee, such sections or
defined terms are incorporated herein by reference, and the statement in
connection with which such reference is made is qualified in its entirety by
such reference. Reference in this summary to preferred securities means the
Capital Trust's preferred securities to which a preferred securities guarantee
relates. The Guarantee Trustee will hold the preferred securities guarantee for
the benefit of the holders of the Capital Trust's preferred securities.
General
We will irrevocably agree to pay in full on a subordinated basis, to the
extent described herein, the Guarantee Payments (as defined below) (without
duplication of amounts theretofore paid by or on behalf of the Capital Trust)
to the holders of the preferred securities, as and when due, regardless of any
defense, right of setoff or counterclaim that the Capital Trust may have or
assert other than the defense of payment. The following payments with respect
to the preferred securities, to the extent not paid by or on behalf of the
Capital Trust (the "Guarantee Payments"), will be subject to the preferred
securities guarantee:
(1) any accrued and unpaid distributions required to be paid on such
preferred securities, to the extent that the Capital Trust has funds on hand
available for payment at such time,
(2) the redemption price, including all accrued and unpaid distributions
to the redemption date, with respect to any preferred securities called for
redemption, to the extent that the Capital Trust has funds on hand available
for payment at such time, and
(3) upon a voluntary or involuntary dissolution, winding up or
liquidation of the Capital Trust (unless the corresponding junior
subordinated debt securities are distributed to holders of such preferred
securities), the lesser of (a) the Liquidation Distribution, to the extent
the Capital Trust has funds available for payment at such time and (b) the
amount of assets of the Capital Trust remaining available for distribution
to holders of preferred securities.
Our obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by us to the holders of the applicable
preferred securities or by causing the Capital Trust to pay such amounts to
such holders. (Section 5.1)
Each preferred securities guarantee will be an irrevocable guarantee on a
subordinated basis of the Capital Trust's payment obligations under the
preferred securities, but will apply only to the extent that the Capital Trust
has funds sufficient to make such payments. (Section 5.1, 6.2) Each preferred
securities guarantee is, to that extent, a guarantee of payment and not a
guarantee of collection. (Section 5.5)
If PartnerRe Finance does not make interest payments on the corresponding
junior subordinated debt securities held by the Capital Trust, and if we do not
make such payments under the junior subordinated debt
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securities guarantee, the Capital Trust will not be able to pay distributions
on the preferred securities and will not have funds legally available for
payment. Each preferred securities guarantee will rank subordinate and junior
in right of payment to all other Indebtedness of ours (including all debt
securities), except those ranking equally or subordinate by their terms. See
"--Status of the Preferred Securities Guarantees."
Because we are a holding company, our rights and the rights of our creditors
(including the holders of preferred securities who are creditors of ours by
virtue of the preferred securities guarantee) and shareholders, to participate
in any distribution of assets of any subsidiary upon such subsidiary's
liquidation or reorganization or otherwise would be subject to the prior claims
of the subsidiary's creditors, except to the extent that we may ourselves be a
creditor with recognized claims against the subsidiary. The right of creditors
of ours (including the holders of preferred securities who are creditors of
ours by virtue of the preferred securities guarantee) to participate in the
distribution of stock owned by us in certain of our subsidiaries may also be
subject to approval by certain insurance regulatory authorities having
jurisdiction over such subsidiaries. Except as otherwise provided in the
applicable prospectus supplement, the preferred securities guarantees do not
limit our ability to incur or issue other secured or unsecured debt, whether
under an indenture or otherwise.
PartnerRe will make all payments of principal of and premium, if any,
interest and any other amounts on, or in respect of, the junior subordinated
debt securities without withholding or deduction at source for, or on account
of, any present or future taxes, fees, duties, assessments, or governmental
charges of whatever nature imposed or levied by or on behalf of Bermuda (a
"taxing jurisdiction") or any political subdivision or taxing authority thereof
or therein, unless such taxes, fees, duties, assessments or governmental
charges are required to be withheld or deducted by (x) the laws (or any
regulations or rulings promulgated there under) of a taxing jurisdiction or any
political subdivision or taxing authority thereof or therein or (y) an official
position regarding the application, administration, interpretation or
enforcement of any such laws, regulations or rulings (including, without
limitation, a holding by a court of competent jurisdiction or by a taxing
authority in a taxing jurisdiction or any political subdivision thereof). If a
withholding or deduction at source is required, PartnerRe will, subject to
certain limitations and exceptions described below, pay to the holder of any
such junior subordinated debt security any such additional amounts as may be
necessary so that every net payment of principal, premium, if any, interest or
any other amount made to such holder, after the withholding or deduction, will
not be less than the amount provided for in such junior subordinated debt
security and the junior subordinated indenture to be then due and payable.
PartnerRe will not be required to pay any additional amounts for or on
account of:
(1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such holder
(a) was a resident, domiciliary or national of, or engaged in business or
maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or
otherwise had some connection with the relevant taxing jurisdiction other
than by reason of the mere ownership of, or receipt of payment under, such
junior subordinated debt security, (b) presented such junior subordinated
debt security for payment in the relevant taxing jurisdiction or any
political subdivision thereof, unless such junior subordinated debt security
could not have been presented for payment elsewhere, or (c) presented such
junior subordinated debt security for payment more than 30 days after the
date on which the payment in respect of such junior subordinated debt
security became due and payable or provided for, whichever is later, except
to the extent that the holder would have been entitled to such additional
amounts if it had presented such junior subordinated debt security for
payment on any day within that 30-day period;
(2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
(3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the holder or the beneficial owner of
such junior subordinated debt security to comply with any reasonable request
by PartnerRe Finance addressed to the holder within 90 days of such request
(a) to
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provide information concerning the nationality, residence or identity of the
holder or such beneficial owner or (b) to make any declaration or other
similar claim or satisfy any information or reporting requirement, which is
required or imposed by statute, treaty, regulation or administrative
practice of the relevant taxing jurisdiction or any political subdivision
thereof as a precondition to exemption from all or part of such tax,
assessment or other governmental charge; or
(4) any combination of items (1), (2) and (3).
In addition, PartnerRe will not pay additional amounts with respect to any
payment of principal of, or premium, if any, interest or any other amounts on,
any such junior subordinated debt security to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such junior subordinated
debt security to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of
a beneficiary or partner or settlor with respect to such fiduciary or a member
of such partnership or a beneficial owner who would not have been entitled to
such additional amounts had it been the holder of the junior subordinated debt
security.
Our obligations described herein and in any accompanying prospectus
supplement, through the applicable preferred securities guarantee, the
applicable restated trust agreement, the subordinated indenture and any
supplemental indentures thereto and the expense agreement described below,
taken together, constitute a full, irrevocable and unconditional guarantee by
us of payments due on the preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Capital Trust's obligations under the preferred
securities. See "The Capital Trust," "Description of the Trust Preferred
Securities," and "Description of the Debt Securities."
Status of the Preferred Securities Guarantees
Each preferred securities guarantee will constitute an unsecured obligation
of ours and will rank subordinate and junior in right of payment to all other
Indebtedness of ours, except those ranking equally or subordinate by their
terms. (Section 6.2)
Each preferred securities guarantee will rank equally with all other similar
preferred securities guarantees issued by us on behalf of holders of preferred
securities of any trust, partnership or other entity affiliated with us which
is a financing vehicle of ours. (Section 6.3). Each preferred securities
guarantee will constitute a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against us to enforce its rights under the preferred securities guarantee
without first instituting a legal proceeding against any other person or entity
(Section 5.4). Each preferred securities guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
the Capital Trust or upon distribution to the holders of the preferred
securities of the corresponding junior subordinated debt securities. None of
the preferred securities guarantees places a limitation on the amount of
additional Indebtedness that may be incurred by us. We expect from time to time
to incur additional Indebtedness that will rank senior to the preferred
securities guarantees.
Amendments And Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related preferred securities (in which case no
vote will be required), no preferred securities guarantee may be amended
without the prior approval of the holders of not less than a majority of the
aggregate liquidation amount of such outstanding preferred securities. (Section
8.2). All guarantees and agreements contained in each preferred securities
guarantee shall bind our successors, assigns, receivers, trustees and
representatives and shall inure to the benefit of the holders of the related
preferred securities then outstanding. (Section 8.1)
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Events of Default
An event of default under the preferred securities guarantee will occur upon
the failure of ours to perform any of our payment obligations thereunder. The
holders of not less than a majority in aggregate liquidation amount of the
related preferred securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of such preferred securities guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under such
preferred securities guarantee. (Section 5.4)
If the Guarantee Trustee fails to enforce a preferred securities guarantee,
any holder of the preferred securities may institute a legal proceeding
directly against us to enforce its rights under such preferred securities
guarantee without first instituting a legal proceeding against the Capital
Trust, the Guarantee Trustee or any other person or entity. (Section 5.4)
We, as guarantor, are required to file annually with the Guarantee Trustee a
certificate as to whether or not we are in compliance with all the conditions
and covenants applicable to us under the preferred securities guarantee.
(Section 2.4)
Termination of the Preferred Securities Guarantees
Each preferred securities guarantee will terminate and be of no further
force and effect upon (1) full payment of the redemption price of the related
preferred securities, (2) the distribution of the corresponding junior
subordinated debt securities to the holders of the related preferred securities
or (3) upon full payment of the amounts payable upon liquidation of the Capital
Trust. Each preferred securities guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of the
related preferred securities must restore payment of any sums paid with respect
to such preferred securities or such preferred securities guarantee. (Section
7.1)
New York Law to Govern
Each preferred securities guarantee will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and performed in that state. (Section 8.5)
DESCRIPTION OF THE SHARE PURCHASE CONTRACTS
AND THE SHARE PURCHASE UNITS
We may issue share purchase contracts, representing contracts obligating
holders to purchase from us, and obligating us to sell to the holders, a
specified number of common shares at a future date or dates. The price per
share and the number of common shares may be fixed at the time the share
purchase contracts are issued or may be determined by reference to a specific
formula set forth in the share purchase contracts. The share purchase contracts
may be issued separately or as a part of share purchase units consisting of a
share purchase contract and, as security for the holder's obligations to
purchase the shares under the share purchase contracts, either:
(1) senior debt securities or subordinated debt securities,
(2) preferred shares,
(3) debt obligations of third parties, including U.S. Treasury
securities, or
(4) preferred securities of the Capital Trust.
The share purchase contracts may require us to make periodic payments to the
holders of the share purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The share purchase contracts may require
holders to secure their obligations in a specified manner and in certain
circumstances we may deliver newly issued prepaid share purchase contracts upon
release to a holder of any collateral securing such holder's obligations under
the original share purchase contract.
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The applicable prospectus supplement will describe the terms of any share
purchase contracts or share purchase units and, if applicable, prepaid share
purchase contracts. The description in the prospectus supplement will not
purport to be complete and will be qualified in its entirety by reference to:
(1) the share purchase contracts,
(2) the collateral arrangements and depositary arrangements, if
applicable, relating to such share purchase contracts or share purchase
units and
(3) if applicable, the prepaid share purchase contracts and the document
pursuant to which such prepaid share purchase contracts will be issued.
PLAN OF DISTRIBUTION
Distributions by PartnerRe, PartnerRe Finance and the Capital Trust
We, PartnerRe Finance and/or the Capital Trust may sell offered securities
in any one or more of the following ways from time to time:
(1) through agents;
(2) to or through underwriters;
(3) through dealers; or
(4) directly to purchasers, including our affiliates.
The prospectus supplement with respect to the offered securities will set
forth the terms of the offering of the offered securities, including:
. the name or names of any underwriters, dealers or agents;
. the purchase price of the offered securities and the proceeds to us,
PartnerRe Finance and/or the Capital Trust from such sale;
. any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation;
. any delayed delivery arrangements;
. any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers; and
. any securities exchange on which such offered securities may be listed.
Any initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The distribution of the offered securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase offered securities may be solicited by agents designated
by us from time to time. Any such agent involved in the offer or sale of the
offered securities in respect of which this prospectus is delivered will be
named, and any commissions payable by us, PartnerRe Finance and/or the Capital
Trust to such agent will be set forth, in the applicable prospectus supplement.
Unless otherwise indicated in such prospectus supplement, any such agent will
be acting on a reasonable best efforts basis for the period of its appointment.
Any such agent may be deemed to be an underwriter, as that term is defined in
the Securities Act of the offered securities so offered and sold.
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If offered securities are sold by means of an underwritten offering, we,
PartnerRe Finance and/or the Capital Trust will execute an underwriting
agreement with an underwriter or underwriters, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, and
the terms of the transaction, including commissions, discounts and any other
compensation of the underwriters and dealers, if any, will be set forth in the
prospectus supplement which will be used by the underwriters to make resales of
the offered securities. If underwriters are utilized in the sale of the offered
securities, the offered securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at fixed public offering
prices or at varying prices determined by the underwriters at the time of sale.
Our offered securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by the
managing underwriters. If any underwriter or underwriters are utilized in the
sale of the offered securities, unless otherwise indicated in the prospectus
supplement, the underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of offered securities will be obligated to
purchase all such offered securities of a series if they purchase any of such
offered securities.
We, PartnerRe Finance and/or the Capital Trust may grant to the underwriters
options to purchase additional offered securities, to cover over-allotments, if
any, at the public offering price (with additional underwriting discounts or
commissions), as may be set forth in the prospectus supplement relating
thereto. If we, PartnerRe Finance and/or the Capital Trust grants any
over-allotment option, the terms of such over-allotment option will be set
forth in the prospectus supplement relating to such offered securities.
If a dealer is utilized in the sales of offered securities in respect of
which this prospectus is delivered, we, PartnerRe Finance and/or the Capital
Trust will sell such offered securities to the dealer as principal. The dealer
may then resell such offered securities to the public at varying prices to be
determined by such dealer at the time of resale. Any such dealer may be deemed
to be an underwriter, as such term is defined in the Securities Act, of the
offered securities so offered and sold. The name of the dealer and the terms of
the transaction will be set forth in the related prospectus supplement.
Offers to purchase offered securities may be solicited directly by us,
PartnerRe Finance and/or the Capital Trust and the sale thereof may be made by
us, PartnerRe Finance and/or the Capital Trust directly to institutional
investors or others, who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the related prospectus supplement.
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for us, PartnerRe Finance and/or the
Capital Trust. Any remarketing firm will be identified and the terms of its
agreements, if any, with us, PartnerRe Finance and/or the Capital Trust and its
compensation will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the offered securities remarketed
thereby.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements entered into with us, PartnerRe Finance and/or the Capital
Trust to indemnification by us, PartnerRe Finance and/or the Capital Trust
against certain civil liabilities, including liabilities under the Securities
Act that may arise from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact in
this prospectus, any supplement or amendment hereto, or in the registration
statement of which this prospectus forms a part, or to contribution with
respect to payments which the agents, underwriters or dealers may be required
to make.
If so indicated in the prospectus supplement, we, PartnerRe Finance and/or
the Capital Trust will authorize underwriters or other persons acting as our,
PartnerRe Finance's and/or the Capital Trust's agents to solicit offers
52
by certain institutions to purchase offered securities from us, PartnerRe
Finance and/or the Capital Trust, pursuant to contracts providing for payments
and delivery on a future date. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but
in all cases such institutions must be approved by us, PartnerRe Finance and/or
the Capital Trust. The obligations of any purchaser under any such contract
will be subject to the condition that the purchase of the offered securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
Disclosure in the prospectus supplement of our, PartnerRe Finance's and/or
the Capital Trust's use of delayed delivery contracts will include the
commission that underwriters and agents soliciting purchases of the securities
under delayed contracts will be entitled to receive in addition to the date
when we will demand payment and delivery of the securities under the delayed
delivery contracts. These delayed delivery contracts will be subject only to
the conditions that are described in the prospectus supplement.
Each series of offered securities will be a new issue and, other than the
common shares and the Series A Preferred Shares, each of which are listed on
the NYSE, will have no established trading market. We, PartnerRe Finance and/or
the Capital Trust may elect to list any series of offered securities on an
exchange, and in the case of the common shares, on any additional exchange,
but, unless otherwise specified in the applicable prospectus supplement,
neither we, PartnerRe Finance nor the Capital Trust shall be obligated to do
so. No assurance can be given as to the liquidity of the trading market for any
of the offered securities.
Underwriters, dealers, agents and remarketing firms may be customers of,
engage in transactions with, or perform services for, us and our subsidiaries
(including PartnerRe Finance) in the ordinary course of business.
LEGAL OPINIONS
Certain legal matters with respect to United States, New York and Delaware
law with respect to the validity of the offered securities will be passed upon
for us by Willkie Farr & Gallagher, New York, New York. Certain legal matters
with respect to Bermuda law will be passed upon for us by Ms. Christine Patton,
PartnerRe's General Counsel. Additional legal matters may be passed on for any
underwriters, dealers or agents by counsel which we will name in the applicable
prospectus supplement.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 2000 have been audited by Deloitte
& Touche, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
ENFORCEMENT OF CIVIL LIABILITIES UNDER
UNITED STATES FEDERAL SECURITIES LAWS
We are a Bermuda company. In addition, certain of our directors and officers
as well as certain of the experts named in this prospectus, reside outside the
United States, and all or a substantial portion of our assets and their assets
are located outside the United States. Therefore, it may be difficult for
investors to effect service of process within the United States upon those
persons or to recover against us or those persons on judgments of courts in the
United States, including judgments based on civil liabilities provisions of the
United States federal securities laws.
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The United States and Bermuda do not currently have a treaty providing for
reciprocal recognition and enforcement of judgments in civil and commercial
matters. Also, there is doubt as to whether the courts of Bermuda would enforce
(1) judgments of United States courts based on the civil liability provisions
of the United States federal securities laws obtained in actions against us or
our directors and officers, and (2) original actions brought in Bermuda against
us or our officers and directors based solely upon the United States federal
securities laws. A Bermuda court may, however, impose civil liability on us or
our directors or officers in a suit brought in the Supreme Court of Bermuda
provided that the facts alleged constitute or give rise to a cause of action
under Bermuda law. Certain remedies available under the laws of U.S.
jurisdictions, including certain remedies under the U.S. federal securities
laws, would not be allowed in Bermuda courts to the extent that they are
contrary to public policy.
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