8-K 1 0001.txt ACQUISITION OF GIBRALTAR CASUALTY COMPANY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): September 19, 2000 EVEREST RE GROUP, LTD. -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Bermuda 1-15731 Not Applicable -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) c/o ABG Financial & Management Services, Inc. Parker House, Wildey Road St. Michael, Barbados Not Applicable --------------------------------------------- --------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 246-436-6287 Not Applicable -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 1 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On September 19, 2000, Everest Reinsurance Holdings, Inc. ("Everest Holdings"), a Delaware corporation and subsidiary of Everest Re Group, Ltd. (the "Company"), completed the acquisition of all of the issued and outstanding capital stock of Gibraltar Casualty Company ("Gibraltar") from The Prudential Insurance Company of America ("The Prudential") pursuant to a Stock Purchase Agreement between The Prudential and Everest Holdings dated February 24, 2000 and amended on August 8, 2000 (the "Stock Purchase Agreement"). As a result of the acquisition, Gibraltar became a wholly owned subsidiary of Everest Holdings and, immediately following the acquisition, its name was changed to Mt. McKinley Insurance Company. Gibraltar, a run-off property and casualty insurer in the United States, has had a long relationship with Everest Holdings and its principal operating company, Everest Reinsurance Company ("Everest Re"). Gibraltar was formed in 1978 by Everest Re and wrote direct insurance until 1985, when it was placed in run off. In 1991, Gibraltar became a subsidiary of The Prudential. Gibraltar is also a reinsurer of Everest Re (all as detailed in filings that the Company and Everest Holdings have made with the Securities and Exchange Commission). Under a series of transactions dating to 1986, Gibraltar reinsured several components of Everest Re's business. In particular, in connection with The Prudential's initial public offering of Everest Holdings stock in 1995, Gibraltar provided stop-loss reinsurance protection for any adverse loss development on Everest Re's reserves, with $375 million in limits, of which approximately $90 million remains available. The stop-loss and other reinsurance contracts between Gibraltar and Everest Re remain in effect following the acquisition. With performing assets and accrued income of $507 million and total assets of $654 million supporting its liabilities, Gibraltar had unaudited GAAP stockholders' equity of approximately $56 million at June 30, 2000. In connection with the acquisition, Prudential Property and Casualty Insurance Company ("Prupac"), a subsidiary of The Prudential, provided reinsurance to Gibraltar covering 80% of the first $200 million of any adverse development of Gibraltar's reserves and The Prudential guaranteed Prupac's obligations to Gibraltar. The purchase price paid by Everest Holdings for Gibraltar was $51.8 million in cash reflecting a modest negotiated discount to stockholders' equity. The purchase price was funded primarily by borrowings under Everest Holdings' revolving line of credit. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired The financial statements required by this item will be filed by amendment no later than 60 days after the date that this initial report on Form 8-K was required to be filed. (b) Pro Forma Financial Information The pro forma financial information required by this item will be filed by amendment no later than 60 days after the date that this initial report on Form 8-K was required to be filed. (c) Exhibits 2.1 Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated February 24, 2000 (incorporated by reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-15731)). 2.2 Amendment No. 1, dated August 8, 2000, to Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated February 24, 2000 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 (File No. 1-15731)). 10.1 Proportional Excess of Loss Reinsurance Agreement entered into between Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty Company) and Prudential Property and Casualty Insurance Company dated September 19, 2000, filed herewith. 10.2 Guarantee Agreement entered into by The Prudential Insurance Company of America in favor of Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty Company) dated September 19, 2000, filed herewith. 99.1 Press Release issued by the Company on September 19, 2000, filed herewith. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 3, 2000 EVEREST RE GROUP, LTD. By: /S/ JANET J. BURAK ------------------------------- Name: Janet J. Burak Title: Senior Vice President, General Counsel and Secretary 4 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF DOCUMENT 2.1 Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated February 24, 2000 (incorporated by reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-15731)). 2.2 Amendment No. 1, dated August 8, 2000, to Stock Purchase Agreement between The Prudential Insurance Company of America and Everest Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar Casualty Company dated February 24, 2000 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 (File No. 1-15731)). 10.1 Proportional Excess of Loss Reinsurance Agreement entered into between Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty Company) and Prudential Property and Casualty Insurance Company dated September 19, 2000, filed herewith. 10.2 Guarantee Agreement entered into by The Prudential Insurance Company of America in favor of Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty Company) dated September 19, 2000, filed herewith. 99.1 Press Release issued by the Company on September 19, 2000, filed herewith. 5