Fitch Rates Everest Re Holdings' Junior Subordinated Debentures 'A-'

Business Wire, May 1, 2007

CHICAGO -- Fitch Ratings assigns an 'A-' rating to Everest Reinsurance Holdings, Inc.'s (Everest Re Holdings) issuance of $400 million long-term junior subordinated debentures due 2037. The debentures will pay a fixed interest rate until 2017 and pay a floating rate based on three month LIBOR thereafter. The Rating Outlook is Stable.

Fitch's expectation is that Everest Re Holdings will use proceeds from the issue to call its outstanding 7.85% junior subordinated debentures (callable beginning Nov. 14, 2007, $216.5 outstanding at year-to-date March 31, 2007) and for general corporate purposes.

Fitch's assigned rating is equivalent to its existing ratings on Everest Re Holdings' outstanding junior subordinated debentures and trust preferred securities (TRUPS). The new debt is pari passu with Everest Re Holdings' existing junior subordinated debt.

Based on Fitch's hybrid criteria, the debentures have a high equity component. Fitch plans to assign a class D designation to the debentures that will allocate 75% of the principal to adjusted equity and 25% to adjusted debt in evaluating Everest Re Holdings' financial leverage.

Fitch's equity credit classification reflects the proposed junior subordinated debentures' ability to absorb losses in distress scenarios, 10-year interest deferral feature, and long-dated effective maturity with no put provision. Everest Re Holdings' call option is balanced by a replacement capital covenant not to redeem the junior subordinated debentures prior to 2047 unless replaced by the issuance of securities with similar equity-like characteristics.

Fitch's ratings continue to reflect the company's strong franchise and competitive position in chosen markets, diversified underwriting portfolio in primary insurance and reinsurance markets, and favorable operating performance and good capital position. Fitch believes that Everest Re Holdings and its parent, Everest Re Group, Ltd. (Everest Group)'s strong balance sheet, demonstrated financial flexibility, and diverse geographic and business portfolio will continue to fuel profitable growth in an increasingly complex and competitive environment.

In 2006, Everest Group generated $817.9 million and $636.3 million of after-tax operating income (exc. realized gains) and operating cash flow respectively. Everest Group uses a moderate amount of financial leverage (all issued from its Everest Re Holdings intermediate holding company), and Fitch calculates the company's pro-forma year-to-date first quarter 2007 equity credit adjusted debt-to-capital ratio at approximately 10.4%. This would decrease to roughly 9.9% after the planned refinancing is complete.

The following rating has been assigned by Fitch:

Everest Reinsurance Holdings, Inc.

--6.60% junior subordinated debenture due May 15, 2037 'A-'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.