10-K/A 1 a2078688z10-ka.htm 10-K/A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
AMENDMENT NO. 2

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15()
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001
Commission file number 000-2348\

ESG RE LIMITED
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction
of Incorporation of organization)

Not Applicable
(I.R.S. Employer
Identification No.)

16 Church Street
Hamilton HM11, Bermuda
(Address of executive offices, zip code)

(441) 295-2185
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Shares, $1.00 par value

Name of each exchange on which registered
Nasdaq National Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ý No o

The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of March 15, 2002, was $33,365,143 based on the closing price of $3.85 on that date.

The number of the Registrant's common shares (par value $1.00 per share) outstanding as of March 15, 2002, was 11,831,818.

EXPLANATORY STATEMENT:

The purpose of this Amendment No. 2 is to file amended SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT and amended SCHEDULE IV—REINSURANCE to the Annual Report on Form 10-K filed by the Registrant on April 1, 2002 and on Form 10-K/A filed April 29, 2002, as well as the report of Deloitte & Touche related to these Financial Schedules.

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

Schedules, other than those listed, are omitted from this filing because they are not applicable, or not required, or because the required information is included in the consolidated financial statements or notes thereto.

		Page
•	Report of Deloitte & Touche	3
•	Schedule II—Condensed Financial Information of the Registrant	4
•	Schedule IV—Reinsurance	7

ESG RE LIMITED
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of ESG Re Limited

We have audited the financial statements of ESG Re Limited as of December 31, 2001 and 2000, and for each of the three years in the period ended December 31, 2001, and have issued our report thereon dated March 29, 2002. Such report has previously been filed as part of the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Our audits also included the financial statement schedules of ESG Re Limited, listed in the accompanying index at Item 14. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE

Dublin

Ireland
March 29, 2002

ITEM 14. SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED BALANCE SHEET

(U.S. dollars in thousands except share and per share data)

		December 31, 2001			December 31, 2000
ASSETS
Investments—available for sale, at fair value (cost: $5,661 and $7,909)		$	5,592		$	7,762
Cash and cash equivalents			851			239
Investments in subsidiaries, at equity in the underlying net assets			87,088			85,541
Other investments			4,831			16,310

	Total investments and cash		98,362			109,852
Accrued investment income			57			564
Intangible assets			—			1,355
Due from affiliates			—			2,438
Other assets			1,226			146

TOTAL ASSETS		$	99,645		$	114,355

LIABILITIES
Due to affiliates			2,854			—
Other liabilities			1,721			789

	Total liabilities		4,575			789

SHAREHOLDERS' EQUITY
Preference shares, 50,000,000 shares authorized; no shares issued and outstanding for 2001 and 2000			—			—
Class B common shares, 100,000,000 shares authorized; no shares issued and outstanding for 2001 and 2000			—			—
Common shares, par value $1 per share; 100,000,000 shares authorized; 11,831,063 shares issued and outstanding for 2001 and 11,777,086 shares issued and outstanding for 2000			11,831			11,777
Additional paid-in capital			208,221			208,539
Unearned compensation			(333	)		(893	)
Accumulated other comprehensive income:
	Foreign currency translation adjustments		(4,193	)		(5,331	)
	Unrealized gains on securities, net of tax		(1,525	)		1,965

Accumulated other comprehensive income			(5,718	)		(3,366	)

Retained (deficit)			(118,931	)		(102,491	)

	Total shareholders' equity		95,070			113,566

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	99,645		$	114,355

CONDENSED STATEMENT OF OPERATIONS

(U.S. dollars in thousands)

		For Years Ended December 31,
		2001			2000			1999
REVENUES
	Net investment income		724			1,097			3,978
	Gain/(loss) on equity investments		(2,682	)		181			(205	)
	Net realized investment gain/(loss)		(12,274	)		(938	)		(526	)
	Equity in undistributed change in retained earnings of subsidiaries		5,244			—			—

			(8,988	)		340			3,247
EXPENSES
	Other expenses		7,452			12,951			20,919
	Equity in undistributed change in retained earnings of subsidiaries		—			49,185			24,322

INCOME (LOSS) BEFORE TAXES			(16,440	)		(61,796	)		(41,994	)
	Income tax expense		—			—			—

NET INCOME (LOSS)		$	(16,440	)	$	(61,796	)	$	(41,994	)

CONDENSED STATEMENT OF CASHFLOWS

(U.S. dollars in thousands)

		For Years Ended December 31,
		2001			2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used by operating activities		$	(3,667	)	$	(8,991	)	$	(7,145	)

CASH FLOWS FROM INVESTING ACTIVITIES
	Cost of fixed maturity investments acquired—available for sale		(10,718	)		(4,476	)		(45,635	)
	Proceeds from sale of fixed maturity investments—available for sale		13,142			23,883			79,834
	Funding of other investments		—			(6,345	)		(4,678	)
	Proceeds from other investments		500			800			—
	Disposals/(purchases) of intangible assets		1,355			(1,355	)		—

Net cash provided by investing activities			4,279			12,507			29,521

CASH FLOWS FROM FINANCING ACTIVITIES
	Dividends paid		—			(2,870	)		(4,414	)
	Grant/(repurchase) of common shares		—			(2,036	)		(16,529	)

Net cash used in financing activities			—			(4,906	)		(20,943	)

Net increase/(decrease) in cash			612			(1,390	)		1,433
Cash and cash equivalents at January 1			239			1,629			196

Cash and cash equivalents at December 31		$	851		$	239		$	1,629

ITEM 14. SCHEDULE IV—REINSURANCE

(Dollars in thousands)

	Gross amount		Ceded to other companies		Assumed from other companies		Net amount		Percentage of amount assumed to net
As at December 31, 2001
Total accident and health insurance earned premium	$	8,699	$	24,881	$	169,402	$	153,220	110.6	%
As at December 31, 2000
Total accident and health insurance earned premium	$	25,662	$	23,849	$	234,807	$	236,620	99.2	%
As at December 31, 1999
Total accident and health insurance earned premium	$	7,701	$	13,326	$	254,750	$	249,125	102.3	%

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized

Dated: May 1, 2002	ESG Re Limited
	BY:	/s/ CONOR HEERY
	Name:	Conor Heery
	Title:	Controller and Chief Accounting Officer

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PART IV.
ESG RE LIMITED INDEPENDENT AUDITORS' REPORT
ITEM 14. SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT CONDENSED BALANCE SHEET (U.S. dollars in thousands except share and per share data)
CONDENSED STATEMENT OF OPERATIONS (U.S. dollars in thousands)
CONDENSED STATEMENT OF CASHFLOWS (U.S. dollars in thousands)
ITEM 14. SCHEDULE IV—REINSURANCE (Dollars in thousands)
SIGNATURES