PEMBROKE, Bermuda, Oct. 22 /PRNewswire/ -- ChannelRe Holdings Ltd. (the "Company") announced today the commencement of a tender offer to purchase any and all of the outstanding Series B Preference Shares, with a par value of US $0.01 per share and a liquidation preference of US $1,000 per share (the "Preference Shares"), issued by Channel Reinsurance Ltd ("Channel Re") upon the terms and subject to the conditions set forth in the Offer to Purchase dated as of October 22, 2009, and the accompanying Letter of Transmittal (together, the "Offer Documents").

Upon the terms and subject to the conditions of the tender offer, as set out in the Offer Documents, the Company is offering to pay $150.00 per Preference Share.

Certain Information Regarding the Tender Offer

The tender offer commenced today and will expire at 5:00 p.m., New York City time, on November 20, 2009, unless extended or earlier terminated (such date and time, as the same may be extended or earlier terminated, the "Expiration Date"). The Company will pay for all properly tendered and not properly withdrawn Preference Shares accepted for purchase promptly after the Expiration Date.

Deutsche Bank Securities is acting as dealer manager for the tender offer. Questions regarding the tender offer may be directed to Deutsche Bank Securities at: (866) 627-0391 (toll-free) or (212) 250-2955.

Global Bondholder Services Corporation is acting as depositary and information agent for the tender offer. Requests for copies of the Offer Documents may be directed to Global Bondholder Services Corporation at (212) 430-3774 (banks and brokers) or (866) 857-2200 (toll-free).

This press release is for informational purposes only and does not constitute an offer to purchase, the solicitation of an offer to purchase or a solicitation of tenders. No recommendation is made as to whether or not holders of Preference Shares should tender their Preference Shares pursuant to the tender offer. The tender offer is being made solely pursuant to the Offer Documents, which more fully set forth and govern the terms and conditions of the tender offer. The Offer Documents contain important information and should be read carefully before any decision is made with respect to the tender offer.

Certain Information Regarding the Preference Shares

Dividends on the Preference Shares, if declared by the Board of Directors of Channel Re (the "Board"), would be payable quarterly in arrears on each February 11, May 11, August 11 and November 11. Channel Re's GAAP equity is currently negative. Channel Re believes, based on advice from Bermuda counsel, that under the Companies Act 1981 of Bermuda, so long as Channel Re's GAAP equity is negative, it is not permitted to declare or pay dividends on any of its share capital and therefore the Board has determined that no dividend payment will be declared with respect to the first payment period, November 11, 2009. Channel Re can make no predictions about if or when its GAAP equity will become positive. Therefore, there can be no assurance that Channel Re will be allowed to pay the preferred dividend in the foreseeable future. However, it should be noted that the major contributor to the Channel Re's negative GAAP equity is the derivative liability relating to mark to market losses on Channel Re's reinsured credit derivative contracts, and changes in the derivative liability, from quarter to quarter, can be volatile. Even if the GAAP equity becomes positive, any dividends on the Preference Shares would have to be approved by the Board and the Bermuda Monetary Authority.

About Channel Re

Channel Re is a monoline financial guarantee reinsurer. At a recent meeting of the Board, the Board made the determination that Channel Re would not underwrite new business. This was in part a result of MBIA Insurance Corporation ("MBIA") being Channel Re's only ceding company with MBIA having suffered significant losses and impairments, primarily related to guarantees of U.S. mortgage backed securities and collateralized debt obligations containing U.S. mortgage backed securities, some of which were reinsured by Channel Re. While no new business has been written by Channel Re since 2008, significant numbers of transactions previously ceded to Channel Re by MBIA have since suffered losses and impairments. Nonetheless, the existing business continues to generate premium receipts and earned premium.

Forward-Looking Statements

Statements included in this release which are not historical or current facts are "forward looking" statements. The words "believe," "anticipate," "project," "plan," "expect," "intend," "will likely result," "preliminary" or "will continue" and similar expressions identify forward looking statements.

These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company's and Channel Re's historical earnings and those presently anticipated or projected. Readers should not place undue reliance on any such forward looking statements, which speak only as of their respective dates. The following are some of the factors that could cause actual results to differ materially from estimates contained in or underlying the forward looking statements: the timing of claims payments being faster than anticipated by Channel Re; greater frequency or severity of claims and loss activity than Channel Re's underwriting, reserving or investment practices anticipate based on historical experience or industry data; developments in the world's financial and capital markets which adversely affect the performance of Channel Re's investments and Channel Re's access to such markets; developments in the world's financial and capital markets which adversely affect the expected losses on Channel Re's insured portfolio; developments in the world's financial and capital markets which affect the derivative liability resulting from mark to market losses on Channel Re's GAAP financial statements; changes in domestic or foreign regulations or tax laws applicable to the Company or Channel Re; loss of key personnel; the effects of mergers, acquisitions, amalgamations and divestitures; changes in accounting policies or practices or the application thereof; legislative or regulatory developments; changes in general economic conditions, including inflation, interest rates, foreign currency exchange rates and other factors; and the effects of business disruption or economic contraction due to war, terrorism or other hostilities.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this release are made only as of the date hereof, and we undertake no obligation to publicly update these forward-looking statements to reflect new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events might or might not occur. We cannot assure you that projected results or events will be achieved. We undertake no obligation to publicly correct or update any forward-looking statement if we later become aware that such results are not likely to be achieved.

SOURCE ChannelRe Holdings Ltd.