S&P's Trenwick Ratings On CreditWatch

S&P's Trenwick Ratings On CreditWatch

NU Online News Service, March 6, 10:40 a.m. EST?Standard & Poor's Ratings Services in New York has placed its "triple-C-minus" counterparty credit ratings on Bermuda-based Trenwick Group Ltd. and its sub-holding companies, LaSalle Re Holdings Ltd. and Trenwick America Corp., on CreditWatch with "negative" implications.

S&P said its decision was based on its belief that the company's ability to restructure its senior debt to keep it out of default is "remote."

S&P also said it placed its "triple-C" counterparty credit and financial strength ratings on Trenwick America Reinsurance Corp., Dakota Specialty Insurance Co. and LaSalle Re Ltd. Trenwick International Ltd. Insurance Corp. of N.Y. is on CreditWatch "negative."

Following Trenwick's fourth-quarter 2002 reserve additions, tangible net worth at year-end 2002 is negative $49.7 million after deducting $127.2 million of deferred acquisition costs, S&P noted. Furthermore, the emergence of earnings and dividend capacity for existing creditors in the near-term remains unlikely, the credit agency said.

S&P said the CreditWatch status will be resolved after the resolution of senior debt restructuring on April 1. The credit agency said it expects Trenwick to either default in payment on the debt or restructure in a way that may be equivalent to a default.

Trenwick Group, a specialty insurance and reinsurance underwriting organization, operates five main subsidiaries. Trenwick America Reinsurance unit underwrites treaty reinsurance for U.S. p-c insurers.

Trenwick International offers treaty and facultative reinsurance as well as specialty insurance, while Canterbury Financial reinsures p-c coverage in the United States through specialty program administrators.

Lasalle Re provides property-casualty reinsurance and focuses on catastrophe coverage, while Chartwell Managing Agents, a member of Lloyd's of London, writes coverage including marine, motor, aviation and life. Trenwick Group had revenues of more than $1.1 billion in 2002.