Trenwick Ratings Lowered

S&P lowered its counterparty credit rating and FSR on Trenwick America Reinsurance Corp., Trenwick International Ltd. (Trenwick International), Chartwell Ins. Co. (Chartwell), Insurance Corp. of NY, Dakota Specialty Ins.Co., and LaSalle Re Ltd. (LaSalle)—the core and strategically important operating companies of Trenwick Group Ltd.—to “A-” from “A+.” Concurrently, S&P lowered its counterparty credit rating on Trenwick Group Ltd. to “BBB-” from “BBB+.” In addition, S&P removed all these ratings from CreditWatch, where they were placed on July 26.

S&P’s also assigned its “BBB-” counterparty credit, “BBB-” senior debt and “BB” preferred stock ratings to Trenwick America Corp. Preliminary “BBB-” senior debt, “BB+” subordinated debt, and “BB” preferred stock ratings were assigned to a $400 million shelf registration that can be drawn upon by Trenwick Group Ltd. and Trenwick America Corp. and that is guaranteed by Trenwick Group Ltd. The outlook is stable.

The ratings reflect weak operating performance at the core operating companies over the past few quarters, coupled with major declines in capital adequacy following the second-quarter 2001 reserve strengthening and pro forma for Sept. 11 losses.

The entire organization, collectively referred to as Trenwick, has successfully gained broader geographic spread of business and diversified operations with the acquisitions of Trenwick International, Chartwell and LaSalle. However, earnings have been adversely affected by the need to cancel unprofitable business and overall weaker-than-expected operating performance.

The ratings have been removed from CreditWatch and assigned a stable outlook because management has successfully demonstrated that contingent capital facilities should mitigate unexpected deterioration from Sept. 11 loss events.

Management is expecting to enjoy profitable business flow in the hardening market, and S&P’s believes re-underwriting efforts at each key operation will also contribute favorably to operating performance.