Standard & Poor’s Ratings Service placed Trenwick Group Ltd.’s “BB” counterparty credit and other ratings on CreditWatch with negative implications. The move came as a result of a covenant breach under Trenwick’s credit agreement amended and restated as of Sept. 24, 2000, under which letters of credit in the amount of $230 million are issued and outstanding in favor of Lloyd’s. The letters of credit expire on Dec. 31, 2005.
Unless renewed or replaced, Trenwick will no longer be able to collateralize its capital requirements to continue operating at Lloyd’s for the 2003 year of account. Should the letters of credit be drawn down by Lloyd’s, repayment in full by Trenwick to the banks would be due immediately.
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