The beleaguered Trenwick Group received some much needed good news from its first quarter 2003 results – a net loss of $600,000, or 2 cents a share, compared to a net loss available to common shareholders of $54.6 million or $1.48 per share for the first quarter of 2002.
“The net loss in the first quarter of 2003 includes $1.2 million or $0.03 per share of charges related to professional and other fees incurred during this period in connection with the ongoing efforts to restructure the Company’s indebtedness, said the announcement. It “also included $6.2 million of letter of credit fees, an increase of $4.6 million over the same period in 2002 and $1.9 million in net fees incurred related to the underwriting facility with Chubb. Re, Inc., (“Chubb Re”). The results for the first quarter of 2002 included a charge of $23.0 million resulting from additional underwriting losses incurred related to the September 11, 2001 terrorist attacks.”
Trenwick’s gross and net premiums decreased substantially as a result of “the sale of the in-force property catastrophe reinsurance business of Trenwick’s Bermuda based subsidiary, LaSalle Re Limited on April 1, 2002, combined with Trenwick’s decision to cease underwriting United States specialty program insurance and United Kingdom international specialty insurance and reinsurance, both effective in the fourth quarter of 2002.” The company’s Q1 gross premiums written totaled $257.8 million, while net premium was$192.3 million.
The company said that “these decreases were offset in part by an increase in premiums written through Trenwick’s Lloyd’s of London (“Lloyd’s”) operation.”
Its combined loss and expense ratio for the first quarter of 2003 was 101.1% compared to a combined loss and expense ratio of 114.1% for the first quarter of 2002. It indicated that “the 2002 first quarter results include 8.6 percentage points of adverse loss reserve development related to the September 11, 2001 terrorist attacks.”
The announcement pointed out that “the future operations of Trenwick will differ materially from prior periods as Trenwick has placed into run-off substantially all of its insurance operations other than its Lloyd’s business. As result of the foregoing, Trenwick’s operations, at least for the foreseeable future, will likely consist of the sale, or management in run-off, of its insurance businesses.”
It indicated that the “reduced operations will be limited primarily to the administration of claims, regulatory compliance, collection of receivables, settlement of reinsurance agreements (including commutations where appropriate), cash and investment management.” Depending on how successful these run-off efforts are, Trenwick will “seek to repay indebtedness owed to Trenwick’s creditors to the extent permitted by the applicable regulator with primary jurisdiction over each of the separate regulated entities and, to the extent there are amounts remaining, to pursue other business opportunities or to distribute amounts to its equity holders.”
It warned, however, “It is likely that these efforts, even if successful in whole or in part, will require several years before any significant amounts will be made available to the creditors and equity holders, if at all.”
The full text of the first quarter financial results are available on the company’s Web site at: www.trenwick.com
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