S&P, A.M. Best Take Rating Actions on Trenwick

April 3, 2003

Both Standard & Poor’s Ratings Services and A.M. Best have reacted to the Trenwick Group Ltd.’s announcement that it was in default on its senior notes as of April 1. (See IJ Website April 2).

S&P said it had removed its counterparty credit ratings on Trenwick and LaSalle Re from CreditWatch, and “revised them to ‘D’ from ‘CCC-‘ following the announced non-payment of interest and principal on the $75 million senior notes due April 1, 2003.” S&P credit analyst Karole Dill Barkley added that “although there is an agreement in principal with the beneficial holders of all the senior notes to waive the default and extend the final maturity to Aug. 1, 2003, the prospect for significant recoveries to the senior note holders is very low.”

S&P indicated that “the ‘CCC’ counterparty credit and financial strength ratings on Trenwick Group Ltd.’s operating subsidiaries remain on CreditWatch with negative implications because of their weakened condition and the possibility of regulatory action.”

A.M. Best announced that it has “withdrawn the financial strength rating of C (Weak) and assigned a NR-4 rating (Company Request) to Trenwick America Reinsurance Corporation (Stamford, CT).” It also said it has “downgraded the debt rating of the group’s U.S. holding company, Trenwick America Corporation, to “d” from “c” relating to its $75 million 6.7% senior notes, which was due on April 1, 2003.” It also listed a series of debt ratings on Trenwick companies that have been withdrawn.

Best further noted that “Trenwick is in negotiations with the senior note holders to extend the maturity date on these notes until August 1, 2003, and it has in fact reached an agreement in principal in this regard. The financial strength rating of Trenwick America Reinsurance Corporation had previously been downgraded to C (Weak) from B- (Fair) on February 3, 2003. At that time, the ratings for all the runoff operations of the company were withdrawn, and the company’s debt ratings were all downgraded to ‘c’.”

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