Trenwick wins Lloyd's cash but halts London business

Troubled (re)insurer Trenwick has won 11th-hour support from its financial backers to continue unde...

Troubled (re)insurer Trenwick has won 11th-hour support from its
financial backers to continue underwriting at Lloyd's but has put its
London company operation, Trenwick International, into run-off.

Bermuda-based Trenwick's backers at Lloyd's finally agreed in principle to
renew $182m of letters of credit as a previous $226m credit facility ran
out in late November.

As it negotiated renewal of the credit facility, Trenwick suspended
dividend payments on its preferred shares and trust-preferred securities
under the terms of an agreement with its letter of credit providers,
prompting rating agencies to lower Trenwick's preferred stock and debt

Moody's said its action was also due to concerns about Trenwick's
liquidity and its future business prospects. The (re)insurer reported an
operating loss of $143m for the first nine months of 2002, largely due to
increases in loss reserves at its US subsidiaries and Trenwick

Trenwick has hired financial adviser Greenhill and Co. to help it "in
evaluating and implementing a restructuring of its outstanding
indebtedness and preferred equity".

Trenwick's forecast capacity at Lloyd's for 2003 is $500m, which includes
the $182m credit facility, capital from Trenwick and £100m ($157m) of
capital from, and a £30m qualifying quota share agreement with, Berkshire
Hathaway's subsidiary National Indemnity.

Trenwick will take a charge in its fourth quarter 2002 accounts for the
expenses of putting Trenwick International, its specialty London market
insurer, into run-off.

The closure of Trenwick International had been expected. Trenwick had said
it would concentrate its London underwriting at Lloyd's and had moved
lines of business, including property and aviation, from Trenwick
International to Lloyd's.
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