Trenwick Group, Ltd.(fka TWKGQ)

[lifegear]

NOLs valuation....

Deferred Income Tax Assets aka NOLs (Net Operating Loss carryover)

Trenwick's United States and United Kingdom operations incurred financial accounting losses in the years 1999 through 2002 and, in connection with such losses, recorded as an asset up to $119.6 million and $96.8 million, respectively, of net deferred income taxes (before application of a valuation allowance). The net deferred income tax asset represented the future tax benefit of the losses previously incurred by Trenwick's United States and United Kingdom operations. Because of Trenwick's cumulative financial accounting losses, in the absence of specific favorable factors, application of FASB Statement No. 109 required Trenwick to establish during 2002 a 100% valuation allowance against its deferred tax asset related to its United States and United Kingdom operations. The establishment of a 100% valuation allowance against Trenwick's deferred tax asset increased Trenwick's provision for income taxes and net loss by $150.2 million, or $4.08 per share for the year ended December 31, 2002. The maintenance of a full valuation allowance against Trenwick's net deferred tax asset through December 31, 2002 further increased Trenwick's provision for income taxes and net loss by $65.1 million, or $1.77 per share. Trenwick's management will continue to monitor its tax position and reassess the need for a full valuation allowance on its deferred tax asset on a periodic basis.