Request for Counsel Trenwick
Request For Counsel
Regarding: Trenwick Group Ltd.
August 21, 2003
1. INTRODUCTION AND BACKGROUND 2
2. WHAT AM I HOPING TO ACCOMPLISH? 2
3. TRENWICK CORPORATE INFORMATION 3
MAIN AFFILIATES 3
TRENWICK AMERICA REINSURANCE 3
LASALLE RE HOLDINGS LTD 3
KEY PEOPLE 3
4. FINANCIAL HIGHLIGHTS 4
MY COMMENTS 4
BALANCE SHEET 4
COMPREHENSIVE INCOME 5
CASH FLOW & SHAREHOLDERS EQUITY 6
5. LATEST PRESS RELEASES 7
MY COMMENTS 7
TRENWICK TO FILE FOR BANKRUPTCY AND SELL OFF LLOYD'S OPERATIONS 7
INTERNATIONAL NEWS - TRENWICK SET TO FILE FOR BANKRUPTCY OVER DEBT. 8
TRENWICK GROUP LTD. ANNOUNCES AGREEMENT IN PRINCIPAL ON LONG-TERM RESTRUCTURING OF ITS DEBT OBLIGATIONS AND SALE OF ITS LLOYD'S OPERATIONS 9
TRENWICK GROUP LTD., LASALLE RE HOLDINGS LIMITED AND TRENWICK AMERICA CORPORATION FILE U.S. CHAPTER 11 BANKRUPTCY PROCEEDINGS TO INITIATE PREVIOUSLY ANNOUNCED RESTRUCTURING 9
TRENWICK GROUP LTD. ANNOUNCES AGREEMENT TO SELL TRENWICK INTERNATIONAL LIMITED 10
6. MORE FINANCIAL HIGHLIGHTS 11
COMMON SHARE OWNERSHIP 11
TRENWICK GROUP LTD. - INVESTMENT PORTFOLIO SUMMARY 12
1. Introduction and Background
I am a minority shareholder in Bermuda based Re-Insurer Trenwick Group Ltd. (TRENWICK) and am seeking bankruptcy representation and equity representation on behalf of the common shareholders of TRENWICK.
TRENWICK filed for Chapter 11 BK protection in Delaware on August 20 2003, primarily due to their inability to repay $75 million in senior notes (their only significant debt – see press release below) that were due August 1, 2003.
TRENWICK’s management and investor relations has refused to respond to all written and telephone communications that I have initiated during the past six months regarding the health and prospects of the company. They have been keeping a low profile and I believe that there may be evidence of fraud and breach of fiduciary duty with regards to their complete silence, inexplicable bankruptcy filing, and their recent announcement to sell their only active insurance business Trenwick Managing Agents (TMA) (see press release below).
I fear that the interests of the minority shareholders will not be properly represented during bankruptcy proceedings and, subsequently, as TRENWICK and its subsidiaries proceed to wind down their operations in run-off mode. I feel that BK may have the adverse effect of leading to the cancellation of the common shares in spite of the fact that TRENWICK has over $2.3 billion in consolidated investments and cash and a common stockholder’s equity of over $40 million (see financials below).
I have been in contact with at least fifty other minority shareholders who share my concern. Together we own over 4 million shares (around 10% of the common) and would represent the largest shareholding entity including institutions.
Details of Bankruptcy Filing
Judge Mary F. Walrath
Case No.:03-12635
U.S. Bankruptcy Court for the District
of Delaware
824 Market Street 6th Floor
Wilmington DE 19801
Tel:302-252-2925 The companies are to be represented by:
Christopher S. Sontchi , William D. Bowden, Ashby & Geddes
222 Delaware Avenue, 17th Floor
Wilmington, Del. 19899
(302) 654-1888
&
Benjamin Hoch, Irena Goldstein, Carey D. Schreiber, Dewy Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
(212) 259-8000
2. What Am I Hoping To Accomplish?
a) I request your assistance, on behalf of the common shareholders of TRENWICK, specifically with respect to bankruptcy representation and equity representation. After performing careful research of TRENWICK’s financial condition (see next section for some details), I am confident that there is significant equity locked away in the company. Without proper representation, I fear that the common shareholder’s portion of such equity will be snatched away.
b) We also request your assistance to ensure that the common shareholders of TRENWICK are included in any SCHEME of ARRANGEMENT that is formulated as part of TRENWICK’s restructuring. Of specific importance to us is that such a SCHEME of ARRANGEMENT allows for the early realization of any residual shareholder value.
I believe that the common shareholders would accept a discounted offer in the range of $1 per share for their part of TRENWICK’s residual equity. We thus request your assistance in putting forth a formal proposal that outlines such an offer.
3. Trenwick Corporate Information
Trenwick Group Ltd. (OTC: TWKGF)
LOM Building
27 Reid Street
Hamilton HM 11 Bermuda
(441) 292-4985
All SEC filings and other company information can be found at www.trenwick.com
Main Affiliates
Trenwick America Reinsurance
1 Canterbury Green
Stamford, CT 06901
Phone: 203-353-5500
Fax: 203-353-5550 Lasalle Re Holdings Ltd
25 Church Street
PO Box HM 1502
Hamilton Bermuda D0
HM FX
441-292-3339
Key People
Acting Chairman, President, and CEO: W. Marston Becker
EVP and CFO: Alan L. Hunte, 441-292-4985
4. Financial Highlights
My comments
TRENWICK's stock is trading at 3 cents; but has a book value of at least twenty times this amount. It is currently an insurance company in run-off with adequate reserves but is struggling to pay $75 million in senior debt. The financials below show that TRENWICK currently has well over a billion dollars in leverage.
Balance Sheet
Trenwick Group Ltd.
Consolidated Balance Sheet
Amounts expressed in thousands of United States dollars,
except share and per share data)
June 30, 2003 and December 31, 2002
(Unaudited)
2003 2002
----------- -----------
ASSETS
Debt securities available for sale, at fair value $ 1,883,494 $ 1,492,834
Equity securities at fair value 8,707 8,849
Cash and cash equivalents 401,103 814,235
Accrued investment income 17,326 19,223
Premiums receivable 426,600 519,866
Reinsurance recoverable balances, net 1,794,460 1,803,011
Prepaid reinsurance premiums 195,880 262,802
Deferred policy acquisition costs 100,304 127,200
Security deposit held by Chubb 50,724 50,207
Other assets 142,006 179,755
----------- -----------
Total assets $ 5,020,604 $ 5,277,982
=========== ===========
LIABILITIES
Unpaid claims and claims expenses $ 3,724,169 $ 3,718,124
Unearned premium income 557,439 721,624
Reinsurance balances payable 259,748 374,397
Indebtedness 76,784 76,498
Other liabilities 171,158 126,549
----------- -----------
Total liabilities 4,789,298 5,017,192
----------- -----------
MINORITY INTEREST
Mandatorily redeemable preferred capital securities
of subsidiary trust holding solely junior subordinated
debentures of U.S. subsidiary 68,350 68,320
Minority interest in preferred shares of
Bermuda subsidiary 75,000 75,000
----------- -----------
Total minority interest 143,350 143,320
----------- -----------
CONVERTIBLE PREFERRED STOCK 40,000 40,000
----------- -----------
COMMON SHAREHOLDERS' EQUITY
Common shares, $0.10 par value, 36,763,041 and
36,801,545 shares issued and outstanding 3,676 3,680
Additional paid in capital 574,858 576,567
Deferred compensation under share award plans (1,174) (2,615)
Retained earnings (accumulated deficit) (545,684) (492,343)
Accumulated other comprehensive income (loss) 16,280 (7,819)
----------- -----------
Total common shareholders' equity 47,956 77,470
----------- -----------
Total liabilities, minority interest and common
shareholders' equity $ 5,020,604 $ 5,277,982
=========== ===========
Comprehensive Income
Trenwick Group Ltd.
Consolidated Statement of Operations and Comprehensive Income (Unaudited)
(Amounts expressed in thousands of United States dollars,
except per share data)
Three and Six Months Ended June 30, 2003 and 2002
Three Months Six Months
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
REVENUES
Net premiums earned $ 214,913 $ 277,261 $ 436,418 $ 543,285
Net investment income 18,449 27,885 38,087 57,140
Net realized investment gains (losses) (584) 3,957 (210) 5,414
Other income (expense) (9,986) 3,036 (12,019) 5,638
--------- --------- --------- ---------
Total revenues 222,792 312,139 462,276 611,477
--------- --------- --------- ---------
EXPENSES
Claims and claims expenses incurred 180,786 194,025 319,269 401,602
Policy acquisition costs 63,863 74,843 126,292 147,915
Underwriting expenses 21,125 20,681 45,119 43,688
General and administrative expenses 3,545 4,658 7,283 7,976
Loss on sale of LaSalle's in-force
reinsurance business -- 7,008 -- 7,008
Interest expense and subsidiary
preferred share dividends 9,012 10,881 20,778 20,817
Foreign currency losses (gains) (4,967) 1,838 (4,502) 1,160
--------- --------- --------- ---------
Total expenses 273,364 313,934 514,239 630,166
--------- --------- --------- ---------
Loss before income taxes and cumulative
effect of change in accounting principle (50,572) (1,795) (51,963) (18,689)
Applicable income taxes (benefit) 1,059 (5,584) (781) (9,568)
--------- --------- --------- ---------
Net income (loss) before cumulative effect
of change in accounting principle (51,631) 3,789 (51,182) (9,121)
Cumulative effect of change in accounting principle -- -- -- (41,653)
--------- --------- --------- ---------
Net income (loss) (51,631) 3,789 (51,182) (50,774)
Dividends on convertible preferred stock 1,086 -- 2,159 --
--------- --------- --------- ---------
Net income (loss) available to common shareholders $ (52,717) $ 3,789 $ (53,341) $ (50,774)
========= ========= ========= =========
EARNINGS PER SHARE:
Basic and diluted earnings (loss) per
common share before cumulative effect
of change in accounting principle $ (1.43) $ 0.10 $ (1.45) $ (0.25)
Cumulative effect of change in accounting principle -- -- -- (1.13)
--------- --------- --------- ---------
Basic and diluted earnings (loss)
per common share $ (1.43) $ 0.10 $ (1.45) $ (1.38)
========= ========= ========= =========
COMPREHENSIVE INCOME (LOSS):
Net income (loss) $ (51,631) $ 3,789 $ (51,182) $ (50,774)
--------- --------- --------- ---------
Other comprehensive income (loss):
Net unrealized investment gains (losses) 14,449 11,225 19,367 (1,530)
Foreign currency translation adjustments 5,661 1,012 4,732 2,125
--------- --------- --------- ---------
Total other comprehensive income (loss) 20,110 12,237 24,099 595
--------- --------- --------- ---------
Comprehensive income (loss) $ (31,521) $ 16,026 $ (27,083) $ (50,179)
========= ========= ========= =========
Cash Flow & Shareholders Equity
Trenwick Group Ltd.
Consolidated Statement of Cash Flows (Unaudited)
(Amounts expressed in thousands of United States dollars)
Three and Six Months Ended June 30, 2003 and 2002
Three Months Six Months
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
OPERATING ACTIVITIES
Premiums collected, net of acquisition costs $ 174,443 $ 473,721 $ 424,066 $ 774,956
Ceded premiums paid, net of acquisition costs (77,900) (102,621) (182,248) (290,843)
Claims and claims expenses paid (198,615) (369,563) (432,530) (545,487)
Claims and claims expenses recovered 81,402 (19,843) 109,687 125,389
Underwriting expenses paid (31,454) (24,985) (70,361) (56,021)
Net investment income received 26,680 35,334 51,003 69,286
Service and other income received, net of expenses 1,005 2,402 11,052 4,972
General and administrative expenses paid (4,782) (8,832) (10,063) (12,971)
Interest expense and
preferred share dividends paid (10,414) (5,381) (11,026) (12,456)
Income taxes recovered 133 986 1,015 1,046
--------- --------- --------- ---------
Cash (for) from operating activities (39,502) (18,782) (109,405) 57,871
--------- --------- --------- ---------
INVESTING ACTIVITIES
Purchases of debt securities (544,951) (487,427) (904,933) (825,493)
Sales of debt securities 102,952 495,364 217,666 703,859
Maturities of debt securities 308,175 232,057 381,842 328,182
Purchases of equity securities -- (83) -- (83)
Sales of equity securities 113 -- 113 --
Effect on cash of exchange rate translation 7,548 14,180 3,547 10,919
Additions to premises and equipment (688) (1,490) (773) (4,740)
--------- --------- --------- ---------
Cash from (for) investing activities (126,851) 252,601 (302,538) 212,644
--------- --------- --------- ---------
FINANCING ACTIVITIES
Repayment of indebtedness -- (197,841) -- (199,293)
Indebtedness issuance costs paid (806) -- (1,299) (88)
Issuance of common shares 55 39 110 96
Common share dividends paid -- (1,472) -- (2,943)
Share and option repurchases -- -- -- (161)
--------- --------- --------- ---------
Cash for financing activities (751) (199,274) (1,189) (202,389)
--------- --------- --------- ---------
Change in cash and cash equivalents (167,104) 34,545 (413,132) 68,126
Cash and cash equivalents, beginning of period 568,207 364,931 814,235 331,350
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 401,103 $ 399,476 $ 401,103 $ 399,476
========= ========= ========= =========
Trenwick Group Ltd.
Consolidated Statement of Changes in Common Shareholders' Equity (Unaudited)
(Amounts expressed in thousands of United States dollars except share data)
Six Months Ended June 30, 2003 and 2002
2003 2002
-------- ---------
Common shareholders' equity, beginning of period $ 77,470 $ 498,326
COMMON SHARES AND ADDITIONAL PAID IN CAPITAL
Issuance of 63,881 and 11,984 common shares for cash
under employee and director plans 6 96
Purchase and retirement of 2,526 and 18,646 common shares (1) (161)
Cancellation of 99,859 and 49,316 restricted common share awards (1,717) (916)
DEFERRED COMPENSATION UNDER SHARE AWARD PLAN
Compensation expense recognized (277) 501
Cancellation of restricted common shares 1,717 916
RETAINED EARNINGS
Net loss (51,182) (50,774)
Dividends on convertible preferred stock (2,159) --
Common share dividends, $0.08 per share -- (2,943)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income 24,099 595
-------- ---------
Common shareholders' equity, end of period $ 47,956 $ 445,640
======== =========
5. Latest Press Releases
My comments
TRENWICK recently filed BK due to its inability to repay $75 million in senior notes that were due Aug 1, 2003 (see below). I fear that this action will lead to cancellation of the common shares and will unjustly deny common shareholders of their stake in the company at the conclusion of run-off.
As stated previously, all my requests for information or clarification about any press releases or SEC filings have been denied. I have attempted to contact Alan Hunte (who is listed as the contact at the bottom of most TRENWICK press releases) numerous times to no avail.
I also believe that there may be evidence of fraud and breach of fiduciary duty regarding TRENWICK’s announced sale of its last remaining active insurance business, Trenwick Managing Agents (TMA). In a recent interview reported in Global Re News and in Hoovers, Mr. Watson of the buyout team is quoted as saying that the decision to not fund the Lloyd's (TRENWICK's last remaining active insurance business) 2004 year of account was made by TRENWICK this past January, a full six months before shareholders learned of this move and before glowing reports on the strength of TRENWICK's Lloyd's operations were made. I would like to know why this material fact was withheld from shareholders at the time the plans were becoming known to certain individuals and groups. On August 8, Mr. Watson admitted to knowing in January of this year that TRENWICK was going to stop being an active insurance company after 2003. Naturally, I feel the withholding of this information from shareholders is an actionable omission.
Trenwick to file for bankruptcy and sell off Lloyd's operations
August 8, 2003 6:25pm
Europe Intelligence Wire
STRICKEN Trenwick Group has announced it is to file for bankruptcy and has agreed to sell its Lloyd's operation to a management-led consortium.
The management buyout of its Lloyd's operation will leave Trenwick with no ongoing insurance operations, and the continued run-off will be the only outstanding issue for the group.
Trenwick will undergo a restructuring of its debts, which will include filing for bankruptcy in the US, UK and Bermuda.
The management buyout will be led by Trenwick Managing Agents chief executive Michael Watson. The deal was for an undisclosed sum.
The Lloyd's deal comes after Trenwick told Mr Watson and his team in January that it was unable to commit to further capacity for 2004 and authorized them to seek new capital from elsewhere.
Mr Watson said the deal is to be partly financed by venture capital but will include finance from the management team itself. The majority shareholder will be Englefield Capital, a E700m ($790m) private equity fund focusing on the middle market sector across Europe.
The management team is being advised by Benfield Advisory and PwC Corporate Finance.
"We can give our new operation no better endorsement that putting our own money into it," he said. The deal will see the company's syndicate 839 focus on treaty reinsurance, personal lines and property insurance, professional indemnity, financial institution insurance and specialty lines cover.
Mr Watson said: "Prior to my arrival in 2001 the company had suffered a series of substantial losses. It is fair to say it lacked identity and I do not think the market knew what we were trying to do. We've worked hard to address the issues and we're now a profitable business. We made a small profit in 2001, 2002 will be better and currently 2003 looks to be better still."
The new company will underwrite with GBP250m ($400m) of capacity for 2004, which will be provided by the existing consortium of banks via an extension of the letter of credit commitment for the 2004, 2005 and 2006 years of account, GBP75m from the new company and GBP25m from third parties.
"The deal had been in the making since we were told in January that Trenwick was not prepared to fund the capacity for the 2004 year of account and I was authorized to find new capital providers," said Mr Watson.
"We've been in discussions with a number of parties and in May we put forward three separate proposals to Trenwick to acquire the business. The deal has been signed although we're awaiting regulatory approval before we can say the acquisition has been completed."
Mr Watson said the buyout has come at the right time for the company, given the current conditions within the market.
"We are fortunate in the fact that we're not a new start-up," he said. "There have been a number of new ventures, but I believe it would be a tough time to start from scratch. We believe the market will continue to harden in 2004 but 2005 will see some easing in rates so we're not planning to look to increase our capacity for 2005 above the 2003 figure.
"Earlier this year we made the decision to move out of the aviation market, which has accounted for some GBP100m of premium. This capacity will provide us with some room for growth. Beyond 2004 it really is a question of where the market will go."
In the new company Mr Watson will remain chief executive, with Jim Giordano as chief underwriting officer.
The buyout team members are all current employees at the company but Mr Watson said there are already plans to recruit new staff.
"This will give us a more stable platform going forward and it will enable us to attract quality people to the company," he explained.
In a statement to the New York stock exchange Trenwick said the move will form part of a new deal enabling it to enter into a long-term restructuring of its debt obligations. Part of the restructuring will be the filing by Trenwick and/or one or more of its subsidiaries for chapter 11 bankruptcy in the US and similar proceedings in Bermuda, Barbados and the UK. The statement said: "Trenwick believes it is unlikely any of the holders of the shares of Trenwick or any of its wholly-owned Bermuda subsidiary LaSalle Re Holdings are likely to receive any return on their investment in the near term if at all."
Publication: Insurance Day
Distributed by Financial Times Information Limited
International News - Trenwick set to file for bankruptcy over debt.
August 13, 2003 12:28pm
Europe Intelligence Wire
Bermudian insurer Trenwick intends to file for bankruptcy as a result of failing to meet a repayment deadline on 1 August for $75m (GBP47m) in senior notes. Its Lloyd's subsidiary will not be affected, however, as it has managed to raise support for a long-planned management buyout.
The Trenwick Group has been struggling for some time, with several delays in the repayment of letters of credit and downgrades from the rating agencies.
Last December, it placed its London market company operations into run-off and has gradually ceased writing new business through its US business Trenwick America Reinsurance. In March this year it was suspended from trading on the New York Stock Exchange, after shares fell to just 16 cents.
Trenwick's Lloyd's arm Trenwick Managing Agents, which manages composite syndicate 839 and life syndicate 44, has completed its MBO with support from private equity fund Engelfield Capital, which will be the majority owner from 2004. The management team, led by chief executive Michael Watson, will also have a "significant stake", the agency said. Capacity of the two syndicates is expected to be GBP250m and GBP3.5m respectively.
In a statement, the new company said the 2004 capacity of Syndicate 839 is expected to be met as follows: GBP150m from the existing consortium of banks (by extending their letter of credit commitment for the 2004, 2005 and 2006 years of account); GBP75m from the new company; and GBP25m from third parties.
Mr Watson said the agency is "highly committed" to Lloyd's and said underwriting conditions in its core areas remain "excellent".
Publication: Post Magazine
Distributed by Financial Times Information Limited
Trenwick Group Ltd. Announces Agreement In Principal on Long-Term Restructuring of its Debt Obligations and Sale of its Lloyd's Operations
HAMILTON, Bermuda--(BUSINESS WIRE)--Aug. 7, 2003--Trenwick Group Ltd. ("Trenwick")(OTC: TWKGF) stated today that it has entered into a letter of intent with respect to an agreement in principle on a long-term restructuring of Trenwick's debt obligations, the sale of its business operations at Lloyd's, and the runoff of its remaining businesses with (i) the majority of the beneficial holders (the "Senior Noteholders") of the 6.70% Senior Notes (the "Senior Notes") of its wholly owned subsidiary, Trenwick America Corporation ("Trenwick America"), (ii) the steering committee (the "Steering Committee") of the lending institutions (the "Banks") that have issued letters of credit under a senior secured credit facility (the "LoC Facility") on behalf of certain subsidiaries of Trenwick in support of Trenwick's Lloyd's operations, and (iii) a group composed of current members of management of Trenwick's Lloyd's operations (the "Management Team"). Trenwick America did not pay principal and interest on the Senior Notes due on August 1, 2003, which also created an event of default with respect to the LoC Facility and under certain other indebtedness of Trenwick America.
The restructuring will be implemented through various means, including but not limited to the following: (i) the filing by Trenwick and/or one or more of its subsidiaries of Chapter 11 bankruptcy proceedings in the United States and the filing of similar proceedings in Bermuda, Barbados or the United Kingdom, as the case may be; (ii) the sale by Trenwick of substantially all of its Lloyd's operations to a company controlled by the Management Team and with capital provided by the Management Team, third-party investors and the Banks and (iii) the retention of third party run-off advisors and the continued runoff or disposition of all of Trenwick's other insurance and reinsurance operations. In light of the foregoing, Trenwick believes that it is unlikely that any of the holders of the shares of Trenwick or of its wholly-owned Bermuda subsidiary, LaSalle Re Holdings Ltd will receive any return on their investment in the near term if at all.
The terms of the restructuring are subject to the satisfaction of numerous conditions precedent including, but not limited to, the following: (i) approval of the restructuring by the Banks; (ii) negotiation of definitive documentation (iii) receipt of all requisite regulatory and other approvals in the United States, Bermuda and the United Kingdom; (iv) due diligence by Englefield Capital LLP, the proposed equity sponsor of the Management Team, which has entered into an exclusive negotiation agreement with Trenwick, and (v) approval of any court having jurisdiction over the above-referenced insolvency proceedings.
Background Information
Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's operations at Lloyd's, London underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis. Trenwick's United States specialty program business, specialty London market insurance company, Trenwick International Limited, and its United States reinsurance business through Trenwick America Reinsurance Corporation are now in runoff. In 2002, Trenwick sold the in-force business of LaSalle Re Limited, its Bermuda based subsidiary
Trenwick Group Ltd., LaSalle Re Holdings Limited and Trenwick America Corporation File U.S. Chapter 11 Bankruptcy Proceedings to Initiate Previously Announced Restructuring
Insurance Company Subsidiaries Not a Party to Proceedings
HAMILTON, Bermuda--(BUSINESS WIRE)--Aug. 20, 2003--Trenwick Group Ltd. ("Trenwick") (OTC: TWKGF) stated today that it and its affiliates, LaSalle Re Holdings Limited ("LaSalle Re Holdings") and Trenwick America Corporation ("Trenwick America," and collectively with LaSalle Re Holdings and Trenwick, the "Debtors"), as a step in its previously announced restructuring and in accordance with its August 6 letter of intent with creditors (the "Letter of Intent"), filed for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Additionally, Trenwick and LaSalle Re Holdings are in the process of filing proceedings in the Supreme Court of Bermuda, known under Bermudian law as "winding up", as a further step in the restructuring and in accordance with the previously announced Letter of Intent. Trenwick's insurance company subsidiaries, Trenwick America Reinsurance Corporation, The Insurance Corporation of New York, Dakota Specialty Insurance Company and LaSalle Re Limited, all of which are in runoff, and its Lloyd's operations are not subject to the proceedings in the Bankruptcy Court or the Supreme Court of Bermuda and their operations continue.
Background Information
Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's operations at Lloyd's, London underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis. Trenwick's United States specialty program business, specialty London market insurance company, Trenwick International Limited, and its United States reinsurance business through Trenwick America Reinsurance Corporation are now in runoff. In 2002, Trenwick sold the in-force business of LaSalle Re Limited, its Bermuda based subsidiary.
Safe Harbor for Forward-Looking Statements
Certain statements made in this press release that are not based on current or historical facts are forward-looking in nature including, without limitation, statements containing words "believes," "anticipates," "plans," "projects," "intends," "expects," "estimates," "predicts," and words of similar import. Such forward-looking statements, including in particular Trenwick's forecast of future results, involve known and unknown risks, assumptions, uncertainties, and other factors disclosed in Trenwick's filings with the Securities and Exchange Commission that may cause actual results, performance, or achievements of Trenwick to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. In particular, forecasting of reserves for future losses is based on historical experience and future assumptions. As a result they are inherently subjective and may fluctuate based on actual future experience and changes to current or future trends in the legal, social or economic environment. Trenwick undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Trenwick Group Ltd.
Alan L. Hunte, 441-292-4985
SOURCE: Trenwick Group Ltd.
Trenwick Group Ltd. Announces Agreement to Sell Trenwick International Limited
HAMILTON, Bermuda--(BUSINESS WIRE)--Aug. 21, 2003--Trenwick Group Ltd. ("Trenwick") announced today that its subsidiary Trenwick Holdings Limited has entered into a definitive agreement with Bestpark Limited ("Bestpark"), an affiliate of Litigation Control Group Limited ("LCL"), to sell to Bestpark all of the capital stock of Trenwick International Limited ("Trenwick International"), Trenwick's London-based specialty insurance and reinsurance subsidiary, currently in runoff, as well as all of the capital stock of Trenwick Management Services Ltd ("TMS") and Specialist Risk Underwriters Limited ("SRU"). TMS is Trenwick International's management services company. SRU is a company that has carried out underwriting agency services for Trenwick International and other entities. Upon completion of the acquisition, LCL will manage the runoff of Trenwick International. It is anticipated that substantially all of the initial consideration to be paid by Bestpark will be used to pay transactional fees and expenses. The remaining consideration, if any, will be contingent upon a successful runoff of the Trenwick International business. Completion of the sale is subject to the fulfillment of customary closing conditions, including the approval of the Financial Services Authority of the United Kingdom.
Background Information
Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's operations at Lloyd's, London underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis. Trenwick's United States specialty program business, specialty London market insurance company, Trenwick International Limited, and its United States reinsurance business through Trenwick America Reinsurance Corporation are now in runoff. In 2002, Trenwick sold the in-force business of LaSalle Re Limited, its Bermuda based subsidiary.
On August 20, 2003, Trenwick and its affiliates LaSalle Re Holdings Limited ("LaSalle Re Holdings") and Trenwick America Corporation ("Trenwick America," and collectively with LaSalle Re Holdings and Trenwick, the "Debtors"), as a step in its previously announced restructuring and in accordance with its August 6, 2003 letter of intent with creditors (the "Letter of Intent"), filed for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Additionally, Trenwick and LaSalle Re Holdings filed proceedings in the Supreme Court of Bermuda, known under Bermudian law as "winding up", as a further step in the restructuring and in accordance with the previously announced Letter of Intent. Trenwick's insurance company subsidiaries, Trenwick America Reinsurance Corporation, The Insurance Corporation of New York, Dakota Specialty Insurance Company and LaSalle Re Limited, all of which are in runoff, and its Lloyd's operations are not subject to the proceedings in the Bankruptcy Court or the Supreme Court of Bermuda and their operations continue.
Safe Harbor for Forward-Looking Statements
Certain statements made in this press release that are not based on current or historical facts are forward-looking in nature including, without limitation, statements containing words "believes," "anticipates," "plans," "projects," "intends," "expects," "estimates," "predicts," and words of similar import. Such forward-looking statements, including in particular Trenwick's forecast of future results, involve known and unknown risks, assumptions, uncertainties, and other factors disclosed in Trenwick's filings with the Securities and Exchange Commission that may cause actual results, performance, or achievements of Trenwick to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. In particular, forecasting of reserves for future losses is based on historical experience and future assumptions. As a result they are inherently subjective and may fluctuate based on actual future experience and changes to current or future trends in the legal, social or economic environment. Trenwick undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Trenwick Group Ltd.
Alan L. Hunte, 441-292-4985
SOURCE: Trenwick Group Ltd.
6. More Financial Highlights
Common Share Ownership
The following table sets forth certain information regarding beneficial ownership of Trenwick's Common Stock as of April 15, 2003 (unless otherwise noted) by (i) each person who is known by the company to own beneficially more than 5% of the Common Stock; and (ii) each of Trenwick's directors and named executive officers and all directors and executive officers of Trenwick as a group.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class
----------------------------------------- ------------------------ --------------------
CNA Financial Corporation
CNA Plaza
Chicago, IL 60685 ......................... 3,707,400(3) 10.08%
Neil Gagnon
1370 Avenue of the Americas, Suite 2002
New York, NY 10019 ........................ 2,665,976(4) 7.25%
W. Marston Becker ......................... 35,250(5) *
James F. Billett, Jr ...................... 160,160 *
Alan L. Hunte ............................. 131,291 *
Paul Feldsher ............................. 57,062(6) *
Robert A. Giambo .......................... 41,335 *
John V. Del Col ........................... 13,331 *
Anthony S. Brown .......................... 65,575(7) *
Robert M. DeMichele ....................... 24,003(8) *
Clement S. Dwyer, Jr ...................... 19,689(9) *
Joseph D. Sargent ......................... 113,625(7)(10) *
Stephen R. Wilcox ......................... 10,250(7) *
All directors and officers as a group
(11 persons) .............................. 603,959 1.64%
Trenwick Group Ltd. - Investment Portfolio Summary
December 31, 2002, September 30, 2002 and December 31, 2001
and Three Months Ended December 31, 2002, September 30, 2002 and December 31, 2001
(Monetary amounts expressed in thousands of U.S. dollars)
December 31, 2002 September 30, 2002 Change December 31, 2001 Change
Cash and investments (at period end)
U.S. federal and U.K. government securities, including agencies $ 721,536 $ 781,624 $ (60,088) $ 435,994 $285,542
Other foreign government securities 94,386 112,192 (17,806) 77,693 16,693
U.S. municipal government securities 3,974 4,131 (157) 125 3,849
Mortgage and other asset-backed securities 269,568 563,510 (293,942) 582,349 (312,781)
Corporate and other debt securities 390,806 494,667 (103,861) 829,868 (439,062)
Debt securities, at amortized cost 1,480,270 1,956,124 (475,854) 1,926,029 (445,759)
Net unrealized gains on debt securities 12,564 68,023 (55,459) 34,571 (22,007)
Debt securities, at fair value 1,492,834 2,024,147 (531,313) 1,960,600 (467,766)
Equity securities, at fair value 8,849 24,752 (15,903) 24,164 (15,315)
Cash and cash equivalents 814,235 320,514 493,721 331,350 482,885
Total cash and investments $2,315,918 $ 2,369,413 $ (53,495) $ 2,316,114 $ (196)
Geographic distribution
United States $ 1,107,234 $ 1,282,909 $ (175,675) $ 1,208,080 $ (100,846)
Bermuda 181,559 271,833 (90,274) 530,688 (349,129)
United Kingdom 1,027,125 814,671 212,454 577,346 449,779
Total cash and investments $ 2,315,918 $ 2,369,413 $ (53,495) $ 2,316,114 $ (196)
Annualized book yields (at period end)
Total debt securities 4.85% 5.79% -0.94% 6.62% -1.77%
Equity securities 0.00% 0.00% 0.00% 0.00% 0.00%
Cash and cash equivalents 1.99% 2.49% -0.50% 3.46% -1.47%
Total cash and investments 3.80% 5.12% -1.32% 6.09% -2.29%
Investment income (for the period)
Net investment income $ 23,497 $ 24,401 $ (904) $ 32,972 $ (9,475)
Applicable income taxes - 7,318 (7,318) 8,217 (8,217)
Net investment income $ 23,497 $ 17,083 $ 6,414 $ 24,755 $ (1,258)
included in net income
Geographic distribution
United States $ 11,052 $ 13,401 $ (2,349) $ 16,276 $ (5,224)
Bermuda 1,666 2,198 (532) 8,295 (6,629)
United Kingdom 10,779 8,802 1,977 8,401 2,378
Net investment income $ 23,497 $ 24,401 $ (904) $ 32,972 $ (9,475)