AM Best has downgraded the financial strength ratings of Trenwick Group's operating subsidiaries. Chartwell Insurance Company has been downgraded to C++ (marginal) and Trenwick International has been downgraded to B-.
AM Best has downgraded the financial strength ratings of Trenwick Group's operating subsidiaries. Chartwell Insurance Company has been downgraded to C++ and Trenwick International has been downgraded to B-.
All ratings remain under review with negative implications.
These rating actions follow AM Best's downgrade of the group's financial strength and debt ratings on October 18, 2002, due to concerns with the insurance subsidiaries' operating leverage and the constricted financial flexibility of the group.
The company's third quarter 2002 earnings release reported $137 million in net losses for the quarter, which included $90.7 million of reserve strengthening for prior accident years and a $54.5 million write-down of its deferred tax asset.
AM Best said: "These actions further compound the company's already stressed financial position. Further, the company is currently undergoing an external actuarial review of its loss reserves."
AM Best added: "Significant uncertainty remains concerning the company's ability to renew its letter of credit facility to support its Lloyd's operation for 2003 and to service its $75 million senior note obligations which come due in April 2003. The company has triggered an event of default with regard to its current letter of credit facility but has just announced a forbearance agreement whereby its credit providers will refrain from enforcing their rights to require the company to collateralize the outstanding letters of credit issued under this agreement until November 22, 2002, unless certain new covenants are breached. If Trenwick is unable to renew this credit facility by November 22, 2002, it will likely not be able to participate in the Lloyd's market in 2003, further inhibiting its ability to generate revenues and cash flow to support the debt obligations of its holding companies."
The financial strength ratings have been downgraded to B- (Fair) from B+ (Very Good) for the following subsidiaries of the Trenwick Group:
· Trenwick America Reinsurance Corporation
· Trenwick International Limited
· LaSalle Re Limited
· Insurance Corporation of New York
· Dakota Specialty Insurance Company
The financial strength rating has been lowered to C++ (Marginal) from B (Fair) for the following subsidiary of the Trenwick Group:
· Chartwell Insurance Company
