Ratings agency Standard & Poor's said yesterday that it expects Bermuda insurer Trenwick Group will default on payment of $75 million of debt due on April or be forced to restructure the debt in such a way that it may be equivalent to a default.

S&P said it was placing its 'CCC-' counterparty credit ratings on the troubled insurer and its sub-holding companies - LaSalle Re Holdings Ltd. and Trenwick America Corp. - on CreditWatch with negative implications because it believes the company's ability to restructure its senior debt to keep it out of default is remote.

S&P also said that it placed its 'CCC' counterparty credit and financial strength ratings on Trenwick America Reinsurance Corp., Dakota Specialty Insurance Co., LaSalle Re Ltd., Trenwick International Ltd., and Insurance Corp. of NY on CreditWatch negative.

S&P said Trenwick had a covenant in its recently renewed bank letter of credit facility that required a refinancing of its April 1 maturity of $75 million of senior debt by March 1.

"Although management has a waiver of the covenant, Standard & Poor's believes its ability to restructure such that the senior debt is not in default remains remote," the agency said.

"Following the fourth-quarter 2002 reserve additions, tangible net worth at year-end 2002 is negative $49.7 million after deducting $127.2 million of deferred acquisition costs," S&P added.

"The emergence of earnings and dividend capacity to service existing creditors in the near-term remains unlikely."