Trenwick Group Ltd. reported a 30 percent increase in gross premium writings in the second quarter of 2002 and a 31 percent increase in gross premium writings in the first half of 2002, compared to the same periods last year.

Trenwick reported operating income of $6.5 million, or $0.18 per share, for the second quarter of 2002 and an operating loss of $7.6 million, or $0.21 per share for the first half of 2002.

Trenwick's operating results for the first half of 2002 were adversely affected by approximately $21.8 million of loss development related to the September 11 terrorist attacks.

Trenwick previously reported $23.0 million of adverse development in the first quarter.

Results of Lloyd's Syndicates in runoff included in Trenwick's operating results for the 2002 second quarter and first half of 2002 were losses of $0.9 million and $4.8 million, respectively.

Trenwick reported second quarter 2002 net income of $3.8 million or $0.10 per share compared to a net loss of $50.8 million or $1.38 per share for the second quarter of 2001.

For the first six months of 2002, Trenwick reported a net loss of $50.8 million or $1.38 per share compared to a net loss of $31.9 million or $0.87 per share for the first six months of 2001. The results for the first six months of 2002 included a charge of $41.7 million or $1.13 per share for the cumulative effect of the change in accounting for goodwill, which resulted from Trenwick's adoption of a new accounting standard effective January 1, 2002. Also included in the results of both the second quarter and first six months of 2002 is a charge of $4.2 million (net of commission income of $2.8 million) related to the previously reported sale of the property catastrophe business of Trenwick's Bermuda subsidiary, LaSalle Re Limited.

The charge includes the effect of structuring the sale as a reinsurance transaction, causing related expenses to be recognised in the current quarter while additional proceeds will be recognised over the duration of the reinsured LaSalle contracts. This transaction reduced net income for both the second quarter and first six months of 2002 by $0.11 per share.

As of June 30, 2002, Trenwick's consolidated common shareholders' equity totalled $445.6 million or $12.11 per share, compared to $498.3 million or $13.52 per share at December 31, 2001. The decrease in consolidated shareholders' equity resulted mainly from the write down of all of Trenwick's goodwill from the Trenwick-LaSalle business combination completed in 2000 as a result of the adoption of a new accounting standard. As of June 30, 2002, Trenwick has no goodwill on its balance sheet and its GAAP and tangible book values are the same.

Trenwick produced core operating income of $7.4 million, or $0.21 per share in the second quarter of 2002 and a core operating loss of $2.7 million, or $0.07 per share in the first half of 2002. Gross premium writings totalled $442.1 million for the second quarter of 2002, an increase of 30 percent compared to $339.6 million for the second quarter of 2001. The increase in gross premium writings was attributable to the combination of new business and rate increases experienced in all principal segments of the group's operations.

Net premium writings totalled $255.9 million for the second quarter of 2002, an increase of 4 percent compared to $244.9 million for the second quarter of 2001. In connection with the sale of LaSalle's business as at April 1, 2002, Trenwick effected a 100 percent quota share reinsurance agreement on LaSalle's in-force property catastrophe business, which served to decrease net written premiums by $50.7 million during the quarter. Absent this transaction, net written premiums for the second quarter of 2002 were $306.6 million, or 25 percent higher than the same period in 2001.

Trenwick's combined loss and expense ratio for the quarter ended June 30, 2002 was 104.4 percent compared to a combined loss and expense ratio of 141.7 percent for the quarter ended June 30, 2001. Trenwick's combined loss and expense ratio for the first six months of 2002 was 109.2 percent compared to a combined loss and expense ratio of 124.4 percent for the first six months of 2001. The higher ratios in 2001 were mainly attributable to the loss reserve strengthening recorded during the second quarter of 2001 and losses relating to Tropical Storm Allison and the sinking of the Petrobras oil rig.

Cash from investing activities during the second quarter of 2002 was $252.6 million, an increase of $319.6 million over 2001. Cash for financing activities was $199.3 million during the second quarter of 2002, $211.4 million greater than the same period in 2001.