The announcement this week that financially troubled Bermuda insurance company Trenwick would suspend payment of its preferred share dividends, got it a rating downgrade from Standard & Poors.

The company, which is currently trying to come to some arrangement with its letter of credit holders over an extension of its $226 million letter of credit facility in support of its Lloyds' operations, recently disclosed that it was restating its financial results for 2001 and the first two quarters of 2002 and posted close to $140 million in net losses for the third quarter.

Yesterday, the S&P lowered its Preferred Stock Ratings from `CC' to `D' for Trenwick Group Ltd., Trenwick America Corp, LaSalle Re Holdings Ltd., and Trenwick Capital Trust I.

The company had been set to make a dividend payment on its LaSalle Re Holdings Ltd.'s Series A preferred stock, yesterday, but announced on Monday that the dividend was suspended.

Trenwick also suspended dividends and distributions payable on all other outstanding preferred securities, including Trenwick Group Ltd.'s Series B cumulative convertible perpetual preferred shares and Trenwick Capital Trust I's 8.82 percent exchange subordinated capital income securities.

S&P analyst Karole Dill Barkley said in a press statement yesterday: "The remaining ratings on Trenwick Group Ltd. and its subsidiaries remain on CreditWatch with negative implications (or subject to further downgrade) as management is in the process of restructuring its obligations to maintain itself as an ongoing concern."

The rating agency has in recent weeks questioned Trenwick's ability to carry on as an "ongoing concern" unless it comes to an agreement with creditors.

Meanwhile, investors reacted to the rating downgrade by pushing the company share price down by more than 20 percent of nearly 40 cents to $1.38.

Yesterday's trading price on the New York Stock Exchange is however an improvement over the stock's performance in previous weeks when it fell as low as 43 cents.

The Trenwick stock 52-week high was reported as $11.05.