It looks as though Trenwick's fourth quarter results may show that the worst is not over.

The Bermuda-based insurance company announced on Friday that it will increase its reserves for losses in the fourth quarter of 2002 by $107 million, or $2.90 per share.

This follows dismal third quarter results including a $135 million operating loss.

The increases follow actuarial reviews by both internal staff and outside consultants and perceived loss activity trends across its major business groups.

Included in the reserve increase was $20 million relating to Trenwick's exposure to asbestos and environmental liabilities.

The increases in reserves impact Trenwick's United States operating subsidiaries and Trenwick International Limited, in the UK.

However the Trenwick Lloyd's operation will be unaffected, which gives an endorsement to the letter of credit deal brokered in December, which threw out a lifeline to the Lloyd's operation.

Following this increase to Trenwick's asbestos and environmental reserves, Trenwick's three year survival ratio (i.e., number of years that existing reserves will last if the current level of average annual payments for the last three years repeats itself indefinitely) for this type of exposure will be approximately 13 years. W. Marston Becker, acting chairman and acting chief executive officer of Trenwick, stated, "Trenwick's operations, other than its North American reinsurance business and its Lloyd's businesses, are currently in runoff.

"The completion of Trenwick's reserve study and its significant increase in loss reserves for the fourth quarter of 2002 demonstrates Trenwick's continued commitment to ensuring that its balance sheet appropriately reflects ongoing actuarial developments within the company and the industry."

The financial results of Trenwick for the fourth quarter of 2002, including its net reserve increase and a corresponding reduction of approximately $12 million in outstanding contingent indebtedness in computing the $107 million charge, will be presented in Trenwick's year-end earnings release.