Troubled Bermuda insurer Trenwick Group Ltd. slumped to a $198.1 million loss in the fourth quarter of 2002 and a $386.1 million loss for the 2002 financial year, it announced yesterday.

The losses, which are the equivalent of a $5.39 per share loss for the quarter and a $10.49 per share loss for the year, came after the company added $106.6 million to loss reserves for prior year losses at its US subsidiaries and a $95.7 million charge against British taxes.

The fourth quarter loss compared to a $26.4 million or 72 cents a share loss in the fourth quarter of 2001 and a $154.4 million or $4.19 loss for 2001 when the company was hit by the September 11 terrorist attacks and the crash of an American Airlines jet in Queens, New York.

Trenwick said the $106.6 million increase in loss reserves related to adverse development of 2001 and prior accident years at Trenwick's US subsidiaries and Trenwick International Ltd., and a non-cash charge of $95.7 million or $2.60 per share related to the establishment of a 100 percent valuation allowance against Trenwick's UK deferred tax asset due to a determination that Trenwick in its present circumstance may be unable to realise the tax benefits of past losses in the future.

Trenwick took a further charge of $13.1 million in the fourth quarter resulting from the commutation of a reinsurance cover relating to the previously announced sale of the in-force property catastrophe reinsurance business of Trenwick's Bermuda subsidiary, LaSalle Re Ltd., to Endurance Specialty Insurance Ltd. The results for the 2002 year include $223.5 million or $6.07 per share of loss reserve strengthening, a non-cash charge of $150.2 million or $4.08 per share resulting from the establishment of 100 percent valuation allowances against Trenwick's US and UK deferred tax assets and a charge of $41.7 million, or $1.13 per share, for the cumulative effect of the change in accounting for goodwill as a result of Trenwick's adoption of a new accounting standard.

In addition, Trenwick's results for the 2002 year include a charge of $17.3 million (net of commission income of $2.8 million), or $0.47 per share related to the sale of the in-force business of LaSalle Re Ltd.

Trenwick acting chairman and chief executive officer W. Marston Becker said: "Trenwick has moved aggressively these last two quarters to ensure our balance sheet appropriately reflects ongoing actuarial developments within the Company and the industry, provide a going forward operating opportunity for our North American reinsurance business and our Lloyd's business, and move into an orderly runoff of our remaining insurance businesses at Canterbury and Trenwick International as well as reflect the accompanying costs of the runoff.

"Trenwick has also adjusted its deferred tax assets associated with both its US and London business to reflect its changed status. Trenwick's outlook going forward remains fluid as we work to restructure our outstanding senior indebtedness prior to its April 1, 2003 maturity."