NEW YORK - Moody's Investors Service has lowered the debt ratings of Bermuda-based Trenwick Group Ltd. and its subsidiaries.

In addition, Moody's has confirmed the financial strength rating of Trenwick America Reinsurance Corporation at A3.

These actions conclude a review initiated on August 9, 2001, which followed the announcement by the company that its second quarter earnings would be negatively impacted by adverse loss reserve development.

Elaborating on its rationale, Moody's stated that adverse development on loss reserves and other challenges relating to both the soft reinsurance market and the acquisition of Chartwell Re have substantially impacted group earnings.

The rating agency also noted that Trenwick's reputation as a disciplined underwriting organisation has failed to translate into satisfactory underwriting performance in recent years.

Moody's outlook for the debt and financial strength ratings is negative.

In Moody's view, Trenwick's ability to assess the true underlying profitability of its portfolio is made difficult by the substantial changes in business mix over the past several years.

Although re-underwriting measures and broadly improving market conditions should help to offset the performance drag of the in-force business, uncertainty remains.

The negative outlook reflects this uncertainty - specifically the possibility for further deterioration in the development of recent accident years.

Accordingly, Moody's principal focus in the near term will be on the extent to which problems of the past have been contained. Extent and quality of capitalisation will, of course, be considerations as well.

The following ratings have been downgraded: Trenwick Group Ltd. - prospective preferred stock shelf to (P)Ba2 from (P)Ba1; Trenwick America Corporation - senior unsecured debt to Baa3 from Baa2; prospective senior unsecured debt shelf to (P) Baa3 from (P)Baa2; prospective subordinated debt shelf to (P)Ba1 from (P)Baa3; Trenwick Capital Trust I - trust preferred stock to Ba1 from Baa3; Trenwick America Capital Trust I, II and III - prospective trust preferred stock shelf to (P)Ba1 from (P)Baa3; LaSalle Re Holding Limited - preferred stock at Ba2.

Moody's announcement comes one day after A.M. Best puts its ratings on Trenwick under review.