Re Group and LaSalle Re Ltd. under review with developing implications.

The rating actions follow the December 19, 1999, announcement by Trenwick Group Inc., Stamford, Connecticut, and LaSalle Re Holdings, Bermuda, that they have signed a definitive agreement to merge the two holding companies.

Shareholders of both companies will receive shares in a newly-formed Bermuda-based holding company, to be named Trenwick Group Ltd. Under the terms of the merger agreement, each shareholder is expected to receive an equal number of shares in the newly formed holding company on tax-free basis.

The transaction, which follows Trenwick's recently completed merger with Chartwell Re, creates a significant new Bermuda-based global reinsurer with established platforms in each of the major insurance markets -- the United States, London and Bermuda.

The new organisation, with pro forma consolidated surplus of $1.2 billion, will rank among the top 25 reinsurers worldwide.

LaSalle Re's higher-margin property catastrophe reinsurance business complements Trenwick's existing casualty reinsurance franchise and further augments its growing position in the global reinsurance market, providing the combined group with a broader array of products for potential cross-marketing opportunities.

In addition, Trenwick's expanded capital base and offshore capabilities are expected to further benefit operations by providing access to new business opportunities.

The addition of LaSalle Re's debt-free balance sheet also serves to reduce Trenwick's financial leverage, decreasing its debt to capital ratio from the current 21.5 percent to 15 percent, thereby increasing the financial flexibility of the overall organisation.

Further, the transaction is expected to be accretive to earnings for both group's shareholders.