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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 2001.

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period to .
---------------------- ----------------------

Commission file number 0-31967

TRENWICK AMERICA CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 06-1087672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

One Canterbury Green, Stamford, Connecticut 06901
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 203-353-5500

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K |X|

There was no voting stock held by non-affiliates of the registrant on March
14, 2002.

The number of shares outstanding of each of the issuer's classes of common
stock as of the close of the period covered by this report:

Class Outstanding at March 14, 2002
----- -----------------------------
Common Stock, $1.00 par value 100

The registrant meets the conditions set forth in General Instruction I (1)(a)
and (b) of Form 10-K and is therefore filing this Form 10-K in the reduced
disclosure format.





TRENWICK AMERICA CORPORATION

Table of Contents



Page
Item Number
- ---- ------
PART I

1. Business ...................................................................... 1
2. Properties .................................................................... 3
3. Legal Proceedings ............................................................. 3
4. Submission of Matters to a Vote of Security Holders ........................... 3

PART II

5. Market for the Corporation's Common Stock and Related Stockholder Matters ..... 3
6. Selected Financial Data ....................................................... 4
7. Management's Discussion and Analysis of Financial Condition and
Results of Operation .......................................................... 4
7a. Quantitative and Qualitative Disclosures About Market Risk...................... 15
8. Financial Statements and Supplementary Data ................................... 15
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure .......................................................... 15

PART III

10. Directors and Executive Officers .............................................. 15
11. Executive Compensation ........................................................ 15
12. Security Ownership of Certain Beneficial Owners and Management ................ 15
13. Certain Relationships and Related Transactions ................................ 15

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ................. 15



i



PART I
Item 1. Business

Trenwick America Corporation, a Delaware corporation, was formed in 1983 and in
1985 became a wholly-owned direct subsidiary of Trenwick Group Inc., the
ultimate controlling entity, for the purposes of serving as a United States
holding company.

On September 27, 2000, Trenwick Group Ltd., a newly formed Bermuda holding
company, issued common shares to acquire Trenwick Group Inc. and another
publicly held Bermuda company, LaSalle Re Holdings Limited, and the minority
interest in LaSalle Re Limited, a Bermuda subsidiary of LaSalle Re Holdings
Limited. Trenwick Group Inc. then distributed the shares received from Trenwick
Group Ltd. to its shareholders in a liquidating distribution. As a part of the
transaction, Trenwick Group Inc. completed a concurrent internal reorganization
of its subsidiary companies in which substantially all of Trenwick Group Inc.'s
assets and liabilities were transferred from Trenwick Group Inc. to a
subsidiary, which then merged with and into Trenwick America Corporation, with
Trenwick America Corporation as the surviving corporation. The result of the
restructuring was that Trenwick America Corporation became the intermediate
holding company for Trenwick Group Ltd.'s United States subsidiaries. This
abbreviated Annual Report on Form 10-K is required as a result of debt assumed
by Trenwick America Corporation in connection with the restructuring.

Each of Trenwick America Corporation's operating insurance company subsidiaries
is rated "A-" (Excellent) by A.M. Best Company and has been assigned an A-
financial strength rating by Standard & Poor's. These ratings are based upon
factors that may be of concern to policy or contract holders, agents and
intermediaries, but may not reflect the considerations applicable to an equity
investment in a reinsurance or insurance company. A change in any such rating is
at the discretion of the respective rating agencies.

Trenwick America Corporation conducts its specialty insurance and reinsurance
business in the following two business segments:

o treaty reinsurance; and

o specialty program insurance.

Trenwick America Corporation operates through the following two principal
operating platforms:

o Trenwick America Reinsurance Corporation, which is located in Stamford
Connecticut, underwrites treaty reinsurance on United States property and
casualty risks, including United States reinsurance business previously
written by its subsidiary Chartwell Insurance Company (formerly Chartwell
Reinsurance Company); and

o Canterbury Financial Group Inc., which is located in Stamford, Connecticut,
underwrites specialty insurance in the United States through its operating
subsidiaries, Chartwell Insurance Company, The Insurance Corporation of New
York and Dakota Specialty Insurance Company.


1



Trenwick America Corporation's gross and net premium writings by business
segment for 2001, 2000 and 1999 are as follows.



2001 2000 1999
------------------ ------------------ ------------------
(expressed in thousands of United States dollars)

Gross Premiums Written
Treaty reinsurance $350,134 $338,794 $210,921
Specialty program insurance 291,433 187,545 38,088
------------------ ------------------ ------------------
Total $641,567 $526,339 $249,009
================== ================== ==================

Net Premiums Written

Treaty reinsurance $331,699 $251,284 $165,744
Specialty program insurance 99,708 54,028 5,641
------------------ ------------------ ------------------
Total $431,407 $305,312 $171,385
================== ================== ==================


For additional financial information regarding Trenwick America Corporation's
business segments, see note 3 to Trenwick America Corporation's consolidated
financial statements.

Treaty Reinsurance

Trenwick America Corporation underwrites United States treaty reinsurance
through its subsidiary, Trenwick America Reinsurance Corporation. This segment
generally obtains all of its business through brokers and reinsurance
intermediaries which seek its participation on reinsurance being placed for
their customers. In underwriting reinsurance, Trenwick America Reinsurance
Corporation does not target types of clients, classes of business or types of
reinsurance. Rather, it selects transactions based upon the quality of the
reinsured, the attractiveness of the reinsured's insurance rates and policy
conditions and the adequacy of the proposed reinsurance terms.

Trenwick America Reinsurance Corporation's commitment is currently limited to
$3.0 million per contract on casualty treaty business and $2.5 million on
property business. Larger commitments are subject to Trenwick America
Reinsurance Corporation's underwriting committee referral process.

The major lines of reinsurance currently underwritten by Trenwick America
Reinsurance Corporation are accident and health, property, errors and omissions,
environmental liability and general liability. Together these lines accounted
for an aggregate of at least 65% of its net premiums written in each of 2001,
2000 and 1999. Trenwick America Reinsurance Corporation also underwrites medical
malpractice, workers' compensation, products liability and automobile liability
lines of reinsurance. Premiums in 2001, 2000 and the fourth quarter of 1999
include business previously underwritten by Chartwell Insurance Company. This
business comprised similar lines of business underwritten by Trenwick America
Reinsurance Corporation.

Three ceding companies generated a majority of the treaty reinsurance business
for Trenwick America Reinsurance Corporation, accounting for 22%, 31%, and 25%
of this segment's gross premiums written in 2001, 2000 and 1999, respectively.
During 2001, Travelers Group, Avemco Group and American International Group
accounted for 9%, 7% and 6%, respectively, of the segment's gross premiums
written. Trenwick America Reinsurance Corporation does not believe that the loss
of these accounts would have a long-term material adverse effect on the results
and operations of its treaty reinsurance business because of its competitive
position within the reinsurance market and the availability of business from
other brokers and ceding companies. Further, Trenwick America Reinsurance
Corporation believes that it would continue to underwrite new business to
replace the accounts.


2



Specialty Program Insurance

Specialty program insurance, written through Canterbury Financial Group Inc.,
develops insurance programs in the United States through specialty production
sources with a focus on a specific line or lines of business, with a limited
geographic emphasis, and where the program administrator's compensation is
adjusted based on the underwriting results of the business. Canterbury Financial
Group Inc. evaluates each business relationship based upon the underwriting
experience and operational expertise of the production source and periodically
performs underwriting, claims and operational audits of each of its production
sources.

During the 2001 calendar year, the specialty program insurance segment
underwrote approximately 68% of its gross premiums through four managing general
agents, of which Florida Intracoastal Underwriters accounted for 27%, HDR
Insurance Services accounted for 16%, Inter-Reco accounted for 14% and Risk
Control Services accounted for 11%. No other managing general agent accounted
for more than 10% of Canterbury Financial Group Inc.'s gross insurance premiums
written for such period.

In order to reduce the potential adverse effect arising from the termination of
any specific business relationship, Canterbury Financial Group Inc. continues to
seek to establish and develop relationships with a large number of managing
general agents. While management believes that its relationships with its
managing general agents are satisfactory, the termination of all or a
substantial number of these relationships could have a material adverse effect
on the business and operations of the specialty program insurance segment.

Item 2. Properties

Trenwick America Corporation's operations are located in approximately 46,000
total square feet of leased office space at Stamford, Connecticut. Management
believes Trenwick America Corporation's current office space is adequate for its
needs.

Item 3. Legal Proceedings

Trenwick America Corporation is party to various legal proceedings generally
arising in the normal course of its business. Trenwick America Corporation does
not believe that the eventual outcome of any such proceeding will have a
material effect on its financial condition or business. Trenwick America
Corporation's subsidiaries are regularly engaged in the investigation and the
defense of claims arising out of the conduct of their business. Pursuant to
Trenwick America Corporation's insurance and reinsurance arrangements, disputes
are generally required to be finally settled by arbitration.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of shareholders of Trenwick America
Corporation during the fourth quarter of 2001.

PART II

Item 5. Market for Corporation's Common Stock and Related Stockholder Matters

There is no established public trading market for Trenwick America Corporation's
stock. All of the outstanding shares of Trenwick America Corporation's common
stock are owned by Trenwick (Barbados) Ltd., which in turn is a wholly-owned
subsidiary of Trenwick Group Ltd.


3



Item 6. Selected Financial Data

Information required by Item 6 has been omitted because Trenwick America
Corporation meets the conditions set forth in General Instruction I (1)(a) and
(b) of Form 10-K and is therefore filing this Annual Report on Form 10-K in the
reduced disclosure format.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion highlights material factors affecting Trenwick America
Corporation's results of operations for the years ended December 31, 2001 and
2000. This discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto of Trenwick America
Corporation for the years ended December 31, 2001, 2000 and 1999, contained in
this Annual Report on Form 10-K. Trenwick America Corporation meets the
conditions set forth in General Instruction I (1)(a) and (b) of Form 10-K and is
therefore omitting certain information otherwise required by Item 7.

Trenwick America Corporation discloses operating and non-operating income to
enable the reader to understand how management evaluates Trenwick America
Corporation's results of operations. These disclosures are not defined under
accounting principles generally accepted in the United States of America;
accordingly the use of these disclosures may not be comparable to other
registrants.

Overview

Trenwick America Corporation is a Delaware holding company headquartered in
Stamford, Connecticut whose principal subsidiaries underwrite specialty
insurance and reinsurance.

Trenwick America Corporation conducts its specialty insurance and reinsurance
business in the United States through the following two business segments:

o Treaty reinsurance; and

o Specialty program insurance.

Trenwick America Corporation operates through the following two principal
operating platforms:

o Trenwick America Reinsurance Corporation, which is located in Stamford,
Connecticut, underwrites treaty reinsurance on United States property and
casualty risks, including United States reinsurance business previously
written by its subsidiary Chartwell Insurance Company (formerly Chartwell
Reinsurance Company); and

o Canterbury Financial Group Inc., which is located in Stamford, Connecticut,
underwrites specialty insurance in the United States through its operating
subsidiaries, The Insurance Corporation of New York and Dakota Specialty
Insurance Company.

All of Trenwick America Corporation's principal operating subsidiaries are rated
A- (Excellent) by A.M. Best Company and have been assigned a financial strength
rating of A- by Standard and Poor's. These ratings are based upon factors that
may be of concern to policy or contract holders, agents and intermediaries, but
may not reflect the considerations applicable to an equity investment in a
reinsurance or insurance company. A change in any such rating is at the
discretion of the respective rating agencies.


4



Results of Operations - Years Ended December 31, 2001 and 2000
(monetary amounts in tables expressed in thousands of United States dollars)



2001 2000 Change
-------- -------- -------

Underwriting loss $(66,303) $(78,962) $12,659
Net investment income 68,041 66,601 1,440
Interest expense and subsidiary preferred
share dividends (31,336) (35,769) 4,433
General and administrative expenses (4,074) (19,131) 15,057
Other income, net 2,819 2,823 (4)
-------- -------- -------
Pretax operating loss (30,853) (64,438) 33,585
Applicable income tax benefit (13,473) (24,257) 10,784
-------- -------- -------
Operating loss (17,380) (40,181) 22,801
Net realized investment gains (losses), net o
income taxes (1,213) 4,399 (5,612)
Foreign currency losses, net of income taxes (932) (1,190) 258
-------- -------- -------
Net loss $(19,525) $(36,972) $17,447
======== ======== =======


The operating loss of $17.4 million in 2001 represented a $22.8 million decrease
from the operating loss of $40.2 million in 2000. The decrease in operating loss
was principally the result of a modest improvement in underwriting results in
the U.S. treaty reinsurance business and a reduction in general and
administrative expenses. General and administrative expenses for 2000 included
expenses assumed by Trenwick Group Ltd. subsequent to the Trenwick/LaSalle
business combination. The decrease in net loss of 2001 of $17.5 million compared
to the 2000 loss was the result of the improvement in underwriting results and
decrease in general and administrative expenses noted above, offset in part by a
decrease in realized investment gains of $5.6 million.

Underwriting Income (Loss)



2001 2000 Change
--------------- --------------- ----------------

Net premiums earned $380,288 $310,791 $69,497
--------------- --------------- ----------------

Claims and claims expenses incurred (305,488) (276,043) (29,445)
Acquisition costs and underwriting expenses (141,103) (113,710) (27,393)
--------------- --------------- ----------------
Total expenses (446,591) (389,753) (56,838)
--------------- --------------- ----------------
Net underwriting loss $(66,303) $(78,962) $12,659
=============== =============== ================

Loss ratio 80.3% 88.8% 8.5%
Expense ratio 37.1% 36.6% (0.5)%
Combined ratio 117.4% 125.4% 8.09%


The underwriting loss of $66.3 million incurred in 2001 represented a $12.7
million decrease compared to the underwriting loss of $79.0 million in 2000. The
decrease in the net underwriting loss in 2001 resulted from an improvement in
the current year results of both the reinsurance and specialty insurance
businesses. The effect of this improvement was offset in part by additional
reserve strengthening in both businesses which is further discussed on page 6
under the caption "Claims and Claims Expenses."

The improvement in the combined ratio in 2001 compared to 2000 resulted from
less adverse development on prior years' reserves.


5



Premiums Written

Gross premiums written for 2001 were $641.6 million compared to $526.3 million
for 2000, an increase of $115.2 million or 21.9%. Details of gross premiums
written are provided below.



2001 2000 Change
--------------- --------------- ---------------

Treaty reinsurance $350,134 $338,794 $11,340
Specialty insurance 291,433 187,545 103,888
--------------- --------------- ---------------
Total $641,567 $526,339 $115,228
=============== =============== ===============


Treaty reinsurance and specialty insurance gross premiums written increased from
$338.8 million and $187.5 million, respectively, for 2000, to $350.1 million,
and $291.4 million, respectively, for 2001. The modest increase in gross
premiums written for treaty reinsurance was due primarily to new business,
offset by the non-renewal of business written in both Trenwick America
Reinsurance Corporation and Chartwell Insurance Company. In 2001, treaty
reinsurance includes $34.6 million in gross premiums previously underwritten by
Chartwell Insurance Company compared to $128.9 million in 2000. Approximately
$52.5 million of the gross premiums written in 2000 was fronted business. The
increase in gross premiums written for specialty insurance was due to an
increase in the number of programs underwritten and growth in business in
existing programs.

Premiums Earned


2001 2000 Change
--------------- -------------- --------------

Gross premiums written $641,567 $526,339 $115,228
Change in gross unearned premiums (69,638) (8,004) (61,634)
--------------- -------------- --------------
Gross premiums earned 571,929 518,335 53,594
--------------- -------------- --------------

Gross premiums ceded (210,160) (221,027) 10,867
Change in gross unearned premiums ceded 18,519 13,483 5,036
--------------- -------------- --------------
Ceded premiums earned (191,641) (207,544) 15,903
--------------- -------------- --------------
Net premiums earned $380,288 $310,791 $69,497
=============== ============== ==============


A majority of gross premiums ceded in both 2001 and 2000 relates to the
specialty insurance business, which cedes a greater portion of its business
written than the treaty reinsurance business. The increase in gross premiums
ceded in 2001 compared to 2000 was offset by a decrease in gross premiums ceded
by treaty reinsurance relating to fronted business previously underwritten by
Chartwell Insurance Company which was discontinued during 2000.

Net premiums earned for 2001 were $380.3 million compared to $310.8 million for
2000. The increase in net premiums earned is commensurate with the increase in
net premiums written.

Claims and Claims Expenses

Included in claims and claims expenses in 2001 and 2000 were prior year reserve
additions of $22.4 million and $32.5 million, respectively. In 2001, prior year
treaty reinsurance reserves were increased by $29.4 million, principally
relating to liability business and $11.5 million related to prior participation
in the Excess and Casualty Reinsurance Association Pool. Similarly, in 2001
prior year specialty insurance reserves were increased by $13.9 million,
principally relating to a discontinued program. In 2000, prior year reserve
increases were $39.8 million on treaty reinsurance business and $(7.3) million
on specialty insurance business. Excluding amounts relating to increases in
prior year reserves, claims and claims expenses increased from $251.1 million in
2000 to $292.9 million in 2001, or $41.8 million. This increase is commensurate
with the increase in business underwritten in 2001 compared to 2000. The


6



claims and claims expenses in 2001 include $4.0 million incurred as a result of
the September 11th terrorist attacks.

Policy Acquisition Costs and Underwriting Expenses


2001 2000 Change
------------ ------------ ------------

Policy acquisition costs $122,213 $ 92,980 $29,233
Underwriting expenses 18,890 20,730 (1,840)
------------ ------------ ------------
Total policy acquisition costs and underwriting expenses $141,103 $113,710 $27,393
============ ============ ============

Expense ratio 37.1% 36.6% 0.5%
============ ============ ============


Total underwriting expenses, comprising policy acquisition costs and
underwriting expenses, for the 2001 year increased by $27.4 compared to total
underwriting expenses for 2000. The increase in total underwriting expenses in
2001 was commensurate with the increase in premium writings. Total underwriting
expenses as a percentage of net premiums earned were 37.1% for 2001 a modest
increase compared to 2000.

Net Investment Income


2001 2000 Change
---------------- --------------- --------------

Average invested assets $1,204,605 $1,284,027 $(79,422)
Average annualized yields 6.8% 6.3% 0.5%
Investment income 82,156 81,506 650
Investment expenses (14,115) (14,905) 790
---------------- --------------- --------------
Net investment income $68,041 $66,601 $1,440
================ =============== ==============


Net investment income for 2001 was $68.0 million compared to $66.6 million for
2000. The increase in net investment income in 2001 was due to an overall
increase in yields. Investment expense for 2001 and 2000 includes interest
expense on funds withheld of $11.3 million and $11.9 million, respectively,
relating to stop loss reinsurance agreements purchased by Trenwick America
Reinsurance Corporation prior to 2000.

Interest Expense and Subsidiary Preferred Share Dividends

Interest expense and subsidiary preferred share dividends were $31.3 million for
2001, a decrease of $4.4 million from 2000. The decrease resulted from a
reduction in interest on Trenwick America Corporation's bank credit facility
following a general decrease in interest rates.

Non-Operating Income and Expenses

Net realized investment losses, net of income taxes, were $1.2 million during
the 2001 year, compared to net realized gains of $4.4 million for 2000. The 2001
losses include $3.4 million of realized losses on investments to recognize
declines in value that were other than temporary. The gains recognized in 2000
were pursuant to an investment policy designed to protect the total returns on
the portfolio.

Trenwick America Corporation recorded foreign currency losses, net of income
taxes, of $0.9 million for 2001, compared to foreign currency losses, net of
income taxes, of $1.2 million for 2000.

Financings and Financing Capacity

Trenwick America Corporation's financing obligations generally include debt and
lease payment obligations. At December 31, 2001, annual principal payments
required by Trenwick America Corporation through 2006 relating to these
financing obligations are as follows (monetary amounts in tables expressed in
thousands of United States dollars):


7




Payments Due by Period
---------------------------------------------------------
Contractual Less than 1-3 4-5 After 5
Obligations Total 1 Year Years Years Years
- ------------------------- ----------- ---------- --------- --------- ---------

Indebtedness and
minority interest $381,035 $43,883 $192,021 $35,131 $110,000
Operating leases 10,140 1,482 3,146 3,118 2,394
Total contractual cash ----------- ---------- --------- --------- ---------
obligations $391,175 $45,365 $195,167 $38,249 $112,394
=========== ========== ========= ========= =========


Trenwick America Corporation's other commercial commitments principally consist
of reimbursement obligations for standby letters of credit. The amounts and
expiration of Trenwick America Corporation's other commercial commitments are as
follows (monetary amounts in table expressed in thousands of United States
dollars):



Expiration Periods
---------------------------------------------------------
Other Commercial Less than 1-3 4-5 After 5
Commitments Total 1 Year Years Years Years
- -------------------------- --------- ---------- --------- --------- ---------

Standby letters of credit $36 $36 $- $- $-
---------- ---------- --------- --------- ---------
Total other commercial
commitments $36 $36 $- $- $-
========== ========== ========= ========= =========


Concurrent with the Trenwick/LaSalle business combination, Trenwick America
Corporation and Trenwick Holdings Limited, Trenwick Group Ltd.'s U.S. and U.K.
holding companies, entered into an amended and restated $490 million credit
agreement with various lending institutions. The credit agreement consisted of
both a $260 million revolving credit facility and a $230 million letter of
credit facility. The revolving credit facility has subsequently been converted
into a four-year term loan. Trenwick America Corporation is the primary obligor
with respect to the revolving credit facility, and Trenwick Holdings Limited is
the primary obligor with respect to the letter of credit facility. Guarantees
are provided by LaSalle Re Holdings Limited and Trenwick Group Ltd. with respect
to both Trenwick America Corporation's and Trenwick Holdings Limited's
obligations and additionally by Trenwick America Corporation with respect to
Trenwick Holdings Limited's obligations. The credit agreement provides for a
letter of credit facility which may only be used to support the Lloyd's
syndicate participations of Trenwick Group Ltd.'s subsidiaries. The letter of
credit facility is scheduled to expire in November 2002. The applicable interest
rate on borrowings under the credit facility is generally 2.5% above the London
Interbank Offered Rate and was 4.7% at year end 2001. The term loan facility is
subject to scheduled principal amortization over the four-year period in
accordance with the following schedule: 2002, 22.5%; 2003, 27.5%; 2004, 32.5%;
2005, 17.5%.

Trenwick America Corporation is obligated to repay a portion or all of the term
loan in the event of equity issuances, asset sales or debt issuances by Trenwick
Group Ltd. or its subsidiaries. At year end 2001, $195.0 million of term loans
were outstanding, and $230.0 million of letters of credit were outstanding under
the credit facility.

The credit agreement contains general covenants and restrictions as well as
financial covenants relating to, among other things, Trenwick Group Ltd.'s
minimum interest coverage, debt to capital leverage, minimum earned surplus,
maintenance of a minimum A.M. Best Company rating of A- and tangible net worth.
As of year end 2001, Trenwick Group Ltd. was in compliance with the credit
agreement covenants.


8



The financial covenants relating to interest coverage, risk based capital and
tangible net worth (each as defined by the financial covenants in the credit
agreement) were revised downward in an amendment to the credit agreement
executed following the September 11th terrorist attacks. The amendment set
Trenwick Group Ltd.'s minimum interest coverage ratio at 1.5 to 1 for the fourth
quarter of 2001, 2.0 to 1 for the first quarter of 2002 and 2.5 to 1 thereafter.
Trenwick Group Ltd.'s interest coverage ratio at December 31, 2001 was 2.0 to 1.
The amendment adjusted downward the minimum risk-based capital requirement for
Trenwick America Corporation's subsidiary, Chartwell Insurance Company, from
300% to 225% through December 31, 2002. Thereafter, the minimum risk-based
capital for Chartwell Insurance Company returns to 300%. The risk based capital
for Chartwell Insurance Company as of December 31, 2001 was 257%. The amendment
lowered the base minimum tangible net worth Trenwick Group Ltd. must maintain
from $560 million to $425 million until the reporting of quarterly results of
operations as of March 31, 2002, which are due no later than May 15, 2002. After
May 15, 2002, Trenwick Group Ltd. minimum tangible net worth reverts to $560
million. Trenwick Group Ltd.'s tangible net worth as of December 31, 2001 was
$428 million. If Trenwick Group Ltd. is unable to meet the credit agreement's
financial covenants at the end of the first quarter of 2002, it may be required
to repay the outstanding indebtedness and collateralize the outstanding letters
of credit issued under the credit agreement through additional financing, asset
sales, subsidiary dividends or similar transactions.

Should Trenwick Holdings Limited be unable to meet any letter of credit
reimbursement obligations as they fall due, and such repayments are not
refinanced, Trenwick America Corporation would become liable for such
reimbursements under the terms of its guarantee. No liability for any such
amounts has been reflected in Trenwick America Corporation's financial
statements. Because Trenwick America Corporation is a holding company, its
principal source of funds consists of permissible dividends, tax allocation
payments, other statutorily permissible payments from its operating subsidiaries
and capital contributions from its parent. As a result of recent losses incurred
by Trenwick America Corporation's operating subsidiaries, their cash
distribution capacities have been significantly reduced. Other than as noted
above, Trenwick America Corporation does not have any material off-balance sheet
arrangements, trading activities involving non-exchange traded contracts
accounted for at fair value or relationships with persons or entities that
derive benefits from a non-independent relationship with Trenwick Group Ltd. or
its related parties.

In connection with the Trenwick/LaSalle business combination, Trenwick America
Corporation assumed, effective September 27, 2000, Trenwick Group Inc.'s
obligations with respect to $75 million aggregate principal amount of 6.70%
Senior Notes, which are due April 1, 2003. Interest is payable semi-annually on
April 1 and October 1 of each year; interest payments commenced on October 1,
1998. The notes are not subject to redemption prior to maturity. They are
unsecured obligations and rank senior in right of payment to all existing and
future subordinated indebtedness of Trenwick America Corporation.

Trenwick America Corporation also assumed, effective September 27, 2000,
Trenwick Group Inc.'s 8.82% Junior Subordinated Deferrable Interest Debentures
held by Trenwick Capital Trust I in respect of the $110 million in 8.82%
Subordinated Capital Income Securities issued by the Trust. Under the terms of
the debentures, Trenwick America Corporation is not restricted from incurring
indebtedness, but is subject to limits on its ability to incur secured
indebtedness for borrowed money.

Upon consummation of the acquisition of Chartwell Re Corporation in 1999,
Trenwick Group Inc. became the successor obligor under Chartwell Re
Corporation's Contingent Interest Notes due June 30, 2006. Effective September
27, 2000, Trenwick America Corporation assumed Trenwick Group Inc.'s obligations
under the contingent interest notes in connection with the Trenwick/LaSalle
business combination. The contingent interest notes were issued in an aggregate
principal amount of $1 million, which accrues interest at a rate of 8% per
annum, compounded annually. The interest is not payable until the maturity or
earlier redemption of the contingent interest notes. In addition, the contingent
interest notes entitle their holders to receive at maturity, in proportion to
the principal amount of the contingent


9



interest notes held by them, an aggregate of from $1 million up to $55 million
in contingent interest. The amount of contingent interest payable under the
contingent interest notes is dependent upon the level of loss and loss
adjustment expense reserves related to business written by Trenwick Group Ltd.'s
subsidiary, The Insurance Corporation of New York, prior to 1996. Settlement of
the contingent interest notes may be made by payment of cash or, under certain
specified conditions, by delivery of Trenwick Group Ltd.'s common shares.

Trenwick America Corporation's ability to refinance its existing debt
obligations or raise additional capital is dependent upon several factors,
including financial conditions with respect to both the equity and debt markets
and the ratings of its securities as established by the rating agencies.
Following Trenwick America Corporation's claims and claims expense liability
reserve increase in the second quarter of 2001 and the losses sustained by
Trenwick Group Ltd. in the September 11th terrorist attacks, Trenwick America
Corporation's senior debt ratings were downgraded by Standard & Poors
Corporation to BBB- and by Moody's Investors Service to Ba2. Trenwick America
Corporation's ability to refinance its outstanding debt obligations, as well as
the cost of such borrowings, could be adversely affected by these ratings
downgrades or if its ratings were downgraded further.

Critical Accounting Policies

The accounting policies described below are those Trenwick America Corporation
considers critical in preparing its consolidated financial statements. These
policies include significant estimates made by management using information
available at the time the estimates are made. However, as described below, these
estimates could change materially if different information or assumptions were
used. The descriptions below are summarized and have been simplified for
clarity. A more detailed description of the significant accounting policies used
by Trenwick America Corporation in preparing its financial statements is
included in the Notes to the Consolidated Financial Statements and the note
references are included below.

Unpaid Claims and Claims Expenses

Trenwick America Corporation establishes liabilities for claims and claims
expenses that have been reported but not paid and claims and claims expenses
that have been incurred but not reported under its insurance and reinsurance
contracts. These liabilities are developed using actuarial principles and
assumptions which consider a number of factors, including historical claims and
claims expense patterns, which are described in the Notes to the Consolidated
Financial Statements. An extensive degree of judgment is used in this estimation
process. Because the future cannot be predicted with certainty, the actual
future claims and claims expense payments are usually different from the
previously recorded liability estimates. Sometimes the differences are
significant. Any adjustments to Trenwick America Corporation's liabilities for
claims and claims expenses are included in Trenwick America Corporation's
results of operations in the period in which the need for the adjustment becomes
known. Due to the considerable variability of the insurance and reinsurance
business underwritten by Trenwick America Corporation, adjustments to its
liabilities for claims and claims expenses may occur each quarter and are
sometimes significant. Also see Note 4 of Notes to the Consolidated Financial
Statements.

Reinsurance Recoverable Balances

Trenwick America Corporation purchases reinsurance to reduce its exposure on
individual risks, catastrophic losses and other large losses. Trenwick America
Corporation estimates the amount of uncollectable receivables from its
reinsurers each period and establishes an allowance for uncollectable amounts.
The amount of the allowance is based on the age of unpaid amounts, information
about the creditworthiness of Trenwick America Corporation's reinsurers, and
other relevant information. Estimates of uncollectable reinsurance amounts
are revised each period, and changes are recorded in the period they become
known. A significant change in the level of uncollectable reinsurance amounts

10



would have a significant effect on Trenwick America Corporation's results of
operations. Also see Note 4 of Notes to the Consolidated Financial Statements.

Investments

Investments are classified as available for sale and recorded at fair value, and
unrealized investment gains and losses are reflected in shareholders' equity.
Investment income is recorded when earned, and capital gains and losses are
recognized when investments are sold. Investments are reviewed periodically to
determine if they have suffered an impairment of value that is considered other
than temporary. If investments are determined to be impaired, a capital loss is
recognized at the date of determination.

Testing for impairment of investments also requires significant management
judgment. The identification of potentially impaired investments, the
determination of their fair value and the assessment of whether any decline in
value is other than temporary are the key judgment elements. The discovery of
new information and the passage of time can significantly change these
judgments. Revisions of impairment judgments are made when new information
becomes known, and any resulting impairment adjustments are made at that time.
The current economic environment and recent volatility of securities markets
increase the difficulty of determining fair value and assessing investment
impairment. The same influences tend to increase the risk of potentially
impaired assets.

Trenwick America Corporation seeks to match the maturities of invested assets
with the payment of expected liabilities. By doing this, Trenwick America
Corporation attempts to make cash available as payments become due. If a
significant mismatch of the maturities of assets and liabilities were to occur
and Trenwick America Corporation had to liquidate investments prior to their
maturity, it may incur realized losses and, the effect on Trenwick America
Corporation's results of operations could be significant. Also see Note 5 of
Notes to the Consolidated Financial Statements.

Deferred Income Taxes

Trenwick America Corporation recorded as an asset as of December 31, 2001 $65.8
million of net deferred income taxes. The net deferred income taxes represent
the expected future tax benefit of losses previously incurred by Trenwick
America Corporation. The future tax benefit must be used on or before 2021. In
order to maintain its net deferred income taxes as an asset, Trenwick America
Corporation is required to determine that it is more likely than not that it
will be able to realize the future tax benefit of its previously incurred
losses. In making this determination, Trenwick America Corporation is required
to make estimates as to its future income. If Trenwick America Corporation's
estimates of its future income were to be revised and it became more likely than
not that Trenwick America Corporation would not be able to realize the future
tax benefit of its previously incurred losses, the effect on Trenwick America
Corporation's results of operations could be significant. Also see Note 7 of
Notes to the Consolidated Financial Statements.

Quantitative and Qualitative Disclosure About Market Risk

The following sections address the significant market risks associated with
Trenwick America Corporation's business activities as of December 31, 2001 and
2000. Trenwick America Corporation's primary market risk exposures are:

o foreign currency exchange risk;

o interest rate risk; and

o equity price risk.

With respect to Trenwick America Corporation's investment portfolio, the risk
management strategy is to place its investments with high credit quality issuers
and to limit the amount of credit exposure with respect to particular ratings
categories and any one issuer. Trenwick America Corporation selects


11



investments with characteristics such as duration, yield, currency and liquidity
to reflect the underlying characteristics of related estimated claim
liabilities.

As of December 31, 2001, Trenwick America Corporation's exposure to high yield
investments was minimal. While these investments are more susceptible to credit
risk, their total market value represents 5% of total investments and cash and
therefore management believes that the exposure to credit risk is not material.
Trenwick America Corporation has no derivatives and its investments do not
contain terms that may result in potential losses due to leverage.

The borrowings of Trenwick America Corporation are summarized in note 6 to the
financial statements.

Foreign Currency Exchange Rate Risk

Foreign currency risk is the risk that Trenwick America Corporation will incur
economic losses due to adverse changes in foreign currency exchange rates. This
risk arises from Trenwick America Corporation's debt obligations and securities
denominated in foreign currencies. Trenwick America Corporation's debt
obligations denominated in foreign currencies were $13.0 million and $13.4
million at year end 2001 and 2000, respectively.

Trenwick America Corporation's reinsurance operations have exposures to
movements in various currencies, particularly the British pound sterling and the
Canadian dollar, as some of its business is denominated in those currencies.
Therefore, changes in currency exchange rates affect Trenwick America
Corporation's balance sheet, statement of operations and statement of cash
flows. This exposure is somewhat mitigated by the fact that premiums received
are invested in the same currency portfolios, to partially offset related unpaid
claims and claims expense liabilities denominated in the same currency.

Management estimates that a 10% immediate unfavorable change in each of the
foreign currency exchange rates to which Trenwick America Corporation is exposed
at year end 2001 would have decreased the fair value of Trenwick America
Corporation's foreign denominated net liabilities by approximately $1.0 million.
At year end 2000, the same 10% shift in foreign currency exchange rates would
have resulted in a potential loss in fair value of the foreign denominated net
assets of approximately $2.8 million.

Interest Rate Risk

Trenwick America Corporation's fixed maturity investments and indebtedness are
subject to interest rate risk. Increases and decreases in prevailing interest
rates generally translate into decreases and increases in the fair value of
fixed maturity investments and the interest payable on Trenwick America
Corporation's outstanding variable rate debt. Additionally, the fair value of
interest rate sensitive instruments may be affected by the creditworthiness of
the issuer, a prepayment option, relative values of alternative investments,
liquidity of the investment and other general market conditions.

Trenwick America Corporation monitors its sensitivity to interest rate risk by
evaluating the change in its financial assets and liabilities relative to
hypothetical increases and decreases in interest rates. It is assumed that the
changes occur immediately and uniformly to each category of instrument
containing interest rate risks. The hypothetical changes in market interest
rates reflect what could be deemed best or worst case scenarios. Significant
variations in market interest rates could produce changes in the timing of
repayments due to prepayment options available. The fair value of such
instruments could be affected and therefore actual results might differ from
those reflected in this summary.

A 100 basis point increase in market interest rates would have resulted in an
estimated pre-tax loss in the fair value of these instruments of $33.9 million
and $31.1 million at year end 2001 and 2000,


12



respectively. Similarly, a 100 basis point decrease in market interest rates
would have resulted in an estimated pre-tax gain in the fair value of these
instruments of $29.8 million and $28.2 million at year end 2001 and 2000,
respectively.

Trenwick America Corporation has not experienced unrealized gains or losses to
the extent indicated above.

Equity Price Risk

The carrying values of investments subject to equity price risks are based on
quoted market prices or management's estimates of fair value as of the balance
sheet date. Market prices are subject to fluctuation and, consequently, the
amount realized in the subsequent sale of an investment may significantly differ
from the reported market value. Fluctuation in the market price of a security
may result from perceived changes in the underlying economic characteristics of
the investee, the relative price of alternative investments and general market
conditions. Furthermore, amounts realized in the sale of a particular security
may be affected by the relative quantity of the security being sold.

Of Trenwick America Corporation's $24.2 million equity portfolio at year end
2001, $14.6 million were subject to equity risk. Trenwick America Corporation's
potential exposure on equity securities is estimated in terms of an immediate
10% drop in equity prices across all equity securities holdings from those
prevailing at year end 2001 which would have resulted in a $1.5 million loss. At
year end 2000, the same drop in equity prices would have resulted in an $8.3
million loss.

The fair value estimates shown are based on the composition of the equity
security portfolio at year-end and these exposures will change as a result of
ongoing portfolio activities in response to management's assessment of changing
market conditions and available investment opportunities.

The above analyses do not take into account any correlation among foreign
currency exchange rates, or any correlation among various markets (i.e., the
fixed income markets and foreign exchange and equity markets). Trenwick America
Corporation's actual experience may differ from the results noted above due to
the correlation assumptions utilized, or if events occur that were not included
in the methodology, such as significant liquidity or market events. The
selection of the amount of increases or decreases in currency exchange rates,
interest rates and equity values in the above analyses should not be construed
as a prediction of future market events, but rather, to illustrate the potential
impact of such events.

Accounting Standards

In July 2001, the Financial Accounting Standards Board issued a statement
covering goodwill and other intangible assets, which is required to be adopted
at the beginning of 2002. The statement requires that the goodwill be tested for
impairment under either market value or cash flow tests and any impairment to be
recorded as of January 1, 2002 as the cumulative effect of an accounting change.
The impairment tests must be completed by the reporting of quarterly results of
operations as of June 30, 2002. We will conduct impairment tests on the goodwill
balance and implement the statement during the first or second quarter of 2002.
Goodwill amortization was $1.5 million in 2001.

Effective January 1, 2001, Trenwick America Corporation implemented SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The adoption of SFAS No. 133 had no significant
impact on Trenwick America Corporation's consolidated financial statements.


13



Safe Harbor Disclosure

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Trenwick America Corporation sets forth below
cautionary statements identifying important risks and uncertainties that could
cause its actual results to differ materially from those that might be
projected, forecasted or estimated in its "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, made by or on behalf of Trenwick America
Corporation in this Annual Report on Form 10-K and in press releases, written
statements or documents filed with the Securities and Exchange Commission, or in
its communications and discussions with investors and analysts in the normal
course of business through meetings, phone calls and conference calls. Such
statements may include, but are not limited to, projections of premium revenue,
investment income, other revenue, losses, expenses, earnings (including earnings
per share), cash flows, plans for future operations, common shareholders' equity
(including book value per share), investments, financing needs, capital plans,
dividends, plans relating to products or services of Trenwick America
Corporation and estimates concerning the effects of litigation or other
disputes, as well as assumptions for any of the foregoing and generally
expressed with words such as "believes," "estimates," "expects," "anticipates,"
"plans," "projects," "forecasts," "goals," "could have," "may have," and similar
expressions.

Forward-looking statements involve known and unknown risks and uncertainties,
which may cause Trenwick America Corporation's results to differ materially from
such forward-looking statements. These risks and uncertainties include, but are
not limited to, the following:

- Changes in the level of competition in the domestic and international
reinsurance or primary insurance markets that affect the volume or
profitability of Trenwick America Corporation's property/casualty
business. These changes include, but are not limited to, changes in
the intensity of price competition, the entry of new competitors,
existing competitors exiting the market and the development of new
products by new and existing competitors:

- Changes in the demand for reinsurance, including changes in ceding
companies' risk retentions and changes in the demand for excess and
surplus lines insurance coverages;

- Changes in reinsurance purchasing and distribution patterns;

- The ability of Trenwick America Corporation to execute its strategies
in its property/casualty operations;

- Catastrophe losses in Trenwick America Corporation's property/casualty
businesses;

- Adverse development on property/casualty claims and claims expense
liabilities related to business written in prior years, including, but
not limited to, evolving case law and its effect on environmental and
other latent injury claims, changing government regulations, newly
identified toxins, newly reported claims, new theories of liability,
or new insurance and reinsurance contract interpretations;

- Changes in inflation that affect the profitability of Trenwick America
Corporation's current property/casualty business or the adequacy of
its property/casualty claims and claims expense liabilities and policy
benefit liabilities related to prior years' business;

- Changes in Trenwick America Corporation's property/casualty
retrocessional arrangements;

- Lower than estimated retrocessional or reinsurance recoveries on
unpaid losses, including, but not limited to, losses due to a decline
in the creditworthiness of Trenwick America Corporation's
retrocessionaires or reinsurers;

- Increases in interest rates, which may cause a reduction in the market
value of Trenwick America Corporation's fixed income portfolio, and
its common shareholders' equity;

- Decreases in interest rates which may cause a reduction of income
earned on new cash flow from operations and the reinvestment of the
proceeds from sales or maturities of existing investments;

- A decline in the value of Trenwick America Corporation's equity
investments;

- Changes in the composition of Trenwick America Corporation's
investment portfolio;

- Credit losses on Trenwick America Corporation's investment portfolio;


14




- Adverse results in litigation matters, including, but not limited to,
litigation related to environmental, asbestos and other potential mass
tort claims;

- The impact of mergers and acquisitions;

- Gains or losses related to changes in foreign currency exchange rates;

- Changes in Trenwick America Corporation's capital needs;

- The ability of Trenwick America Corporation to refinance or repay its
outstanding indebtedness; and

- Changes in the financial strength ratings assigned to Trenwick America
Corporation and its operating subsidiaries.

In addition to the factors outlined above that are directly related to Trenwick
America Corporation's business, it is also subject to general business risks,
including, but not limited to, adverse state, federal or foreign legislation and
regulation, adverse publicity or news coverage, changes in general economic
factors and the loss of key employees.

The facts set forth above should be considered in connection with any
forward-looking statement contained in this Annual Report on Form 10-K. The
important factors that could affect such forward-looking statements are subject
to change, and Trenwick America Corporation does not intend to update any
forward-looking statement or the foregoing list of important factors. By this
cautionary note Trenwick America Corporation intends to avail itself of the safe
harbor from liability with respect of forward-looking statements provided by
Section 27A and Section 21E referred to above.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

This information called for by this item can be found under the caption
"Quantitative and Qualitative Disclosure About Market Risk" in Management's
Discussion and Analysis of Financial Condition and Results of Operations above
and is incorporated herein by reference.


Item 8. Financial Statements and Supplementary Data

See the Consolidated Financial Statements and Notes thereto and the Schedules on
pages F-1 through F-28 and S-1 through S-6 included in Part IV, Item 14.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

Items 10-13. Information required by Items 10 through 13 has been omitted
because Trenwick America Corporation meets the conditions set forth in General
Instruction I (1)(a) and (b) of Form 10-K and is therefore filing this Annual
Report on Form 10-K in the reduced disclosure format.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) The following documents are filed as part of this report:

1. Financial statements:

Report of Independent Accountants - (Page F-1).


15



Consolidated Balance Sheet at December 31, 2001 and 2000. (Page F-2).

Consolidated Statements of Operations, Comprehensive Income and
Changes in Common Stockholder's Equity for the years ended December
31, 2001, 2000 and 1999. (Page F-3).

Consolidated Statement of Cash Flows for the years ended December 31,
2001, 2000 and 1999. (Page F-4).

Notes to Consolidated Financial Statements. (Pages F-5 through F-28).

2. Financial statement schedules required to be filed by Item 8 of this
Form:

Schedule
Page Number
---- --------
S-1 Report of Independent Accountants on Financial
Statement Schedules.

S-2 II Condensed Financial Information of Registrant.

S-5 III Supplementary Insurance Information.

S-6 V Valuation and Qualifying Accounts.

(b) Exhibits

3.1 Certificate of Incorporation of Trenwick America Corporation.
Incorporated by reference to Exhibit 3.1 to Trenwick America
Corporation's Current Report on Form 8-K filed on November 16, 2000
(File No. 0-31967).

3.2 By-Laws of Trenwick America Corporation. Incorporated by reference to
Exhibit 3.2 to Trenwick America Corporation's Current Report on Form
8-K (File No.0-31967).

4.1 (a) Indenture dated as of January 31, 1997, between The Chase
Manhattan Bank and Trenwick Group Inc. Incorporated by reference
to Exhibit 4.2(a) to Trenwick Group Inc.'s Annual Report on Form
10-K for the year ended December 31, 1996 (File No. 0-14737).

(b) Amended and Restated Declaration of Trust of Trenwick Capital
Trust I dated as of January 31, 1997. Incorporated by reference
to Exhibit 4.2(b) to Trenwick Group Inc.'s Annual Report on Form
10-K for the year ended December 31, 1996 (File No. 0-14737).

(c) Exchange Capital Securities Guarantee Agreement dated as of July
25, 1997, between Trenwick Group Inc. and The Chase Manhattan
Bank, as Trustee. Incorporated by reference to Exhibit 4.7 to
Trenwick Group Inc.'s Registration Statement on Form S-4 (File
No. 333-28707).

4.2 First Supplemental Indenture, dated as of September 27, 2000, among
Trenwick Group Inc., Trenwick America Corporation and The Chase
Manhattan Bank, as Trustee, with respect to the 8.82% Junior
Subordinated Deferrable Interest Debentures. Incorporated by


16



reference to Exhibit 4.2 to Trenwick America Corporation's Current
Report on Form 8-K, filed on November 16, 2000 (File No. 0-31967).

4.3 Indenture dated as of March 27, 1998 between Trenwick and The First
National Bank of Chicago, as Trustee, with respect to Trenwick Group
Inc.'s $75 million principal amount of 6.7% Senior Notes due April 1,
2003. Incorporated by reference to Exhibit 4.2 to Trenwick Group
Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 (File No. 1-15389).

4.4 First Supplemental Indenture, dated as of September 27, 2000, among
Trenwick Group Inc., Trenwick America Corporation, and Bank One Trust
Company, N.A., as successor to First National Bank of Chicago, as
Trustee, with respect to the $75 million principal amount of 6.7%
Senior Notes due April 1, 2003. Incorporated by reference to Exhibit
4.4 to Trenwick America Corporation's Current Report on Form 8-K,
filed on November 16, 2000 (File No. 0-31967).

4.5 Indenture, dated as of December 1, 1995, between Chartwell Re
Corporation, as the successor to Piedmont Management Company Inc., and
Fleet Bank, as Trustee, for the Contingent Interest Notes due June 30,
2006. Incorporated by reference to Exhibit 4.5 to Chartwell Re
Corporation's Registration Statement on Form S-1 (File No. 333-678).

4.6 First Supplemental Indenture, dated as of December 13, 1995, among
Piedmont Management Company, Chartwell Re Corporation and Fleet Bank,
as Trustee under the Contingent Interest Notes due June 30, 2006.
Incorporated by reference to Exhibit 4.6 to Chartwell Re Corporation's
Registration Statement on Form S-1 (File No. 333-678).

4.7 Second Supplemental Indenture, dated as of October 27, 1999, among
Chartwell Re Corporation, Trenwick Group Inc. and State Street Bank
and Trust Company, as successor to Fleet Bank, as Trustee, with
respect to the Contingent Interest Notes due June 30, 2006.
Incorporated by reference to Exhibit 4.7 to Trenwick America
Corporation's Current Report on Form 8-K, filed on November 16, 2000
(File No. 0-31967).

4.8 Third Supplemental Indenture, dated as of September 27, 2000, among
Trenwick Group Inc., Trenwick America Corporation and State Street
Bank and Trust Company, as successor to Fleet Bank, as Trustee under
the contingent Interest Notes due June 30, 2006. Incorporated by
reference to Exhibit 4.8 to Trenwick America Corporation's Current
Report on Form 8-K, filed on November 16, 2000 (File No. 0-31967).

10.1 Amended and Restated Credit Agreement, dated as of November 24, 1999
and Amended and Restated as of September 27, 2000, among Trenwick
America Corporation, Trenwick Holdings Limited, various lending
institutions, First Union National Bank, as Syndication Agent, Fleet
National Bank, as Documentation Agent, and Chase Manhattan Bank, as
Administrative Agent. Incorporated by reference to Exhibit 10.1 to
Trenwick Group Ltd,'s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000 (File No. 1-16089).

10.2 First Amendment and Waiver to the Credit Agreement, dated as of June
13, 2001, among Trenwick America Corporation, Trenwick Holdings
Limited, the lending institutions from time to time party thereto,
First Union National Bank, as Syndication Agent, Fleet National Bank,
as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent. Incorporated by reference to Exhibit 10.1 to
Trenwick America Corporation's First Amendment to Quarterly Report on
Form 10-Q, filed on January 11, 2002 (File No. 0-31967).


17



10.3 First Amendment to the Holdings Guaranty, dated as of June 13, 2001,
among Trenwick Group Ltd. and the lending institutions from time to
time party to the Credit Agreement. Incorporated by reference to
Exhibit 10.2 to Trenwick America Corporation's First Amendment to
Quarterly Report on Form 10-Q, filed on January 11, 2002 (File No.
0-31967).

10.4 Second Amendment and Waiver to the Credit Agreement, dated as of
November 13, 2001, among Trenwick America Corporation, Trenwick
Holdings Limited, the lending institutions from time to time party
thereto, First Union National Bank, as Syndication Agent, Fleet
National Bank, as Documentation Agent, and JP Morgan Chase Bank, as
Administrative Agent. Incorporated by reference to Exhibit 10.3 to
Trenwick America Corporation's First Amendment to Quarterly Report on
Form 10-Q, filed on January 11, 2002 (File No. 0-31967).

10.5 Second Amendment to the Holdings Guaranty, dated as of November 13,
2001, among Trenwick Group Ltd. and the lending institutions from time
to time party to the Credit Agreement. Incorporated by reference to
Exhibit 10.4 to Trenwick America Corporation's First Amendment to
Quarterly Report on Form 10-Q, filed on January 11, 2002 (File No.
0-31967).

10.6 Office lease between Trenwick America Corporation and EOP-Canterbury
Green, L.L.C. dated as of January 29, 1998, with respect to office
space in Stamford, Connecticut. Incorporated by reference to Exhibit
10.16 to Trenwick Group Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1997 (File No. 1-15389).

10.7 First Amendment dated as of March 31, 1998, to office lease between
Trenwick America Corporation and EOP-Canterbury Green L.L.C. dated
January 29, 1998. Incorporated by reference to Exhibit 10.11 to
Trenwick Group Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 1-15389).

10.8 Coinsured Aggregate Excess of Loss Reinsurance Agreement between
Trenwick America Reinsurance Corporation and Centre Reinsurance
Company of New York. Incorporated by reference to Exhibit 10.28 to
Trenwick Group Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 0-14737).

10.9 Aggregate Excess of Loss Ratio Cover between Trenwick America
Reinsurance Corporation and Continental Casualty Company. Incorporated
by reference to Exhibit 10.22 to Trenwick Group Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995 (File No. 0-14737).

10.10 1996 Coinsured Aggregate Excess of Loss Reinsurance Agreement between
Trenwick America Reinsurance Corporation and Centre Reinsurance
Company of New York and CNA Re. Incorporated by reference to Exhibit
10.33 to Trenwick Group Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1996 (File No. 0-14737).

10.11 First and Second Coinsured Aggregate Excess of Loss Reinsurance
Agreement between Trenwick America Reinsurance Corporation and Centre
Reinsurance Company of New York and CNA Re. Incorporated by reference
to Exhibit 10.31 to Trenwick Group Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 1-15389).

10.12 1998 Coinsured Aggregate Excess of Loss Reinsurance Agreement between
Trenwick America Reinsurance Corporation and Centre Reinsurance
Company of New York and


18



National Union. Incorporated by reference to Exhibit 10.27 to Trenwick
Group Inc.'s Annual Report on Form 10-K for the year ended December
31, 1998 (File No. 1-15389).

10.13 1999 Coinsured Aggregate Excess of Loss Reinsurance Agreement between
Trenwick America Reinsurance Corporation and Centre Insurance Company
and National Union. Incorporated by reference to Exhibit 10.39 to
Trenwick Group Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1999 (File No. 1-15389).

10.14 Aggregate Excess of Loss Reinsurance Agreement, dated as of October
27, 1999, by and between Chartwell Reinsurance Company, Dakota
Specialty Insurance Company, The Insurance Corporation of New York and
Drayton Company Limited, inclusive of corporate capital support of
London underwriting operations, and London Life and Casualty
Reinsurance Corporation and Scandinavian Reinsurance Company, Ltd.
Incorporated by reference to Exhibit 10.40 to Trenwick Group Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1999 (File
No. 1-15389).

12.1 Computation of Ratios.

23.1 Consent of PricewaterhouseCoopers LLP

(b) Reports on Form 8-K

Trenwick America Corporation did not file any Current Reports on Form 8-K
during the fourth quarter of 2001.





19



SIGNATURES

Pursuant to the Requirements of Section 13 or 15(d) of Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

TRENWICK AMERICA CORPORATION
(Registrant)


By /s/ Stephen H. Binet
-----------------------------------
Stephen H. Binet
President, Chief Executive Officer,
and Director
Dated: March 18, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/Stephen H. Binet President, Chief Executive March 18, 2002
- ------------------------- Officer, and Director
Stephen H. Binet

/s/Alan L. Hunte Executive Vice President, March 18, 2002
- ------------------------- Chief Accounting Officer,
Alan L. Hunte and Director


/s/James F. Billett, Jr. Chairman of the Board March 18, 2002
- -------------------------
James F. Billett, Jr.

/s/Paul Feldsher Director March 18, 2002
- -------------------------
Paul Feldsher

/s/Robert A. Giambo Director March 18, 2002
- -------------------------
Robert A. Giambo

/s/James E. Roberts Director March 18, 2002
- -------------------------
James E. Roberts


20



Report of Independent Accountants


To the Board of Directors
and Stockholder of
Trenwick America Corporation


In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, comprehensive income and changes in
common stockholder's equity and of cash flows present fairly, in all material
respects, the financial position of Trenwick America Corporation and its
subsidiaries at December 31, 2001 and December 31, 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP



New York, New York
February 27, 2002



F-1



Trenwick America Corporation
Consolidated Balance Sheet
(Amounts expressed in thousands of United States dollars)
December 31, 2001 and 2000



2001 2000
---------- ----------

ASSETS:
Debt securities available for sale, at fair value $1,054,518 $1,006,161
Equity securities, at fair value 24,164 103,641
Cash and cash equivalents 128,522 133,395
Accrued investment income 12,685 14,006
Premiums receivable 159,721 158,110
Reinsurance recoverable balances, net 544,202 511,163
Prepaid reinsurance premiums 83,980 63,879
Deferred policy acquisition costs 45,403 36,267
Due from parent and affiliates 68,260 57,952
Net deferred income taxes 65,757 63,598
Goodwill 52,119 33,976
Other assets 89,774 102,874
---------- ----------
Total assets $2,329,105 $2,285,022
========== ==========
LIABILITIES:
Unpaid claims and claims expenses $1,412,104 $1,396,504
Unearned premium income 239,004 177,174
Reinsurance balances payable 42,424 26,401
Indebtedness 288,878 283,289
Due to affiliates 50,434 75,303
Other liabilities 33,939 38,385
---------- ----------
Total liabilities 2,066,783 1,997,056
---------- ----------
MINORITY INTEREST:
Mandatorily redeemable preferred capital securities
of subsidiary trust holding solely junior
subordinated debentures of Trenwick
America Corporation 86,973 87,059
---------- ----------
COMMON STOCKHOLDER'S EQUITY
Common stock and additional paid in capital 99,353 114,847
Retained earnings 57,104 76,629
Accumulated other comprehensive income 18,892 9,431
---------- ----------
Total common stockholder's equity 175,349 200,907
---------- ----------
Total liabilities, minority interest
and common stockholder's equity $2,329,105 $2,285,022
========== ==========


The accompanying notes are an integral part of these statements.


F-2



Trenwick America Corporation
Consolidated Statement of Operations, Comprehensive Income
and Changes in Common Stockholder's Equity
(Amounts expressed in thousands of United States dollars)
Years Ended December 31, 2001, 2000 and 1999



2001 2000 1999
--------- --------- ---------

Revenues:
Net premiums earned $ 380,288 $ 310,791 $ 187,885
Net investment income 68,041 66,601 40,291
Net realized investment gains (losses) (1,866) 6,768 971
Other income 2,819 2,823 569
--------- --------- ---------
Total revenues 449,282 386,983 229,716
--------- --------- ---------

Expenses:
Claims and claims expenses incurred 305,488 276,043 147,182
Policy acquisition costs 122,213 92,980 62,550
Underwriting expenses 18,890 20,730 17,694
General and administrative expenses 2,562 18,776 5,990
Goodwill amortization 1,512 355 --
Interest expense and subsidiary
preferred share dividends 31,336 35,769 18,550
Foreign currency losses 1,434 1,831 --
--------- --------- ---------
Total expenses 483,435 446,484 251,966
--------- --------- ---------

Loss before income taxes (34,153) (59,501) (22,250)
Income taxes (benefit) (14,628) (22,529) (12,355)
--------- --------- ---------
Net loss (19,525) (36,972) (9,895)
Net unrealized investment gains (losses) 11,043 14,713 (25,154)
Foreign currency translation adjustments (1,582) 1,466 (1,458)
--------- --------- ---------
Comprehensive loss $ (10,064) $ (20,793) $ (36,507)
========= ========= =========

Changes in common stockholder's equity:
Common stockholder's equity, beginning of year $ 200,907 $ 214,482 $ 208,332
Net capital transactions with affiliates (13,486) (21,076) 88,757
Adjustments related to business combination (2,008) 37,794 --
Comprehensive loss (10,064) (20,793) (36,507)
Common share dividends -- (9,500) (46,100)
--------- --------- ---------

Common stockholder's equity, end of year $ 175,349 $ 200,907 $ 214,482
========= ========= =========


The accompanying notes are an integral part of these statements.


F-3



Trenwick America Corporation Consolidated Statement of Cash Flows
(Amounts expressed in thousands of United States dollars)
Years ended December 31, 2001, 2000 and 1999



2001 2000 1999
--------- --------- ---------

Net income (loss) $(19,525) $(36,972) $(9,895)
Adjustments to reconcile net income (loss) to net
cash from (for) operating activities:
Contingent interest note adjustments (8,700) (4,675) 642
Investment premium amortization 389 633 1,832
Deferred income taxes (25,753) (289) 5,056
Net realized investment gains (losses) 1,866 (6,768) (971)
Unrealized loss (gain) on foreign exchange (1,040) 1,883 --
Uncollectable accounts provision 3,320 11,666 7,779
Other fair value adjustment accretion 458 365 --
Loss sharing agreement reallocation (28,570) 17,756 10,814
Other 760 (6,859) (4,803)
Changes in assets and liabilities, net of effects from
purchase of subsidiary:
Accrued investment income 1,321 3,847 1,354
Premiums receivable (1,611) (4,398) 59,995
Deferred policy acquisition costs (9,136) 1,704 7,032
Other assets 18,806 37,901 (58,897)
Unpaid claims and claims expenses, net of
reinsurance recoverable balances (17,440) (76,962) (61,170)
Unearned premium income, net of prepaid
reinsurance premiums 41,730 (10,351) (15,944)
Other liabilities 13,143 (26,704) (7,576)
--------- --------- ---------
Cash for operating activities (29,982) (98,223) (64,752)
--------- --------- ---------
Investing activities:
Debt and equity securities sales and maturities 646,048 481,853 272,390
Debt and equity securities purchases (599,566) (327,491) (134,381)
Cash acquired in pooling business combination -- -- 34,131
Other investing activities (5,320) (1,552) 8,424
--------- --------- ---------
Cash from investing activities 41,162 152,810 180,564
--------- --------- ---------
Financing activities:
Indebtedness proceeds 14,000 24,000 --
Indebtedness costs (1,475) (1,834) --
Indebtedness repayments -- (41,101) (48,417)
Affiliate loan proceeds (repayments) (33,677) 57,288 54,855
Affiliate capital transactions, net 5,099 (47,901)
Dividend payments -- (9,500) (46,100)
Other financing activities, net -- -- (9,056)
--------- --------- ---------
Cash for financing activities (16,053) (19,048) (48,718)
--------- --------- ---------
Change in cash and cash equivalents (4,873) 35,539 67,094
Cash and cash equivalents, beginning of year 133,395 97,856 30,762
--------- --------- ---------
Cash and cash equivalents, end of year $128,522 $133,395 $97,856
========= ========= =========



F-4



TRENWICK AMERICA CORPORATION
Notes to Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars except share data)
Years Ended December 31, 2001, 2000 and 1999

Note 1 Organization
Organization Trenwick America Corporation is a United States holding
and Basis company whose principal subsidiaries underwrite specialty
of Presentation insurance and reinsurance. Trenwick America Corporation's
ultimate parent is Trenwick Group Ltd., which is a publicly
traded Bermuda holding company. Prior to September 27, 2000,
Trenwick America Corporation's parent was Trenwick Group Inc.

On September 27, 2000, Trenwick Group Ltd., a newly formed
company, acquired all of the assets and liabilities of
Trenwick Group Inc. and all of the issued and outstanding
common shares of LaSalle Re Holdings Limited and LaSalle Re
Limited in exchange for Trenwick Group Ltd. common shares.
Trenwick Group Inc. then distributed the shares received from
Trenwick Group Ltd. to its shareholders in a liquidating
distribution. Substantially all of Trenwick Group Inc.'s
assets and liabilities were transferred from Trenwick Group
Inc. to Chartwell Re Holdings Corporation (then a
wholly-owned subsidiary of Trenwick Group Inc.) immediately
prior to the Trenwick/LaSalle business combination. Chartwell
Re Holdings Corporation then sold most of its United Kingdom
and Bermuda subsidiaries to Trenwick Group Inc. at fair
value. Immediately after the Trenwick/LaSalle business
combination, Chartwell Re Holdings Corporation merged with
and into Trenwick America Corporation, with Trenwick America
Corporation as the surviving corporation. As a result of such
merger, Trenwick America Corporation acquired Chartwell
Insurance Company, The Insurance Corporation of New York and
Dakota Specialty Insurance Company. The Trenwick/LaSalle
business combination and its related transactions were
completed on September 27, 2000. On October 27, 1999,
Trenwick Group Inc. became the ultimate parent of Chartwell
Insurance Company, The Insurance Corporation of New York and
Dakota Specialty Insurance Company through its acquisition of
Chartwell Re Corporation. More details of these business
combinations are disclosed in Note 2.

Trenwick America Corporation's principal subsidiaries
underwrite specialty insurance and reinsurance through two
business platforms: Trenwick America Reinsurance Corporation,
which underwrites treaty reinsurance on United States
property and casualty risks, including reinsurance business
previously written by Chartwell Re Corporation; and
Canterbury Financial Group Inc. which underwrites specialty
insurance through The Insurance Corporation of New York,
Dakota Specialty Insurance Company and Chartwell Insurance
Company. More details on business segments are disclosed in
Note 3.

Basis of Presentation
We include the accounts of Trenwick America Corporation and
its subsidiaries in these financial statements after
elimination of significant intercompany accounts and
transactions. We have reclassified certain items in prior
year financial statements to conform to current presentation.

We prepared these financial statements in conformity with
accounting principles that are generally accepted in the
United States of America, sometimes referred to as U.S. GAAP.
In preparing these financial statements, we are required to
make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of
revenues and expenses during the reporting periods. Actual
amounts will differ from these estimates.


F-5



As discussed in Note 2, the business combination between
LaSalle Re Holdings Limited and Trenwick Group Inc. was
accounted for as a purchase by LaSalle Re Holdings Limited of
the minority interest in LaSalle Re Limited and of Trenwick
Group Inc. Accordingly, the assets and liabilities of
Trenwick America Corporation have been adjusted to reflect
their fair value, after consideration of the purchase price,
as of September 27, 2000. In addition, a portion of the
goodwill resulting from the business combination has been
pushed down to Trenwick America Corporation and was reflected
in the consolidated balance sheet.

As a result of the reorganization described above, the United
Kingdom and Bermuda subsidiaries of Trenwick Group Inc., were
sold to Trenwick Group Ltd., and the remaining net
liabilities of Trenwick Group Inc., consisting primarily of
indebtedness and preferred capital securities, were assumed
by Trenwick America Corporation. These financial statements
present the reorganization at historical cost in a manner
similar to a pooling of interests business combination.
Accordingly, the accompanying financial statements at year
end 2001 and for the 2000 and 1999 years have been restated
to reflect the combined operating results, cash flows, and
financial position of the United States operations of
Trenwick Group Inc. for all periods in which the companies
were under the common control of Trenwick Group Inc.

Other significant accounting policies are presented in
italics within the appropriate footnotes.

Note 2 Trenwick/LaSalle Business Combination
Business On December 19, 1999, LaSalle Re Holdings Limited, LaSalle
Combinations Re Limited and Trenwick Group Inc. signed a definitive
agreement to combine under a new holding company, Trenwick
Group Ltd. On September 27, 2000, following shareholder and
regulatory approval, the newly formed Trenwick Group Ltd.
issued common shares on a one-for-one, tax-free basis to
the former shareholders of LaSalle Re Holdings Limited, the
minority shareholders of LaSalle Re Limited, then a 77.5%
owned subsidiary of LaSalle Re Holdings Limited, and the
former shareholders of Trenwick Group Inc.

We accounted for the Trenwick/LaSalle business combination as
a purchase by LaSalle Re Holdings Limited of the minority
interest in LaSalle Re Limited and of Trenwick Group Inc.
Under the purchase basis of accounting, we allocated the
purchase price to the identifiable assets acquired and
liabilities assumed, based on the estimated fair values at
the date of acquisition and recorded the unallocated excess
as goodwill. A portion of the goodwill resulting from the
business combination ($33,976 at December 31, 2000) was
pushed down to Trenwick America Corporation and was reflected
in the consolidated balance sheet. During the 2001 year, we
refined our estimates used in the calculation of the fair
value of the net assets acquired in this business
combination, principally for the deferred income tax asset,
and recorded an additional $2,008 of goodwill has been pushed
down to the consolidated balance sheet of Trenwick America
Corporation. Pending changes in accounting for goodwill and
its amortization are described in Note 11.

Trenwick Group Inc./Chartwell Re Corporation Merger
On October 27, 1999, Trenwick Group Inc. issued common shares
in exchange for all of the common shares of Chartwell Re
Corporation, a publicly held insurer and reinsurer. The
merger of Chartwell Re Corporation with and into Trenwick
Group Inc. was accounted for as a purchase by Trenwick Group
Inc. of Chartwell Re Corporation, and the $153,315 excess of
the purchase price ($231,326) over the fair value of
Chartwell Re Corporation's identifiable net assets ($78,011)
was recorded as goodwill. On September 27, 2000, the
unamortized goodwill resulting from this transaction was
eliminated in connection with the Trenwick/LaSalle business
combination.


F-6



Note 3 Trenwick America Corporation conducts its specialty insurance
Segment and reinsurance business in the following two business
Information segments:

o Treaty reinsurance, principally through Trenwick America
Reinsurance Corporation; and

o Specialty insurance, principally through The Insurance
Corporation of New York and Dakota Specialty Insurance
Company

The business segment financial information excludes the
Excess Casualty Reinsurance Association Pool ("ECRA Pool")
runoff. The business segment financial information also
excludes affiliate transactions, the most significant of
which are a reinsurance contract with a U.K. affiliate of
Trenwick America Corporation that writes international
specialty insurance and reinsurance business and a loss
sharing agreement with some of Trenwick America
Corporation's U.K. affiliates, which provides for the
allocation of recoverables from reinsurance purchased in
connection with the Trenwick/Chartwell merger.

Business segment financial information for Trenwick America
Corporation at year end 2001 and 2000 and for each of the
years 2001, 2000, and 1999 follow:



Total assets: 2001 2000
---------- ----------

Treaty reinsurance $1,634,470 $1,782,808
Specialty insurance 572,138 376,994
Unallocated 122,497 125,220
---------- ----------
Total assets $2,329,105 $2,285,022
========== ==========


2001 2000 1999
--------- --------- ---------

Total revenues:
Treaty reinsurance $ 335,867 $ 328,478 $ 217,322
Specialty insurance 97,178 54,758 12,234
Affiliate transactions 10,879 173 --
Unallocated 5,358 3,574 160
--------- --------- ---------
Total revenues $ 449,282 $ 386,983 $ 229,716
========= ========= =========


2001 2000 1999
--------- --------- ---------

Net income (loss)
Treaty reinsurance $ 4,863 $ 7,404 $ 7,473
Specialty insurance 44 2,339 1,680
Affiliate transactions 5,417 (14,817) --
ECRA pool runoff (7,495) -- --
Unallocated interest expense and
subsidiary preferred
share dividends (30,824) (35,540) (18,362)
Other unallocated 8,470 3,642 (686)
--------- --------- ---------
Net loss $ (19,525) $ (36,972) $ (9,895)
========= ========= =========


Revenues from transactions between operating segments, which
are not material, have been eliminated in consolidation.


F-7



Note 4 Premiums
Underwriting We accrue insurance and reinsurance premiums on contracts on
Activities an estimated basis throughout the term of such contracts. For
retrospectively rated and other experience rated reinsurance
contracts, we estimate and accrue premiums based on the
difference between total costs before and after the
experience under the contract (the with-and-without method).
We make premium estimates based on statistical and other data
and record subsequent adjustments in the period in which they
become known. We account for short-duration contracts as
reinsurance when they provide indemnification against loss or
liability relating to insurance risk and as deposits when
they do not.

We earn insurance and reinsurance premiums (net of
reinsurance ceded) on a pro-rata basis over the related
contract period. We record unearned premium income for the
portion of premiums applicable to the unexpired portion of
premium coverage with renewal dates later than year-end. We
compute premium income for direct business and excess of loss
reinsurance using pro-rata methods; for proportional
business, we compute premium income based on reports received
from ceding companies. We record reinsurance premiums as
prepaid expenses and amortize them over the contract period
in proportion to the amount of reinsurance protection
provided. Where the contract provides for return premiums, we
make accruals based on loss experience through the date of
the balance sheet.

The components of premiums written and earned follow:

2001 2000 1999
--------- --------- ---------
Assumed premiums written $ 350,134 $ 338,794 $ 210,921

Direct premiums written 291,433 187,545 38,088
--------- --------- ---------
Gross premiums written 641,567 526,339 249,009
Ceded premiums written (210,160) (221,027) (77,624)
--------- --------- ---------
Net premiums written $ 431,407 $ 305,312 $ 171,385
========= ========= =========

Assumed premiums earned $ 321,882 $ 352,607 $ 255,164
Direct premiums earned 250,047 165,728 10,343
--------- --------- ---------
Gross premiums earned 571,929 518,335 265,507
Ceded premiums earned (191,641) (207,544) (77,622)
--------- --------- ---------
Net premiums earned $ 380,288 $ 310,791 $ 187,885
========= ========= =========

Policy acquisition costs
Policy acquisition costs primarily consist of commissions and
brokerage expenses that vary with, and are primarily related
to, the acquisition of business. We defer and amortize policy
acquisition costs over the period in which the related
premiums are earned. We periodically review deferred policy
acquisition costs to determine that they do not exceed
recoverable amounts after allowing for anticipated investment
income.

The components of policy acquisition costs are as follows:



2001 2000 1999
--------- --------- ---------

Gross policy acquisition costs deferred $ 194,429 $ 156,910 $ 106,617
Ceded policy acquisition costs deferred (63,080) (65,634) (27,119)
--------- --------- ---------
Net policy acquisition costs deferred $ 131,349 $ 91,276 $ 79,498
========= ========= =========

Policy acquisition costs expensed $ 122,213 $ 92,980 $ 62,550
========= ========= =========


Trenwick America Corporation earned commissions on cessions
to retrocessionaires of $152,564, $64,883, and $18,928 for
the 2001, 2000 and 1999 years, respectively.


F-8



Claims and Claims Expenses
We record claims and claims expenses as incurred, at
management's best estimate, in order to match claims and
claims expense costs with premiums over the contract periods.
The amount provided for unpaid claims and claims expenses
consists of any unpaid reported claims and claims expenses
and estimates for incurred but not reported claims and claims
expenses, net of salvage and subrogation. We developed the
estimates for claims and claims expenses incurred but not
reported based on historical claims and claims expense
experience and an actuarial evaluation of expected claims and
claims expense experience. In connection with the
Trenwick/LaSalle business combination, Trenwick America
Corporation adopted LaSalle Re Holdings Limited's policy of
using tabular reserving for workers' compensation indemnity
liabilities that are considered fixed and determinable, and
discounted such reserves using an interest rate of 3.5%.
Insurance liabilities are based on estimates, and the
ultimate liability will vary from our estimates. Adjustments
to these estimates are reflected in income when known.

The components of net claims and claims expenses incurred
follow:



2001 2000 1999
--------- --------- ---------

Gross claims and claims expenses incurred $ 430,702 $ 455,093 $ 268,066
Ceded claims and claims expenses incurred (125,214) (179,050) (120,884)
--------- --------- ---------
Net claims and claims expenses incurred $ 305,488 $ 276,043 $ 147,182
========= ========= =========



F-9



The following table presents a reconciliation of the
beginning and ending balances of net liabilities for unpaid
claims and claims expenses. The gross liabilities for unpaid
claims and claims expenses at period ends are as reflected in
the balance sheet. The net liabilities for unpaid claims and
claims expenses are after deductions for reinsurance
recoverable on unpaid claims and claims expenses, also as
reflected in the balance sheet.



2001 2000 1999
----------- ----------- -----------

Net unpaid claims and claims expenses,
beginning of year $ 760,071 $ 841,381 $ 352,050
----------- ----------- -----------
Net unpaid claims and claims
expenses of companies acquired -- -- 564,829
----------- ----------- -----------
Provision, net of reinsurance recoverable:
Claims incurred in the current year 292,933 251,139 130,993
Claims incurred prior to the current year 22,448 32,496 16,189
----------- ----------- -----------
Total provision 315,381 283,635 147,182
----------- ----------- -----------
Payments, net of reinsurance:
Claims incurred in the current year (64,085) (66,574) (38,320)
Claims incurred prior to the current year (250,649) (279,717) (173,546)
----------- ----------- -----------
Total payments (314,734) (346,291) (211,866)
----------- ----------- -----------
Adoption of accounting policy for workers'
compensation discounting -- (1,135) --
----------- ----------- -----------
Effect of loss sharing agreement with affiliates 28,570 (17,756) (10,814)
----------- ----------- -----------
Foreign currency translation adjustment to net
unpaid claims and claims expenses 88 237 --
----------- ----------- -----------
End of year:
Net unpaid claims and claims expenses 789,376 760,071 841,381
Reinsurance recoverable on unpaid claims
and claims expenses 610,906 611,954 502,787
----------- ----------- -----------
Gross unpaid claims and claims expenses $ 1,400,282 $ 1,372,025 $ 1,344,168
=========== =========== ===========


Unpaid claims and claims expenses at year end 2001 and 2000
includes $11,822 and $24,479 of claims and claims expenses
payable, respectively, which are not reflected in the
reconciliation of beginning and ending balances of net
liabilities for unpaid claims and claims expenses presented
above. In addition, the 2001 and 2000 provisions for claims
incurred prior to the current year presented in the
reconciliation above do not include the benefits of $9,893
and $7,592, respectively related to the reduction of the
contingent interest note. Workers' compensation indemnity
reserves subject to discounting totaled $3,998 and $3,883 at
year end 2001 and 2000, respectively.

In the 2001 year, Trenwick America Corporation recorded a net
increase of $12,555 in estimates for claims occurring in
prior accident years. The increase in 2001 includes $15,654
of reserve strengthening related to the treaty reinsurance
segment's liability business, which was underwritten prior to
2001 and $11,530 related to prior participation in the ECRA
Pool. In addition, $13,940 of the loss reserve strengthening
related to the specialty program insurance segment. This
reserve strengthening was offset in part by a reduction in
claims and claims expenses of $28,570 incurred related to a
loss sharing agreement with some of Trenwick America
Corporation's U.K. affiliates, as described below.


F-10



In 2000, the net estimates of prior year loss reserves for
Trenwick America Reinsurance Corporation, Chartwell Insurance
Company and The Insurance Corporation of New York increased
by approximately $13,171, $9,133 and $2,600, respectively.
The increases for Trenwick America Reinsurance Corporation
and Chartwell Insurance Company's casualty reinsurance
business reflect a continued deterioration in market
conditions since 1997. The increase for The Insurance
Corporation of New York relates primarily to unfavorable
development two specialty insurance programs that underwrite
casualty and commercial auto business.

In 1999, net estimates of prior year losses increased by
approximately $16,189. The increase was due to adverse
development of Trenwick America Reinsurance Corporation's
reserves for the 1997 and 1998 accident years.

Inflation
Inflation raises the cost of economic losses and non-economic
damages covered by insurance contracts and, therefore is a
factor in determining effective rates of reinsurance. The
methods used to estimate individual case reserves and
reserves for claims incurred but not yet reported implicitly
incorporate the effects of inflation in the projection of
ultimate losses. Due to the inherent uncertainties of
estimating unpaid claims and claims expenses, actual claims
and claims expenses may deviate, perhaps substantially, from
estimates reflected in these financial statements. Management
believes that its claim estimation methods are reasonable and
prudent and that its unpaid claims and claims expenses at
year end 2001 are adequate.

Latent Injury and Toxic Tort Claims
The balance of unpaid claims and claims expenses also
includes provisions for latent injury or toxic tort claims
that cannot be estimated with traditional techniques. Due to
inconsistent court decisions in federal and state
jurisdictions and the wide variation among insureds with
respect to underlying facts and coverage, uncertainty exists
with respect to these claims as to liabilities of ceding
companies and, consequently, reinsurance coverage. With the
exception of an insurer acquired in the Trenwick/ Chartwell
merger, Trenwick America Corporation's exposure to such
latent losses is not expected to be significant due to its
relatively recent entry into the reinsurance business, its
low historical levels of premium volume prior to the
application of exclusions for asbestos and environmental
liabilities and its retrocessional programs. To the extent
that there is adverse development in that insurer's loss
reserves, including its reserves for latent losses, Trenwick
America Corporation's obligation under certain of its
indebtedness is reduced. More details on that indebtedness
are included in Note 6.

The estimate of net unpaid claims and claims expenses for
asbestos and environmental claims at year end 2001 and 2000
was $91,050 and $70,547, respectively, comprising gross
unpaid claims and claims expenses of $118,688 and $99,474,
net of reinsurance recoverable on unpaid claims and claims
expenses of $27,638 and $28,927. The above figures include
liabilities emanating from Trenwick Group Ltd.'s
participation in the ECRA Pool.

Reinsurance
We enter into reinsurance and retrocessional agreements to
reduce our exposure on individual risks, catastrophic losses
and other large losses in all lines of business. We classify
reinsurance contracts which do not meet insurance accounting
risk transfer requirements as deposits. We treat these
deposits as financing transactions and credit or charge with
interest income or interest expense to them according to
contract terms.

Trenwick America Reinsurance Corporation's reinsurance
treaties consist principally of property catastrophe
reinsurance treaties. Canterbury Financial Group Inc.
purchases specific reinsurance programs for each of the
programs underwritten by its insurance companies.


F-11



From 1989 to 1999, Trenwick America Reinsurance Corporation
purchased aggregate excess of loss ratio treaties from
several reinsurers. These facilities provided Trenwick
America Reinsurance Corporation with a layer of protection
against adverse results from its domestic casualty business
in excess of specified loss ratios. Trenwick America
Reinsurance Corporation did not purchase an aggregate excess
of loss ratio treaty after 1999. Interest expense on funds
held under these facilities is recorded as an investment
expense, and is included in the funds held offset at year end
2001 and 2000.

At the time of the closing of the Trenwick/Chartwell merger
(October 27, 1999), Chartwell Re Corporation purchased a
reinsurance policy providing for up to $100,000 in coverage
in order to indemnify Trenwick Group Inc. against
unanticipated increases in Chartwell Re Corporation's
reserves for business written on or before the date the
merger was completed. Amounts recoverable under this loss
sharing agreement are presented gross in the balance sheet as
reinsurance recoverable balances ($91,970 at year end 2001
and 2000) and as miscellaneous accounts receivable, included
in other assets ($8,030 at year end 2001 and 2000). The
related benefit for losses ceded to the agreement has been
reflected as a reduction to claims and claims expenses
incurred ($28,570, $27,754 and $35,646 during 2001, 2000 and
1999, respectively) and the benefit related to other
underwriting balances was reflected as a reduction to
underwriting expenses ($8,030 for 1999). The benefit
recognized through income is limited to the extent of any
losses incurred by Trenwick America Corporation under the
agreement. Any excess benefit from the agreement is directly
reflected in net capital transactions with affiliates
included in common stockholder's equity. In addition, as part
of the merger, Chartwell Re Corporation commuted several
aggregate stop-loss contracts.

Reinsurance Recoverable Balances, Net
The components of reinsurance recoverable balances, net at
year end 2001 and 2000 are as follows:



2001 2000
-------- --------

Paid claims $ 69,154 $ 38,209
Unpaid claims and claims expenses, net of
funds held offset of $135,859 and $139,000 475,048 472,954
-------- --------
Reinsurance recoverable balances, net $544,202 $511,163
======== ========


Reinsurance recoverable balances at year end 2001 and 2000
are net of allowances for doubtful accounts of $17,255 and
$14,353, respectively, which includes $12,707 and $10,337 for
paid claims and $4,548 and $4,016 for unpaid claims and
claims expenses, respectively.

Reinsurance agreements provide for recovery of a portion of
certain claims and claims expenses from reinsurers and
retrocessionaires. Trenwick America Corporation remains
liable in the event that the reinsurer or retrocessionaire is
unable to meet its obligations; however, Trenwick America
Corporation holds collateral under some of these agreements.
Letters of credit, trust accounts and funds withheld in the
aggregate amount of $354,011 (including interest) have been
arranged in favor of Trenwick America Corporation
collateralizing reinsurance recoverables with respect to
certain reinsurers and retrocessionaires.


F-12



Note 5 Debt and Equity Security Investments
Investing We have classified debt securities as "available for sale"
Activities and reported them as well as equity securities, at estimated
fair value principally using quoted market prices or broker
dealer quotes. Included in equity securities are limited
partnerships in which we hold greater than a 3% interest, and
which are recorded at equity value.

Fair value and amortized cost or cost of debt and equity
securities at year end 2001 and 2000 follow:



2001 2000
----------------------- ---------------------
Fair Value Cost Fair Value Cost
---------- ---------- ---------- --------

U.S. federal and U.K. government
securities, including agencies $ 147,827 $ 144,580 $ 136,396 $133,447
Other foreign government securities 19,485 19,055 18,223 17,908
U.S. municipal government securities 125 125 249,700 244,234
Mortgage and other asset-backed securities 495,799 481,410 337,184 330,204
Corporate and other debt securities 391,282 384,678 264,658 263,847
Debt securities fair value and ---------- ---------- ---------- --------
amortized cost $1,054,518 $1,029,848 $1,006,161 $989,640
========== ========== ========== ========
Publicly traded common and
preferred stock $ 14,619 $ 7,865 $ 82,919 $ 84,943
Limited partnerships 9,545 9,545(1) 19,722 19,722(1)
Private placement stock -- -- 1,000 1,000
---------- ---------- ---------- --------
Equity securities fair value and cost $ 24,164 $ 17,410 $ 103,641 $105,665
========== ========== ========== ========


(1) Amounts represent cost, adjusted for changes in equity of
the limited partnerships.

Gross unrealized gains and losses on debt and equity
securities at year end 2001 and 2000 follow:



2001 2000
----------------- -----------------
Gains Losses Gains Losses
------- ------- ------- -------

U.S. federal and U.K. government
securities, including agencies $ 4,486 $(1,239) $ 2,949 $ --
Other foreign government securities 663 (233) 315 --
U.S. municipal government securities -- -- 5,466 --
Mortgage and other asset-backed securities 14,709 (320) 7,097 (117)
Corporate and other debt securities 12,449 (5,845) 5,000 (4,189)
------- ------- ------- -------
Debt securities gross gains and losses $32,307 $(7,637) $20,827 $(4,306)
======= ======= ======= =======
Equity securities gross gains and losses $ 6,754 $ -- $ 3,160 $(5,184)
======= ======= ======= =======


The fair value and amortized cost at year end 2001 are shown
below by contractual maturity periods except mortgage-backed
and asset-backed securities, which are included in the table
based on expected maturity dates. Actual maturities will
differ from contractual maturities because borrowers
generally have the right to prepay obligations.


F-13




Fair Value Amortized Cost
---------- --------------

Due in one year or less $ 77,413 $ 75,619
Due after one year through five years 496,049 477,346
Due after five years through ten years 349,280 346,124
Due after ten years 131,776 130,759
---------- ----------
Total maturities of debt securities $1,054,518 $1,029,848
========== ==========


Net Investment Income and Net Investment Gains (Losses)
We recognize investment income, consisting principally of
interest and dividends, when earned, net of investment
expenses. In computing interest income, we amortize premiums
and accrete discounts on debt securities utilizing the
interest method. We adjust the amortization and accretion for
mortgage-backed and other asset-backed securities, when
sufficient information exists to estimate the probability and
timing of their prepayments, to the amount that would have
existed had the new effective yield been applied since the
acquisition of the security. We classify imputed interest on
the funds held offset to reinsurance recoverable in
investment expense.

We generally limit investments in debt securities that are
rated below investment grade, as these investments are
subject to a higher degree of credit risk than investment
grade securities. We monitor the creditworthiness of the
portfolio, including below investment grade securities, and
we write down investments when fair values decline for
reasons other than changes in interest rates or other
perceived temporary conditions. We determine realized gains
or losses on disposition of investments on the basis of
specific identification.

Sources of net investment income follow:



2001 2000 1999
-------- -------- --------

Debt securities interest $ 71,212 $ 68,264 $ 49,468
Equity securities dividends and earnings 5,255 7,063 2,146
Cash and cash equivalents interest 5,689 6,179 1,286
-------- -------- --------
Gross investment income 82,156 81,506 52,900
Imputed interest expense (11,342) (11,940) (10,636)
Other investment expenses (2,773) (2,965) (1,973)
-------- -------- --------
Net investment income $ 68,041 $ 66,601 $ 40,291
======== ======== ========


Net realized gains (losses) on sales of investments and their
effect on net income follow:



2001 2000 1999
-------- ------- -------

Debt security realized gains $ 11,749 $ 2,124 $ 2,558
Equity security realized gains 997 7,143 4,896
Debt security realized losses (7,872) (2,423) (6,483)
Equity security realized losses (6,740) (76) --
-------- ------- -------
Net realized investment gains (losses) (1,866) 6,768 971
Applicable income taxes (benefit) (653) 2,369 288
-------- ------- -------
Net realized investment gains (losses)
included in net income $ (1,213) $ 4,399 $ 683
======== ======= =======


During 2001 and 1999, Trenwick America Corporation wrote down
the fair value of certain debt and equity securities by
$3,441 and $5,179, respectively, and reflected the writedown
as realized losses of investments to recognize declines in
value that were other than temporary. Trenwick America
Corporation did not write down the value of any investments
during 2000.


F-14



Net unrealized gains (losses) on investments and their effect
on other comprehensive income (loss) follow:



2001 2000 1999
-------- ------- --------

Debt securities net gains (losses) $ 12,088 $27,431 $(39,932)
Equity securities net gains 3,035 1,972 2,195
-------- ------- --------
Net investment gains (losses) included
in comprehensive income before income taxes 15,123 29,403 (37,737)
Applicable income taxes (benefit) 5,293 10,291 (13,266)
-------- ------- --------
Net investment gains (losses) included in
comprehensive income (loss) 9,830 19,112 (24,471)
Less net realized investment gains (losses)
included in net income (loss) (1,213) 4,399 683
-------- ------- --------
Net unrealized investment gains (losses)
included in other comprehensive income (loss) $ 11,043 $14,713 $(25,154)
======== ======= ========


Net investment gains (losses) included in other comprehensive
income (loss) in 2000 are net of fair value adjustments of
$1,875 on debt and equity securities recorded in connection
with the Trenwick/LaSalle business combination.

Net Unrealized Investment Gains (Losses)

We calculate unrealized investment gains (losses) as the
difference between recorded values (fair value) and amortized
cost or cost. We include net unrealized investment gains and
losses, net of applicable deferred income taxes, in common
stockholder's equity as accumulated other comprehensive
income.

Components of net unrealized investment gains (losses) at
year end 2001 and 2000 follow:



2001 2000
------- --------

Debt securities net unrealized gains $24,670 $ 16,521
Equity securities net unrealized gains (losses) 6,754 (2,024)
------- --------
Net unrealized gains before income taxes 31,424 14,497
Applicable deferred income taxes 10,958 5,074
------- --------
Net unrealized investment gains $20,466 $ 9,423
======= ========


Note 6 Indebtedness and Minority Interest
Financing
Activities We have recorded indebtedness and other mandatorily
redeemable obligations at their fair value at the date of the
Trenwick/LaSalle business combination or at principal amounts
advanced subsequent thereto. We accrete the discount on these
obligations utilizing the interest method. For our contingent
interest note obligations, we adjust the principal amount of
the notes for any adverse development in the applicable
liability for claims and claims expenses.

Carrying value and fair value of indebtedness and minority
interest at year end 2001 and 2000 are as follows:


F-15




2001 2000
------------------- -------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- -------- --------

Senior notes $ 73,920 $ 63,750 $ 73,143 $ 73,155
Senior credit facility 195,035 195,035 181,379 181,379
Contingent interest notes 19,923 19,923 28,767 28,767
-------- -------- -------- --------
Total indebtedness 288,878 278,708 283,289 283,301
Mandatorily redeemable
preferred capital securities 86,973 55,000 87,059 84,779
-------- -------- -------- --------
Total indebtedness and
minority interest $375,851 $333,708 $370,348 $368,080
======== ======== ======== ========


Future Minimum Principal Payments on Indebtedness
Future minimum principal payments on indebtedness and
minority interest at year end 2001 follow: 2002, $43,883;
2003, $128,635; 2004, $63,386; 2005, $34,131; 2006, $1,000
and thereafter $110,000.

Senior Notes
The senior notes, with a par value of $75,000, are due April
1, 2003, and are not subject to redemption prior to maturity.
They are unsecured obligations and rank senior in right of
payment to all existing and future subordinated indebtedness
of Trenwick America Corporation, Trenwick Group Ltd.'s U.S.
holding company. Under the terms of the notes, Trenwick
America Corporation is not restricted from incurring
indebtedness, but is subject to limits on its ability to
incur secured indebtedness for borrowed money. Interest on
the notes is payable semi-annually at an annual rate of 6.7%;
interest charged to operations is at the imputed rate of
7.9%.

In connection with the Trenwick/Chartwell merger as discussed
in Note 1, Trenwick America Corporation indirectly assumed
the obligations of its affiliate, Chartwell Re Holdings
Corporation under the 10.25% senior notes. During the first
quarter of 2000, these notes were redeemed and a loss of
$825, net of income taxes of $445, was recorded by Trenwick
America Corporation.

Senior Credit Facility
Concurrent with the Trenwick/LaSalle business combination,
Trenwick Group Ltd.'s U.S. and U.K. holding companies entered
into an amended and restated $490,000 credit agreement with
various lending institutions. The agreement consists of both
a $260,000 revolving credit facility and a $230,000 letter of
credit facility. Trenwick Group Ltd's U.S. holding company,
Trenwick America Corporation, is the primary obligor with
respect to the revolving credit facility, and Trenwick Group
Ltd.'s U.K. holding company, Trenwick Holdings Limited, is
the primary obligor with respect to the letter of credit
facility. Guarantees are provided by LaSalle Re Holdings
Limited and Trenwick Group Ltd. with respect to both the U.S.
and U.K. holding companies' obligations and additionally by
the U.S. holding company with respect to the U.K. holding
company's obligations.

On September 30, 2001, the U.S. holding company converted the
outstanding borrowings under the revolving credit facility to
a four year term loan facility. The applicable interest rate
on the term loan is generally 2.5% above the London Interbank
Offered Rate and was 4.7% at year end 2001. The scheduled
principal repayments of the $195,035 outstanding at year end
2001 are as follows: 2002, $43,883; 2003, $53,635; 2004,
$63,386; and 2005, $34,131. Additionally, the U.S. holding
company is obligated to repay a portion or all of the term
loan in the event of equity issuances, asset sales and debt
issuances by Trenwick Group Ltd. or its subsidiaries.

The credit agreement also provides for a letter of credit
facility to be issued for the account of Lloyd's to support
the syndicate participations of Trenwick Group Ltd.'s
subsidiaries. At year end


F-16



2001, the letter of credit portion of the credit facility was
fully utilized at $230,000. Trenwick Group Ltd.'s letter of
credit facility is scheduled to expire in November 2002. In
the event that Trenwick Group Ltd. is unable to obtain a
replacement letter of credit facility, it will be required to
post sufficient collateral at Lloyd's or reduce or refrain
from underwriting at Lloyd's in the 2003 year of account.

The credit agreement contains general covenants and
restrictions as well as financial covenants relating to,
among other things, Trenwick Group Ltd.'s minimum interest
coverage, debt to capital leverage, minimum earned surplus,
maintenance of a minimum A.M. Best Company rating of A- and
tangible net worth. As of year end 2001, Trenwick Group Ltd.
was in compliance with the credit agreement covenants.

The financial covenants relating to interest coverage, risk
based capital and tangible net worth (each as defined by the
financial covenants) were revised downward in an amendment to
the credit agreement executed following the September 11th
terrorist attacks. The amendment set Trenwick Group Ltd.'s
minimum interest coverage ratio at 1.5 to 1 for the fourth
quarter of 2001, 2.0 to 1 for the first quarter of 2002 and
2.5 to 1 thereafter. Trenwick Group Ltd.'s interest coverage
ratio at December 31, 2001 was 2.0 to 1. The amendment
adjusted downward the minimum risk-based capital requirement
for Trenwick Group Ltd.'s subsidiary, Chartwell Insurance
Company, from 300% to 225% through December 31, 2002.
Thereafter, the minimum risk-based capital for Chartwell
Insurance Company returns to 300%. The risk based capital for
Chartwell Insurance Company as of December 31, 2001 was 257%.
The amendment lowered the base minimum tangible net worth
Trenwick Group Ltd. must maintain from $560,000 to $425,000
until the reporting of quarterly results of operations as of
March 31, 2002, which are due no later than May 15, 2002.
After May 15, 2002, Trenwick Group Ltd. minimum tangible net
worth reverts to $560,000. Trenwick Group Ltd.'s tangible net
worth as of December 31, 2001 was $428,000. If Trenwick Group
Ltd. is unable to meet the credit agreement's financial
covenants at the end of the first quarter of 2002, it may be
required to repay the outstanding indebtedness and
collateralize the outstanding letters of credit issued under
the credit agreement through additional financing, asset
sales, subsidiary dividends or similar transactions.

Contingent Interest Notes
The contingent interest notes were issued immediately prior
to Chartwell Re Corporation's acquisition of The Insurance
Corporation of New York to protect Chartwell Re Corporation
against the possibility of adverse development of that
insurer's liability for claims and claims expenses and
long-tail casualty exposures, which are more fully described
in Note 4. Trenwick Group Inc. assumed the obligations of
Chartwell Re Corporation under the notes in the
Trenwick/Chartwell merger, described in Note 2, and Trenwick
America Corporation subsequently assumed the obligations of
Trenwick Group Inc. under the notes in the Trenwick/LaSalle
business combination, also described in Note 2. The notes
were issued in an aggregate principal amount of $1,000 with
principal accruing interest at a rate of 8% per annum,
compounded annually. The interest will not be payable until
maturity or earlier redemption of the notes. In addition, the
notes entitle the holders thereof to receive at maturity, in
proportion to the principal amount of the notes held by them,
an aggregate of from $1,000, up to $55,000, in contingent
interest. Settlement of the notes may be made by payment of
cash or, under certain specified conditions, by delivery of
registered Trenwick Group Ltd. common shares. For purposes of
any settlement of the notes in Trenwick Group Ltd.'s common
shares, the value ascribed to each common share would be 85%
of an average of the closing sales prices of the common stock
prior to the settlement date. The notes mature on June 30,
2006.

At year end 2001, the notes were recorded at the present
value of the amount which is reasonably determined to be
payable at maturity. Trenwick America Corporation believes
that the applicable liability for unpaid claims and claims
expenses at year end 2001 is an appropriate estimate of


F-17



projected ultimate losses and loss adjustment expenses to be
paid and therefore, the amount of contingent interest on the
notes presently expected to be paid at maturity is $34,582.
During the 2001 and 2000 years, Trenwick America Corporation
recorded $9,893 and $7,592, respectively, of reductions to
its underwriting losses incurred in connection with adverse
development covered under the terms of the contingent
interest notes. The notes contain covenants which relate to
the maintenance of certain records and limitations on certain
indebtedness. At year end 2001 Trenwick Group Ltd. was in
compliance with those covenants.

Mandatorily Redeemable Preferred Capital Securities
The mandatorily redeemable preferred capital securities, with
a par value of $110,000, are obligations of a business trust
subsidiary of Trenwick America Corporation U.S. holding
company, Trenwick America Corporation. The capital securities
mature in 2037, require preferential cumulative semi-annual
cash distributions at an annual rate of 8.82% and are
guaranteed by the U.S. holding company, within certain
limits, as to distribution payments and liquidation or
redemption payments. Interest charged to operations on the
capital securities is at the imputed interest rate of 11.2%.

The business trust issuing the capital securities holds an
investment in subordinated debentures of the U.S. holding
company that have an aggregate principal amount of $113,403,
and interest from that investment is the source of cash
distributions on the capital securities. The capital
securities are subject to mandatory redemption in certain
circumstances pertaining to the U.S. holding company's
prepayment or repayment of its subordinated debentures held
by the trust. In the event of a default by the U.S. holding
company with respect either to making required payments on
the subordinated debentures or to its guarantee, holders of
the capital securities may institute a direct action against
the U.S. holding company. In the first quarter of 2001 and
the fourth quarter of 2000, a Trenwick Group Ltd. subsidiary
purchased $10,650 and $13,000, respectively, par value of the
capital securities in the open market for $8,462 and $9,902,
respectively.

Interest Expense and Subsidiary Preferred Share Dividends
We accrue and recognize interest expense and subsidiary
preferred share dividends when incurred. In computing
interest expense and dividends on capital securities, we
accrete the discount on certain obligations utilizing the
interest method. Reductions in the liability under the
contingent interest notes, which were previously included as
reductions to interest expense, have been reclassified as
reductions to the appropriate underwriting accounts for the
2001 and 2000 years.

Components of interest expense and dividends on preferred
capital securities for 2001, 2000 and 1999 were as follows:

2001 2000 1999
------- ------- -------
Indebtedness interest expense $19,825 $24,890 $ 8,479
Capital securities dividends 9,702 9,702 9,702
Commitment and other fees 1,809 1,177 369
------- ------- -------
Total $31,336 $35,769 $18,550
======= ======= =======

Interest on indebtedness of $15,563, $7,951 and $1,164 was
paid during 2001, 2000 and 1999, respectively. Dividends on
preferred capital securities of $2,426 were paid during 2001,
2000 and 1999.

Common Shares
Trenwick America Corporation has 1,000 shares of $1.00 par
value common shares authorized, 100 shares of which are
outstanding. All of the outstanding shares of Trenwick
America Corporation are held by a subsidiary of Trenwick
Group Ltd. Dividends of $9,500 were declared and paid by


F-18



Trenwick America Corporation to its parent company during
2000. No such dividends were paid in 2001 or 1999.


Note 7 Trenwick America Corporation and its subsidiaries are
Income incorporated in the United States and are subject to federal
Taxation and state income taxes imposed by U.S. authorities.

We provide income taxes based upon consolidated income
reported in the financial statements and the provisions of
currently enacted tax laws. We allocate income taxes to
operations, other comprehensive income and shareholders'
equity, as applicable.

We recognize current income tax assets and liabilities, for
estimated income taxes refundable or payable based on the
current year's income tax returns, and deferred income tax
assets and liabilities, for the estimated future income tax
effects of temporary differences and carryforwards. Temporary
differences are the differences between the financial
statement carrying amounts of assets and liabilities and
their tax bases, as well as the timing of income or expense
recognition for financial reporting and tax purposes of items
not related to assets and liabilities. We establish valuation
allowances to reduce the carrying amount of deferred income
tax assets, if necessary, to amounts that are more likely
than not to be realized. We periodically review the adequacy
of these valuation allowances and record any reduction in
allowances through earnings or, for allowances established in
the Trenwick/LaSalle business combination, as an offset to
goodwill.

In 2000, the income tax provision includes an income tax
benefit of $445 applicable to an extraordinary loss on debt
redemption. The components of the provision for income taxes
for 2001, 2000 and 1999 are as follows:



2001 2000 1999
-------- -------- --------

Current and deferred components:
Current income tax expense (benefit) $ 11,125 $(22,239) $(17,411)
Deferred income tax expense (benefit) (25,753) (290) 5,056
-------- -------- --------
Total income tax benefit $(14,628) $(22,529) $(12,355)
======== ======== ========


The income tax provision for each of the years presented
differs from the amounts determined by applying the
applicable U.S. statutory federal income tax rate of 35% to
losses before income taxes as a result of the following:



2001 2000 1999
-------- -------- --------

Loss before income taxes $(34,153) $(59,501) $(22,250)
-------- -------- --------
Expected income tax benefit at statutory rate of 35% (11,954) (20,826) (7,788)
Effect of tax-exempt investment income (984) (5,077) (6,227)
Non-deductible goodwill and other expenses 529 387 252
True-up for prior year returns (3,448) 2,103 682
Other book-tax differences (559) -- --
Change in valuation allowance 109 -- 770
State income taxes 1,512 411 (44)
Foreign income taxes 167 473 --
-------- -------- --------
Total U.S. federal income tax benefit $(14,628) $(22,529) $(12,355)
======== ======== ========


Deferred income tax assets (liabilities) are attributable to
the following temporary differences at year end 2001 and
2000:


F-19




2001 2000
--------- ---------

Deferred income tax assets:
Claims and claim expenses discounted $ 37,950 $ 33,947
Unearned premium income discounted 10,845 7,930
Contingent interest note adjustments 6,416 9,552
Investment securities, purchase accounting adjustments 1,309 7,419
U.S. net operating losses 47,982 33,711
Alternative minimum tax credits 5,859 5,256
Foreign tax credits 410 4,579
Unrealized foreign exchange loss 855 --
Other 4,673 5,751
Valuation allowance (267) (2,976)
--------- ---------
Total deferred income tax assets 116,032 105,169
--------- ---------
Deferred income tax liabilities:
Deferred policy acquisition costs (15,890) (12,693)
Unrealized investment gains (11,020) (5,074)
Unrealized foreign exchange gains -- (4)
Equity securities, purchase accounting adjustments (4,489) (2,781)
Debt securities market discount accretion (2,362) (1,796)
Indebtedness purchase accounting adjustment (8,437) (8,679)
Deferred intercompany transactions (7,510) (8,549)
Other (567) (1,995)
--------- ---------
Total deferred income tax liabilities (50,275) (41,571)
--------- ---------
Net deferred income tax asset $ 65,757 $ 63,598
========= =========


At year end 2001, Trenwick America Corporation has a net
operating loss carryforward of $137,091 that will be
available to offset regular taxable income during the
carryforward periods which expire in 2007 and between 2018
and 2021. As a result of the Trenwick/LaSalle business
combination, an ownership change took place on September 27,
2000, and approximately $41,852 of the total U.S. net
operating loss carryforward became limited to a cumulative
annual utilization of $5,228. The remaining $95,239 in U.S.
net operating loss carryforwards are not so limited. Details
of the net operating loss carryforwards and the year of their
expiration are described below:

U.S. Net Operating Year of
Loss Carryforwards Expiration
------------------ ----------
$ 9,655 2007
32,197 2018
28,491 2020
66,748 2021
------------------
$137,091
==================

In connection with the Trenwick/LaSalle business combination,
Trenwick America Corporation recorded a valuation allowance
against its deferred income tax asset as sufficient
uncertainty existed regarding the realizability of certain
foreign tax credits. In evaluating the need for this
valuation allowance at year end 2001, it is management's
judgment that there has not been a significant change in
circumstances and therefore the valuation allowance relative
to its remaining foreign tax credits has been maintained.
There is no valuation allowance recorded against the U.S. net
operating losses because, in management's judgment, it is
more likely than not that these amounts will be realized from
future operations. Management's judgment is based on its
assessment of business plans and related projections of
future taxable income that reflect significant assumptions
about increased premium volume and improved rates and
profitability.


F-20



Income taxes of $17,146 and $27,766 were recovered during
2001 and 2000 respectively. Income taxes of $1,371 were paid
during 1999.

Note 8 Retirement and Savings Plans
Employee We recognize expenses for employee retirement and savings
Benefits and plans as they are incurred.
Compensation
Arrangements Trenwick America Corporation has a defined contribution plan
for substantially all full-time employees through which it
contributes 8% of an eligible employee's total compensation
to the plan; no employee contributions are made to the plan.

Additionally, Trenwick America Corporation maintains a 401(k)
savings plan for substantially all full time employees,
through which employees contribute up to the maximum amount
allowable by the Internal Revenue Service. Trenwick America
Corporation contributes up to 6% of a participating
employee's compensation to the plan.

Trenwick America Corporation's provisions for employee
retirement and savings plans follow:

2001 2000 1999
------ ------ ----
Defined contribution plans $ 737 $ 823 $429
401(k) savings plan 606 625 365
------ ------ ----
Total $1,343 $1,448 $794
====== ====== ====

Restricted Common Share Awards
Our parent company awards its restricted common shares to key
employees of our company. At the time of the award, our
parent company records deferred compensation for the fair
value of the restricted common share awards and present
deferred compensation as a separate, offsetting component of
shareholders' equity. We are allocated a portion of
compensation expense which is recognized over the vesting
period of the restricted common shares.

Trenwick America Corporation recognized $258, $3,897 and
$982, respectively, of compensation expense on restricted
common share awards for the 2001, 2000 and 1999 years,
respectively.

Share Options
Our parent company grants options for a fixed number of
common shares to employees of our company. These options have
an exercise price equal to the market value of the shares at
the date of grant. The current accounting standard
establishes a fair value based method of accounting for
stock-based compensation plans; however, it permits an entity
to continue to apply the accounting provisions of a previous
standard and make pro forma disclosures of net income and
earnings per share, as if the fair market value based method
had been applied. Our parent company continues to account for
the share option grants in accordance with the previous
standard and have included the pro forma disclosures required
by the fair value based method below.

Trenwick Group Ltd. has several plans through which it grants
options in its common shares to employees of Trenwick America
Corporation at the discretion of its board of directors.
Exercise prices are generally fixed at the market value at
the date of grant. Options vest and are exercisable on
various terms, usually either over a five year period or up
to a ten year period. All options have an expiration date not
exceeding ten years.


F-21



Upon completion of LaSalle Re Holdings Limited's acquisition
of Trenwick Group Inc. and the minority interest of LaSalle
Re Limited, all of the options granted to employees of
Trenwick America Corporation prior to 2000 became fully
vested.

Pro Forma Information
All of the outstanding share options of Trenwick Group Ltd.
that were issued to Trenwick America Corporation employees
were issued at an exercise price equal to the fair market
value on the date of grant; therefore no compensation expense
has been recognized for these grants. Had the fair value
based method been applied, net loss would have been
$(20,122), $(37,622), and $(10,168) for the years 2001, 2000
and 1999, respectively.

The pro forma adjustments relate to options granted from 1995
to 2001 are based on a fair value method using the
Black-Scholes option pricing model. No effect has been given
to options granted prior to 1995. Valuation and related
assumption information for options granted in 2001, 2000 and
1999 are as follows:



2001 2000 1999
------------- -------- -------

Expected volatility 38.0% - 59.8% 33.5% 28.0%
Risk-free interest rate 4.0% 5.0% 6.1%
Trenwick Group Ltd. common share
dividend yield 0.9% 0.6% 3.0%


The Black-Scholes option valuation model was developed for
use in estimating the fair value of options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly
subjective assumptions including the expected share price
volatility. Because Trenwick Group Ltd.'s share options have
characteristics significantly different from those of traded
options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily
provide a reliable measure of the fair value of its share
options.

Note 9 We record other comprehensive income for the change in the
Other net unrealized appreciation of investments and the change in
Compensation foreign currency translation adjustments, both net of income
Income taxes.

The components of accumulated other comprehensive income at
year end 2001 and 2000 are as follows:



2001 2000
-------- ------

Unrealized investment gains, net of applicable deferred
income taxes of $10,958 and $5,074 $ 20,466 $9,423
Foreign currency translation adjustment, net of applicable
deferred income taxes of $855 and $4 (1,574) 8
-------- ------
Accumulated other comprehensive income $ 18,892 $9,431
======== ======



F-22



Note 10 Trenwick America Corporation's insurance subsidiaries are
Insurance subject to insurance laws and regulations in the
Regulation jurisdictions in which they operate. These regulations
include restrictions that limit the amount of dividends or
other distributions available to be paid to Trenwick America
Corporation by its insurance subsidiaries without prior
approval of the insurance regulatory authorities.

Each of Trenwick America Corporation's insurance subsidiaries
are subject to restrictions on the payments of dividends
without prior approval from the state insurance regulator in
its state of domicile. These restrictions are based upon
certain measures of statutory surplus and net income. At year
end 2001, Trenwick America Corporation's insurance
subsidiaries had $14,482 available for the payment of
dividends in 2002 without prior regulatory approval.
Additionally, the insurance regulators in each of Trenwick
America Corporation's subsidiaries' respective states of
domicile require the insurance companies to calculate and
report certain information under a risk-based capital formula
which measures statutory capital and surplus needs based on
the risks in a company's mix of business and investment
portfolio. Based upon calculations at year end 2001, Trenwick
America Corporation's insurance subsidiaries each exceeded
the capital levels prescribed by the risk-based capital
formula.

Trenwick America Corporation's insurance subsidiaries file
financial statements prepared in accordance with statutory
accounting practices prescribed or permitted by insurance
regulators in each of the subsidiaries' states of domicile.
Combined statutory surplus of Trenwick America Corporation's
insurance subsidiaries was $374,835 and $438,738 at year end
2001 and 2000, respectively; their combined statutory net
loss was $119,085, $16,157 and $47,603 for the 2001, 2000 and
1999 years, respectively.

Effective January 1, 2001, the domiciliary state insurance
departments of Trenwick America Corporation's U.S. insurance
subsidiaries adopted the codification of statutory accounting
principles. The codification provides guidance for areas
where statutory accounting has been silent and changes
current statutory accounting in some areas. The cumulative
effect of the adoption of the codification, $14,305, was
recorded as an adjustment to increase statutory surplus of
the U.S. insurance subsidiaries on January 1, 2001.
Additionally, one of the state insurance departments adopted
certain prescribed accounting practices that differ from
those found in the codification. The most significant of
these practices is that deferred income tax assets and
liabilities are not recorded. The monetary effect on the
combined statutory capital and surplus of Trenwick America
Corporation's U.S. insurance subsidiaries of using accounting
practices prescribed by that state insurance department was a
decrease of $9,042.

A state insurance department has permitted one of Trenwick
America's insurance subsidiaries domiciled in that state to
account for the reinsurance agreement purchased in connection
with the Trenwick/Chartwell merger on a prospective basis in
its statutory basis financial statements. This treatment is
consistent with the U.S. GAAP accounting treatment of the
contract. Another state insurance department has required
another of Trenwick America Corporation's insurance
subsidiaries, domiciled that state, to account for that
reinsurance agreement on a retroactive basis. The difference
in these statutory accounting practices does not have an
effect on the combined statutory surplus or net income of
Trenwick America Corporation's U.S. insurance subsidiaries.
The terms of this reinsurance agreement are described in Note
4.

Debt securities and cash with a carrying value of $46,989 at
year end 2001 were on deposit with various state or
governmental insurance departments in order to comply with
insurance laws.

Note 11 Goodwill represents the unamortized excess of purchase price
Goodwill over the fair value of identifiable net assets of acquired
entities which was pushed down to Trenwick


F-23



America Corporation by its ultimate parent Trenwick Group
Ltd. Through the 2001 year, we amortized goodwill on a
straight-line basis over twenty-five years. On a periodic
basis, we estimate the future undiscounted cash flows of the
business to which the goodwill relates in order to ensure
that its carrying value has not been impaired.

In July 2001, the Financial Accounting Standards Board issued
a statement covering goodwill and other intangible assets,
which is required to be adopted at the beginning of 2002. The
statement requires that the goodwill be tested for impairment
under either market value or cash flow tests and any
impairment be recorded on January 1, 2002 as the cumulative
effect of an accounting change. The impairment tests must be
completed by the time of reporting of quarterly results of
operations as of June 30, 2002. We will conduct impairment
tests on the goodwill balance and implement the statement
during the first or second quarter of 2002.

The goodwill that resulted from the Trenwick/LaSalle business
combination which was pushed down to Trenwick America
Corporation is reflected in the consolidated financial
statements at $52,119 net of accumulated amortization of
$1,866 at year end 2001.

Note 12 We record our investments in managing general agencies,
Other Assets through which we write primary insurance business and in
and Other which we hold ownership interest of between 20% and 30%, in
Liabilities other assets on the balance sheet. Based on the ownership
interest and our ability to exercise significant influence on
the operating and financial policies of these managing
general agencies, we account for these investments under the
equity method.

We record premises and equipment, including leasehold
improvements and capitalized software costs, at cost and
amortize or depreciate them using the straight-line method
over their useful lives.

The components of other assets and other liabilities at year
end 2001 and 2000 are as follows:



2001 2000
------- --------

Other assets:
Investments in managing general agencies $ 9,010 $ 9,968
Premises and equipment, net of accumulated
depreciation of $3,963 and $299, respectively 15,106 6,304
Funds held by insurers and other insurance deposits 34,057 14,556
Prepaid expenses and other deposits 517 30,726
Current income taxes recoverable 3,397 21,386
Contingent commissions receivable 8,666 3,960
Other receivables 11,232 13,019
Other 7,789 2,955
------- --------
Total $89,774 $102,874
======= ========
Other liabilities:
Accounts payable and accrued expenses $16,661 $ 21,234
Security deposits for insureds 9,548 7,788
Contingent commissions payable 4,746 5,484
Other 2,984 3,879
------- --------
Total $33,939 $ 38,385
======= ========


During the 2001, 2000 and 1999 years, Trenwick America
Corporation recorded $1,944, $239 and $188, respectively, in
equity income related to investments in managing general
agencies.


F-24



Depreciation and amortization on items included in other
assets charged to operations for the 2001, 2000 and 1999
years was $3,075, $299 and $1,006, respectively.

Operating Lease Agreements
Trenwick America Corporation leases office space under
non-cancelable operating leases which expire on various dates
through 2008. Trenwick America Corporation's future minimum
lease commitments at year end 2001 total $10,140 and are
payable as follows: 2002, $1,482; 2003, $1,549; 2004, $1,597;
2005, $1,562; 2006, $1,556 and thereafter, $2,394.

Total office rent expense for 2001, 2000 and 1999 was $1,282,
$2,060 and $1,405, respectively.

Note 13 We define the fair value of a financial instrument as the
Fair Value of amount at which the instrument could be exchanged in a
Financial current transaction between willing parties. We estimate
Instruments values based upon quoted market prices or broker dealer
quotes and these estimates may vary in the near term.

The carrying amounts and estimated fair values of financial
instruments in summary form at year end 2001 and 2000 follow:



2001 2000
----------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
---------- ---------- ---------- ----------

Assets:
Debt securities (Note 5) $1,054,518 $1,054,518 $1,006,161 $1,006,161
Equity securities (Note 5) 24,164 24,164 103,641 103,641
Cash and cash equivalents 128,522 128,522 133,395 133,395
Deposits 7,800 7,800 21,547 21,547

Liabilities:
Indebtedness (Note 6) 288,878 278,708 283,289 283,301
Preferred capital securities
(Note 6) 86,973 55,000 87,059 84,799


Note 14 Restrictions on Certain Payments within Trenwick
Commitments, Because Trenwick America Corporation's operations are
Contingencies, conducted through its operating subsidiaries, Trenwick
Concentrations, America Corporation is dependent upon the ability of its
and operating subsidiaries to transfer funds, principally in the
Related-Party form of cash dividends, tax reimbursements and other
Transactions statutorily permissible payments. In addition to general
legal restrictions on payments of dividends and other
distributions to shareholders applicable to all corporations,
Trenwick America Corporation's insurance subsidiaries are
subject to further regulations that, among other things,
restrict the amount of dividends and other distributions that
may be paid to their parent corporations, which is more fully
described in Note 10. Management believes that current levels
of cash flow from operations and assets held at the holding
company level, together with receipt of dividends from
Trenwick America Corporation's operating subsidiaries and
capital contributions from Trenwick Group Ltd., will provide
Trenwick America Corporation with sufficient liquidity to
meet its operating needs over the next twelve months.

Litigation
Trenwick America Corporation is party to various legal
proceedings generally arising in the normal course of its
business. Trenwick America Corporation does not believe that
the eventual outcome of any such proceeding will have a
material effect on its financial condition or results of
operations or cash flows. Trenwick America Corporation's
subsidiaries are regularly engaged in the investigation and
the defense of claims arising out of the conduct of their
business. Pursuant to


F-25



Trenwick America Corporation's insurance and reinsurance
arrangements, disputes are generally required to be finally
settled by arbitration.

Investments and Cash Held as Collateral or on Deposit
Debt securities and cash with a carrying value of $140,475
are being held in trust as collateral for certain reinsurance
obligations. In addition, cash in the amount of $1,713 has
been pledged as collateral for letters of credit for
reinsurance obligations.

Concentrations
During 2001, Trenwick America Corporation received 33% of its
gross written premiums from three reinsurance brokers, of
which Aon Reinsurance Agency accounted for 19%, Guy Carpenter
and Company, Ltd. accounted for 8%, and Reinsurance
Alternatives accounted for 6%. During 2000, Aon Reinsurance
Agency, E.W. Blanch and Marsh and MacLennan provided 27%, 11%
and 9% of Trenwick America Corporation's gross written
premiums, respectively. In 1999, Aon Reinsurance Agency,
Marsh and MacLennan, and E.W. Blanch and Company provided
37%, 16%, and 8% of Trenwick America Corporation's gross
written premiums, respectively.

Loss of all or a substantial portion of the business provided
by these brokers could have a material adverse effect on the
business and operations of Trenwick America Corporation.
Trenwick America Corporation does not believe, however, that
the loss of such business would have a long-term adverse
effect because of Trenwick America Corporation's competitive
position within the reinsurance market and the availability
of business from other brokers.

During 2001, Trenwick America Corporation received 22% of its
assumed written premiums from three ceding companies, of
which Travelers Group accounted for 9%, Avemco Group
accounted for 7% and American International Group accounted
for 6%. During 2000, LDG Reinsurance Underwriters provided
21% of Trenwick America Corporation's assumed written
premiums during 1999, and American International Group and
Duncanson and Holt Group each accounted for 5% of assumed
written premiums. In 1999, Trenwick America Corporation
produced 12% of assumed written premiums from Duncanson and
Holt, American International Group and CNA each accounted for
7% of assumed written premiums.

Trenwick America Corporation wrote approximately 68% of its
direct written premiums during 2001 through four managing
agencies of which Florida Intracoastal Underwriters, Ltd.
accounted for 27%, HDR Insurance Services accounted for 16%,
Inter-Reco, Inc. accounted for 14% and Risk Control Services
accounted for 11%. During 2000, Florida Intracoastal
Underwriters, HDR Insurance Services, Inter-Reco, Inc. and
Risk Control Services provided 30%, 21%, 12% and 10% of
direct written premiums, respectively.

At year end 2001, 37% of Trenwick America Corporation's
reinsurance recoverables on unpaid claims and claims
expenses, net of funds held offsets, are recoverable from
five principal retrocessionaires. These retrocessionaires are
London Life and Casualty Reinsurance Corporation ($64,378),
Centre Solutions (U.S.) Limited ($50,096), UNUM Life
Insurance Company of America ($33,077), Continental Casualty
Co. ($28,257), and Scandinavian Reinsurance Company Ltd.
($27,591). Each of these companies is rated B++ or better by
A.M. Best Company.

Related Party Transactions with Trenwick Group Ltd. and
Affiliates

Trenwick America Reinsurance Corporation has entered into a
stop loss agreement with Trenwick International Ltd., one of
its U.K. affiliates. During 2001 and 2000, Trenwick
International Ltd. ceded premiums of $10,879 and $173,
respectively, and during 2001 and 2000, ceded claims and
claims expenses of $31,139 and $5,039, respectively to
Trenwick America Corporation under this agreement. No losses
were ceded under this agreement during 1999. Unpaid claims
and claims


F-26



expenses related to this agreement at year end 2001 and 2000
were $31,544 and $5,472, respectively.

Trenwick America Reinsurance Corporation has entered into a
multi-layer excess of loss catastrophe reinsurance treaty
with LaSalle Re Limited, a Bermuda affiliate. During 2001,
2000 and 1999, Trenwick America Reinsurance Corporation ceded
$1,088, $2,175 and $2,175, respectively of premiums to
LaSalle Re Limited. No losses have been ceded under this
agreement and profit commissions receivable from LaSalle Re
Limited was $924 at year end 2001.

In the first quarter of 2001 and the fourth quarter of 2000,
a Bermuda affiliate of Trenwick America Corporation purchased
$10,650 and $13,000, respectively, par value of the
mandatorily redeemable capital securities in the open market.
During the 2001 and 2000 years, Trenwick America Corporation
incurred $1,806 and $166, respectively, of dividends on the
preferred capital securities held by its affiliate.

Included in due from parent and affiliates on Trenwick
America Corporation's consolidated balance sheet are
recoverable expenses of $8,430 and non-interest bearing
demand loans receivable of $59,830, the majority of which is
receivable from Trenwick (Barbados) Ltd. and Chartwell
Managing Agents Limited. Due to affiliates as reflected on
Trenwick America Corporation's consolidated balance sheet
includes recoverable expenses of $1,790 and a promissory note
payable to Trenwick (Barbados) Ltd. of $48,644. Under terms
of the promissory note, principal amounts are payable on
demand. Interest on unpaid balances is at a rate equal to
that generated by Trenwick Groupd Ltd.'s investment
portfolio. During the 2001 year, principal repayments
amounted to $26,927 with $1,108 incurred of interest expense.
No interest expense was recorded in the 2000 year.

Other Related Party Transactions

Included in other assets are Trenwick America Corporation's
investments in managing general agencies through which it
writes primary insurance business, as more fully described in
Note 12. At year end 2001 and 2000, the carrying value of
these investments totaled $9,010 and $9,968. During 2001 and
2000, Trenwick America Corporation incurred $11,655 and
$37,898, respectively, of commission expense to these
managing general agencies. At year end 2001 and 2000,
Trenwick America Corporation's balance sheet includes $19,231
and $25,494, respectively, of agents' balances receivable
from these managing general agencies including installment
premiums deferred and not yet due. The current portion of
balances due from these managing general agencies are settled
on a monthly basis.


F-27



Note 15
Unaudited Summarized unaudited quarterly financial data for 2001 and
Quarterly 2000 follows:
Financial
Data



Quarter ended 2001 2000
-------------- -------- -------

Net premiums earned Fourth quarter $124,578 $99,381
Third quarter 94,574 114,007
Second quarter 87,214 48,333
First quarter 73,922 49,070

Net investment income Fourth quarter 16,276 14,751
Third quarter 16,005 13,838
Second quarter 18,311 27,977
First quarter 17,449 10,035

Net realized investment Fourth quarter (33) 192
gains (losses) Third quarter (4,189) 6,931
Second quarter 252 (315)
First quarter 2,104 (40)

Net income (loss) Fourth quarter (11,939) (7,082)
Third quarter (7,069) (37,835)
Second quarter (7,264) 19,830
First quarter 6,747 (11,885)



F-28



Report of Independent Accountants on
Financial Statement Schedules



To the Board of Directors and Stockholder of
Trenwick America Corporation

Our audits of the consolidated financial statements referred to in our report
dated February 27, 2002 (which report and consolidated financial statements are
included in this Annual Report on Form 10-K) also included an audit of the
financial statement schedules listed in Item 14(a)(2) of this Annual Report on
Form 10-K. In our opinion, these financial statement schedules present fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.




/s/ PricewaterhouseCoopers LLP

New York, New York
February 27, 2002





S-1



TRENWICK AMERICA CORPORATION AND SUBSIDIARIES
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT

TRENWICK AMERICA CORPORATION
(Parent Company Only)
BALANCE SHEET
(Amounts expressed in thousands of United States dollars)
December 31, 2001 and 2000

2001 2000
-------- --------
Assets:
Investments in consolidated subsidiaries
after minority interest of $86,973 and $87,059 $506,452 $572,021
Cash and cash equivalents 288 8,686
Due from consolidated subsidiaries 70,135 54,816
Net deferred income taxes 20,745 17,597
Other assets 71,117 51,892
-------- --------
Total assets $668,737 $705,012
-------- --------
Liabilities:
Due to consolidated subsidiaries $ 80,365 $ 88,158
Other liabilities 10,742 19,255
Indebtedness 402,281 396,692
-------- --------
Total liabilities 493,388 504,105
Stockholder's equity 175,349 200,907
-------- --------
Total liabilities and stockholders' equity $668,737 $705,012
======== ========




S-2



TRENWICK AMERICA CORPORATION AND SUBSIDIARIES
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)

TRENWICK AMERICA CORPORATION
(Parent Company Only)
STATEMENT OF OPERATIONS
(Amounts expressed in thousands of United States dollars)
Years Ended December 31, 2001, 2000 and 1999

2001 2000 1999
-------- -------- --------
Revenues:
Consolidated subsidiary dividends $ 51,300 $ 19,269 $ 53,400
Net investment income 457 1,290 43
Other income 314 1,934 132
-------- -------- --------
Total revenues 52,071 22,493 53,575
-------- -------- --------
Expenses:
General and administrative expenses 4,061 18,686 5,772
Interest expense and preferred
capital securities dividends 19,506 26,934 16,586
Foreign currency gains (268) (3) --
-------- -------- --------
Total expenses 23,299 45,617 22,358
-------- -------- --------
Income before equity in undistributed
income of unconsolidated subsidiaries 28,772 (23,124) 31,217
Equity in undistributed income (loss) of
-------- -------- --------
consolidated subsidiaries (56,012) (26,778) (48,821)
-------- -------- --------
Net loss before income taxes (27,240) (49,902) (17,604)
Income taxes (benefit) (7,715) (12,930) (7,709)
-------- -------- --------
Net loss $(19,525) $(36,972) $ (9,895)
======== ======== ========




S-3



TRENWICK AMERICA CORPORATION AND SUBSIDIARIES
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)

TRENWICK AMERICA CORPORATION
(Parent Company Only)
STATEMENT OF CASH FLOWS
(Amounts expressed in thousands of United States dollars)
Years Ended December 31, 2001, 2000 and 1999

2001 2000 1999
-------- -------- --------
Operating activities:
Interest and operating expenses paid $(26,569) $ (6,196) $ 23
General and administrative expenses paid (34,729) (49,027) (20,874)
Income taxes (paid) recovered 2,664 (72,206) 1,201
Net investment income received 457 244 --
Other income (1,944) 42,853 16,586
-------- -------- --------
Cash for operating activities (60,121) (84,332) (3,064)
-------- -------- --------
Investing activities:
Sales of debt securities -- 257 343
Additions to premises and equipment (4,524) (1,514) (632)
Investment in subsidiaries -- 3,048 (835)
-------- -------- --------
Cash from (for) investing activities (4,524) 1,791 (1,124)
-------- -------- --------
Financing activities:
Issuance of indebtedness 14,000 24,000 --
Issuance costs of indebtedness (1,475) (1,834) --
Net dividends received (paid) 51,300 5,100 7,300
Capital contributions received 5,099 -- --
Intercompany loans (repayments) advances (12,677) 62,361 (2,200)
-------- -------- --------
Cash from financing activities 56,247 89,627 5,100
-------- -------- --------
Change in cash and cash equivalents (8,398) 7,086 912
Cash and cash equivalents, beginning of year 8,686 1,600 688
-------- -------- --------
Cash and cash equivalents, end of year $ 288 $ 8,686 $ 1,600
======== ======== ========




S-4



TRENWICK AMERICA CORPORATION AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
(Amounts expressed in thousands of United States dollars)
Years Ended December 31, 2001, 2000 and 1999

2001 2000 1999
---------- ---------- -----------
Deferred policy acquisition costs
Treaty reinsurance $ 36,039 $ 30,347 $ 34,757
Specialty program insurance 9,364 5,920 3,214
---------- ---------- -----------
Total 45,403 36,267 37,971

Unpaid claims and claim expenses
Treaty reinsurance 1,146,975 1,221,071 1,223,981
Specialty program insurance 233,585 169,961 142,214
Affiliate transactions 31,544 5,472 --
---------- ---------- -----------
Total 1,412,104 1,396,504 1,366,195

Unearned premium income
Treaty reinsurance 112,085 92,224 110,909
Specialty program insurance 126,919 84,950 63,133
---------- ---------- -----------
Total 239,004 177,174 174,042

Net premiums earned
Treaty reinsurance 288,760 265,934 177,542
Specialty program insurance 80,649 44,684 10,343
Affiliate transactions 10,879 173 --
---------- ---------- -----------
Total 380,288 310,791 187,885

Net investment income
Treaty reinsurance 49,868 55,466 38,679
Specialty program insurance 13,057 9,493 1,722
Unallocated 5,116 1,642 (110)
---------- ---------- -----------
Total 68,041 66,601 40,291

Claims and claims expenses incurred
Treaty reinsurance 224,860 224,250 130,602
Specialty program insurance 66,530 34,037 5,766
ECRA pool runoff 11,530 -- --
Affiliate transactions 2,568 17,756 10,814
---------- ---------- -----------
Total 305,488 276,043 147,182

Policy acquisition costs
Treaty reinsurance 101,217 83,134 61,633
Specialty program insurance 20,996 9,846 917
---------- ---------- -----------
Total 122,213 92,980 62,550

Underwriting expenses
Treaty reinsurance 11,680 13,718 15,007
Specialty program insurance 7,210 7,012 2,687
---------- ---------- -----------
Total 18,890 20,730 17,694

Net premiums written
Treaty reinsurance 320,820 251,111 165,744
Specialty program insurance 99,708 54,028 5,641
Affiliate transactions 10,879 173 --
---------- ---------- -----------
Total $ 431,407 $ 305,312 $ 171,385


S-5



TRENWICK AMERICA CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(Amounts expressed in thousands of United States dollars)
Years Ended December 31, 2001, 2000 and 1999


Balance at Balance at
Beginning End of
of Period Period
---------- ----------
Year Ended December 31, 2001
Allowance for uncollectible reinsurance
recoverable and premiums receivable $10,191 $13,334

Year Ended December 31, 2000
Allowance for uncollectible reinsurance
recoverable and premiums receivable $6,569 $10,191

Year Ended December 31, 1999
Allowance for uncollectible reinsurance
recoverable and premiums receivable $6,402 $6,569




S-6