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inactive subsidiary. Also at this time, Trenwick America gained as indirect subsidiaries

various U.K.-based Chartwell businesses, including Chartwell Managing Agents, which

held the Lloyd’s syndicates. In sum, with the exception of the Chartwell Re entity itself,

all of the former Chartwell businesses were transferred to Trenwick America briefly

during the first stage of the restructuring.22

In September, the second and third stages of the restructuring occurred. During

the second stage, all of the Chartwell U.K. business lines (i.e., reinsurance and Lloyd’s)

that were transferred into Trenwick America in April were transferred out of Trenwick

America to another principal operating subsidiary known as Trenwick Holdings Limited,

which held only U.K.-based businesses, including Trenwick International. That is,

Trenwick America was left primarily holding the U.S.-based reinsurance and specialty

insurance businesses while Trenwick Holdings Limited was left holding all the UK-based

businesses, regardless of the type of insurance business. Also, during the second stage,

Trenwick contributed all of its assets and liabilities to Chartwell Re except for the $135

million intercompany payable it was owed by Chartwell Re. Trenwick’s liabilities that

were transferred included approximately $75 million in senior notes, approximately

$113.4 million in subordinated deferrable interest debentures, and an additional $1

million in contingent interest notes that came from Chartwell during the 1999 merger

(collectively, the “Assumed Notes”). The structural impact of this transfer of all or

substantially all of Trenwick’s assets was that Chartwell Re remained as the only direct

22

As previously noted,

note 11, the reinsurance business of Chartwell may have been part

of or a subsidiary of Trenwick America previous to this stage. At the least, they were operated

together as a business line and the financial results were reported together.

17

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