================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q

                                   ----------

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

      For the quarterly period ended June 30, 2003.

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from _____________ to ________________.

                         Commission file number 1-16089

                               TRENWICK GROUP LTD.
             (Exact name of registrant as specified in its charter)

            Bermuda                                              98-0232340
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

                          LOM Building, 27 Reid Street
                             Hamilton HM 11, Bermuda
               (Address of principal executive offices) (zip code)

                                   ----------

Registrant's telephone number, including area code: 441-292-4985

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes |_| No |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

                                                      Shares Outstanding
Description of Class                                 as of August 20, 2003
------------------------------                       ---------------------
Common Shares - $.10 par value                            36,761,021

<PAGE>

                               TRENWICK GROUP LTD.
                               INDEX TO FORM 10-Q

                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                                <C>
ITEM 1. Unaudited Consolidated Financial Statements
        Consolidated Balance Sheet
        June 30, 2003 and December 31, 2002 ..................................      1

        Consolidated Statement of Operations and Comprehensive Income
        Three and Six Months ended June 30, 2003 and 2002 ....................      2

        Consolidated Statement of Cash Flows
        Three and Six Months ended June 30, 2003 and 2002 ....................      3

        Consolidated Statement of Changes in Common Shareholders' Equity
        Six Months ended June 30, 2003 and 2002 ..............................      4

        Notes to Unaudited Consolidated Financial Statements .................      5

ITEM 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations ................................................     14

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk ...........     42

ITEM 4. Controls and Procedures ..............................................     42

        PART II - OTHER INFORMATION

ITEM 1. Legal proceedings ....................................................     42

ITEM 2. Changes in Securities and Use of Proceeds ............................     42

ITEM 3. Defaults Upon Senior Securities ......................................     43

ITEM 4. Submission of Matters to a Vote of Security Holders ..................     43

ITEM 5. Other Information ....................................................     43

ITEM 6. Exhibits and Reports on Form 8-K .....................................     43

Signatures ...................................................................     46
</TABLE>

<PAGE>

                              Trenwick Group Ltd.
                           Consolidated Balance Sheet
           (Amounts expressed in thousands of United States dollars,
                        except share and per share data)
                      June 30, 2003 and December 31, 2002

<TABLE>
<CAPTION>
                                                              (Unaudited)
                                                                  2003             2002
                                                              -----------      -----------
<S>                                                           <C>              <C>
ASSETS
Debt securities available for sale, at fair value             $ 1,883,494      $ 1,492,834
Equity securities at fair value                                     8,707            8,849
Cash and cash equivalents                                         401,103          814,235
Accrued investment income                                          17,326           19,223
Premiums receivable                                               426,600          519,866
Reinsurance recoverable balances, net                           1,794,460        1,803,011
Prepaid reinsurance premiums                                      195,880          262,802
Deferred policy acquisition costs                                 100,304          127,200
Security deposit held by Chubb                                     50,724           50,207
Other assets                                                      142,006          179,755
                                                              -----------      -----------
Total assets                                                  $ 5,020,604      $ 5,277,982
                                                              ===========      ===========

LIABILITIES
Unpaid claims and claims expenses                             $ 3,724,169      $ 3,718,124
Unearned premium income                                           557,439          721,624
Reinsurance balances payable                                      259,748          374,397
Indebtedness                                                       76,784           76,498
Other liabilities                                                 171,158          126,549
                                                              -----------      -----------
Total liabilities                                               4,789,298        5,017,192
                                                              -----------      -----------
MINORITY INTEREST
Mandatorily redeemable preferred capital securities
   of subsidiary trust holding solely junior subordinated
   debentures of U.S. subsidiary                                   68,350           68,320
Minority interest in preferred shares of
   Bermuda subsidiary                                              75,000           75,000
                                                              -----------      -----------
Total minority interest                                           143,350          143,320
                                                              -----------      -----------

CONVERTIBLE PREFERRED STOCK                                        40,000           40,000
                                                              -----------      -----------

COMMON SHAREHOLDERS' EQUITY
Common shares, $0.10 par value, 36,763,041 and
   36,801,545 shares issued and outstanding                         3,676            3,680
Additional paid in capital                                        574,858          576,567
Deferred compensation under share award plans                      (1,174)          (2,615)
Retained earnings (accumulated deficit)                          (545,684)        (492,343)
Accumulated other comprehensive income (loss)                      16,280           (7,819)
                                                              -----------      -----------
Total common shareholders' equity                                  47,956           77,470
                                                              -----------      -----------
Total liabilities, minority interest and common
   shareholders' equity                                       $ 5,020,604      $ 5,277,982
                                                              ===========      ===========
</TABLE>

The accompanying notes are an integral part of these statements.


                                       1
<PAGE>

                               Trenwick Group Ltd.
    Consolidated Statement of Operations and Comprehensive Income (Unaudited)
            (Amounts expressed in thousands of United States dollars,
                             except per share data)
                Three and Six Months Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                              Three Months                   Six Months
                                                        ------------------------      ------------------------
                                                           2003           2002           2003           2002
                                                        ---------      ---------      ---------      ---------
<S>                                                     <C>            <C>            <C>            <C>
REVENUES
Net premiums earned                                     $ 214,913      $ 277,261      $ 436,418      $ 543,285
Net investment income                                      18,449         27,885         38,087         57,140
Net realized investment gains (losses)                       (584)         3,957           (210)         5,414
Other income (expense)                                     (9,986)         3,036        (12,019)         5,638
                                                        ---------      ---------      ---------      ---------
Total revenues                                            222,792        312,139        462,276        611,477
                                                        ---------      ---------      ---------      ---------

EXPENSES
Claims and claims expenses incurred                       180,786        194,025        319,269        401,602
Policy acquisition costs                                   63,863         74,843        126,292        147,915
Underwriting expenses                                      21,125         20,681         45,119         43,688
General and administrative expenses                         3,545          4,658          7,283          7,976
Loss on sale of LaSalle's in-force
   reinsurance business                                        --          7,008             --          7,008
Interest expense and subsidiary
   preferred share dividends                                9,012         10,881         20,778         20,817
Foreign currency losses (gains)                            (4,967)         1,838         (4,502)         1,160
                                                        ---------      ---------      ---------      ---------
Total expenses                                            273,364        313,934        514,239        630,166
                                                        ---------      ---------      ---------      ---------

Loss before income taxes and cumulative
   effect of change in accounting principle               (50,572)        (1,795)       (51,963)       (18,689)
Applicable income taxes (benefit)                           1,059         (5,584)          (781)        (9,568)
                                                        ---------      ---------      ---------      ---------
Net income (loss) before cumulative effect
   of change in accounting principle                      (51,631)         3,789        (51,182)        (9,121)
Cumulative effect of change in accounting principle            --             --             --        (41,653)
                                                        ---------      ---------      ---------      ---------
Net income (loss)                                         (51,631)         3,789        (51,182)       (50,774)
Dividends on convertible preferred stock                    1,086             --          2,159             --
                                                        ---------      ---------      ---------      ---------
Net income (loss) available to common shareholders      $ (52,717)     $   3,789      $ (53,341)     $ (50,774)
                                                        =========      =========      =========      =========
EARNINGS PER SHARE:
Basic and diluted earnings (loss) per
   common share before cumulative effect
   of change in accounting principle                    $   (1.43)     $    0.10      $   (1.45)     $   (0.25)
Cumulative effect of change in accounting principle            --             --             --          (1.13)
                                                        ---------      ---------      ---------      ---------
Basic and diluted earnings (loss)
   per common share                                     $   (1.43)     $    0.10      $   (1.45)     $   (1.38)
                                                        =========      =========      =========      =========
COMPREHENSIVE INCOME (LOSS):
Net income (loss)                                       $ (51,631)     $   3,789      $ (51,182)     $ (50,774)
                                                        ---------      ---------      ---------      ---------
Other comprehensive income (loss):
   Net unrealized investment gains (losses)                14,449         11,225         19,367         (1,530)
   Foreign currency translation adjustments                 5,661          1,012          4,732          2,125
                                                        ---------      ---------      ---------      ---------
   Total other comprehensive income (loss)                 20,110         12,237         24,099            595
                                                        ---------      ---------      ---------      ---------
Comprehensive income (loss)                             $ (31,521)     $  16,026      $ (27,083)     $ (50,179)
                                                        =========      =========      =========      =========
</TABLE>

The accompanying notes are an integral part of these statements.


                                       2
<PAGE>

                               Trenwick Group Ltd.
                Consolidated Statement of Cash Flows (Unaudited)
            (Amounts expressed in thousands of United States dollars)
               Three and Six Months Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                             Three Months                   Six Months
                                                       ------------------------      ------------------------
                                                          2003           2002           2003           2002
                                                       ---------      ---------      ---------      ---------
<S>                                                    <C>            <C>            <C>            <C>
OPERATING ACTIVITIES
Premiums collected, net of acquisition costs           $ 174,443      $ 473,721      $ 424,066      $ 774,956
Ceded premiums paid, net of acquisition costs            (77,900)      (102,621)      (182,248)      (290,843)
Claims and claims expenses paid                         (198,615)      (369,563)      (432,530)      (545,487)
Claims and claims expenses recovered                      81,402        (19,843)       109,687        125,389
Underwriting expenses paid                               (31,454)       (24,985)       (70,361)       (56,021)
Net investment income received                            26,680         35,334         51,003         69,286
Service and other income received, net of expenses         1,005          2,402         11,052          4,972
General and administrative expenses paid                  (4,782)        (8,832)       (10,063)       (12,971)
Interest expense and
   preferred share dividends paid                        (10,414)        (5,381)       (11,026)       (12,456)
Income taxes recovered                                       133            986          1,015          1,046
                                                       ---------      ---------      ---------      ---------
Cash (for) from operating activities                     (39,502)       (18,782)      (109,405)        57,871
                                                       ---------      ---------      ---------      ---------
INVESTING ACTIVITIES
Purchases of debt securities                            (544,951)      (487,427)      (904,933)      (825,493)
Sales of debt securities                                 102,952        495,364        217,666        703,859
Maturities of debt securities                            308,175        232,057        381,842        328,182
Purchases of equity securities                                --            (83)            --            (83)
Sales of equity securities                                   113             --            113             --
Effect on cash of exchange rate translation                7,548         14,180          3,547         10,919
Additions to premises and equipment                         (688)        (1,490)          (773)        (4,740)
                                                       ---------      ---------      ---------      ---------
Cash from (for) investing activities                    (126,851)       252,601       (302,538)       212,644
                                                       ---------      ---------      ---------      ---------
FINANCING ACTIVITIES
Repayment of indebtedness                                     --       (197,841)            --       (199,293)
Indebtedness issuance costs paid                            (806)            --         (1,299)           (88)
Issuance of common shares                                     55             39            110             96
Common share dividends paid                                   --         (1,472)            --         (2,943)
Share and option repurchases                                  --             --             --           (161)
                                                       ---------      ---------      ---------      ---------
Cash for financing activities                               (751)      (199,274)        (1,189)      (202,389)
                                                       ---------      ---------      ---------      ---------
Change in cash and cash equivalents                     (167,104)        34,545       (413,132)        68,126
Cash and cash equivalents, beginning of period           568,207        364,931        814,235        331,350
                                                       ---------      ---------      ---------      ---------
Cash and cash equivalents, end of period               $ 401,103      $ 399,476      $ 401,103      $ 399,476
                                                       =========      =========      =========      =========
</TABLE>

The accompanying notes are an integral part of these statements.


                                       3
<PAGE>

                               Trenwick Group Ltd.
  Consolidated Statement of Changes in Common Shareholders' Equity (Unaudited)
   (Amounts expressed in thousands of United States dollars except share data)
                     Six Months Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                 2003           2002
                                                                               --------      ---------
<S>                                                                            <C>           <C>
Common shareholders' equity, beginning of period                               $ 77,470      $ 498,326

COMMON SHARES AND ADDITIONAL PAID IN CAPITAL
Issuance of 63,881 and 11,984 common shares for cash
   under employee and director plans                                                  6             96
Purchase and retirement of 2,526 and 18,646 common shares                            (1)          (161)
Cancellation of 99,859 and 49,316 restricted common share awards                 (1,717)          (916)

DEFERRED COMPENSATION UNDER SHARE AWARD PLAN
Compensation expense recognized                                                    (277)           501
Cancellation of restricted common shares                                          1,717            916

RETAINED EARNINGS
Net loss                                                                        (51,182)       (50,774)
Dividends on convertible preferred stock                                         (2,159)            --
Common share dividends, $0.08 per share                                              --         (2,943)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income                                                       24,099            595
                                                                               --------      ---------
Common shareholders' equity, end of period                                     $ 47,956      $ 445,640
                                                                               ========      =========
</TABLE>

The accompanying notes are an integral part of these statements.


                                       4
<PAGE>

                               TRENWICK GROUP LTD.
              Notes to Unaudited Consolidated Financial Statements
 (Amounts expressed in thousands of United States dollars except per share data)
                Three and Six Months Ended June 30, 2003 and 2002

Note 1            Organization
Organization      Trenwick Group Ltd. ("Trenwick") is a Bermuda-based specialty
and Basis         insurance and reinsurance holding company with subsidiaries
of Presentation   located in the United States and the United Kingdom, including
                  four runoff operations. Trenwick's operations at Lloyd's of
                  London ("Lloyd's") underwrite specialty property and casualty
                  insurance as well as treaty and facultative property and
                  casualty reinsurance on a worldwide basis. As indicated below,
                  on August 20, 2003, Trenwick and certain of its subsidiaries
                  that are not insurance companies filed for protection under
                  chapter 11 of the United States Bankruptcy Code.


                  In 2002, Trenwick conducted several strategic reviews of its
                  operations in light of its capital constraints and determined
                  that it was necessary for Trenwick to reduce its operating
                  leverage by reducing premium volumes to a level more
                  commensurate with its capital base and to concentrate its
                  limited financial resources on its core franchises and
                  businesses, its United States treaty reinsurance business and
                  its Lloyd's operations, where it would be able to write
                  insurance and reinsurance based on direct or indirect
                  financial support. As a result, Trenwick voluntarily placed
                  into runoff its United States specialty program business
                  formerly operated through its subsidiary, Canterbury Financial
                  Group, Inc., effective October 30, 2002, and its London-based
                  specialty insurance and reinsurance company, Trenwick
                  International Limited ("Trenwick International"), effective
                  November 29, 2002. Additionally, in light of the increasing
                  capital requirements imposed by the market on catastrophe
                  insurance providers, Trenwick sold the in-force property
                  catastrophe reinsurance business of its Bermuda subsidiary,
                  LaSalle Re Limited ("LaSalle Re"), to Endurance Specialty
                  Insurance, Ltd. ("Endurance"). Little or no new insurance or
                  reinsurance is presently being offered in these runoff
                  operations.

                  Trenwick's United States treaty reinsurance business, formerly
                  written through its subsidiary, Trenwick America Reinsurance
                  Corporation ("Trenwick America Re"), has been limited since
                  November 2002 to providing, through an underwriting facility
                  with Chubb Re, Inc. and its affiliate Federal Insurance
                  Company (together, "Chubb"), treaty reinsurance to insurers of
                  property and casualty risks. Since inception in November 2002,
                  Trenwick underwrote approximately $128 million of reinsurance
                  under the facility. Trenwick announced on April 15, 2003 that
                  it would cease underwriting reinsurance business under the
                  Chubb facility. Trenwick will continue to be entitled to the
                  economic benefits of, and will bear losses on, existing
                  business under the facility, subject to the terms and
                  conditions of the facility. Trenwick's ability to write
                  reinsurance business under the facility was severely
                  constrained by its financial condition and concerns arising
                  with respect to its ongoing stability. As a result, Trenwick
                  ceased underwriting activities under the facility in order to
                  reduce Trenwick's costs. The effect of this cessation is that
                  Trenwick America Re is now in runoff. Trenwick will continue
                  to service and pay claims for all business previously written
                  through Trenwick America Re outside of the Chubb facility and
                  will jointly adjust and settle with Chubb any claims arising
                  under the business written under the Chubb facility, subject
                  to Chubb's final authority.


                                       5
<PAGE>

                  Trenwick announced on August 7, 2003 that that it has entered
                  into a letter of intent with respect to an agreement in
                  principle on a long-term restructuring of its debt
                  obligations, the sale of its business operations at Lloyd's,
                  and the runoff of its remaining businesses with (i) the
                  majority of the beneficial holders (the "Senior Noteholders")
                  of its 6.70% Senior Notes (the "Senior Notes"), (ii) the
                  steering committee (the "Steering Committee") of the lending
                  institutions (the "Banks") that have issued letters of credit
                  under a senior secured credit facility (the "LoC Facility") on
                  behalf of certain subsidiaries of Trenwick in support of
                  Trenwick's Lloyd's operations, and (iii) a group composed of
                  current members of management of Trenwick's Lloyd's operations
                  (the "Management Team"). Trenwick did not pay principal and
                  interest on the Senior Notes due on August 1, 2003, which also
                  created an event of default with respect to the LoC Facility
                  and under certain other indebtedness of Trenwick.

                  The restructuring is intended to be implemented through
                  various means, including but not limited to the following: (i)
                  the filing by Trenwick and/or one or more of its subsidiaries
                  of chapter 11 bankruptcy proceedings in the United States and
                  the filing of similar proceedings in Bermuda, Barbados or the
                  United Kingdom, as the case may be; (ii) the sale by Trenwick
                  of substantially all of its Lloyd's operations to a company
                  controlled by the Management Team and with capital provided by
                  the Management Team, third-party investors and the Banks and
                  (iii) the retention of third party run-off advisors and the
                  continued runoff or disposition of all of Trenwick's other
                  insurance and reinsurance operations. In light of the
                  foregoing, Trenwick believes that it is unlikely that any of
                  the holders of the shares of Trenwick or of its wholly-owned
                  Bermuda subsidiary, LaSalle Re Holdings Ltd, will receive any
                  return on their investment in the near term if at all.

                  The terms of the restructuring are subject to the satisfaction
                  of numerous conditions precedent including, but not limited
                  to, the following: (i) approval of the restructuring by the
                  Banks; (ii) negotiation of definitive documentation (iii)
                  receipt of all requisite regulatory and other approvals in the
                  United States, Bermuda and the United Kingdom; (iv) due
                  diligence by Englefield Capital LLP, the proposed equity
                  sponsor of the Management Team, which has entered into an
                  exclusive negotiation agreement with Trenwick, and (v)
                  approval of any court having jurisdiction over the
                  above-referenced insolvency proceedings.

                  On August 20, 2003, Trenwick and its affiliates, LaSalle Re
                  Holdings Limited ("LaSalle Re Holdings") and Trenwick America
                  (collectively with LaSalle Re Holdings and Trenwick, the
                  "Debtors"), filed for protection from their creditors under
                  chapter 11 of the United States Bankruptcy Code (the
                  "Bankruptcy Code") with the United States Bankruptcy Court for
                  the District of Delaware (the "Bankruptcy Court"). On that
                  same date, Trenwick and LaSalle Re Holdings were in the
                  process of filing proceedings in the Supreme Court of Bermuda
                  known under Bermudian law as "winding up". Trenwick and
                  LaSalle Re Holdings will petition the Supreme Court of Bermuda
                  to issue an order appointing Joint Provisional Liquidators for
                  Trenwick and LaSalle Re Holdings and will request that
                  deference be paid in the "winding up" to the jurisdiction of
                  the Bankruptcy Court and the Debtors' restructuring efforts in
                  accordance with the Bankruptcy Code. It is the intention of
                  the Debtors to implement the restructuring agreed to among the
                  Debtors and their creditor constituencies as discussed above
                  through the bankruptcy process. (See also Note 8)

                  Basis of Presentation

                  The interim financial statements include the accounts of
                  Trenwick and its subsidiaries after elimination of significant
                  intercompany accounts and transactions. Certain items in prior
                  financial statements have been reclassified to conform to the
                  current presentation.

                  These interim financial statements have been prepared in
                  conformity with accounting principles that are generally
                  accepted in the United States of America, sometimes referred
                  to as U.S. GAAP. To prepare these interim financial
                  statements, management is 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 may differ from these
                  estimates.


                                       6
<PAGE>

                  The accompanying financial statements have been prepared
                  assuming Trenwick will continue as a going concern. As
                  discussed above, Trenwick was unable to repay certain senior
                  notes by April 1, 2003 and collateralize, with cash or cash
                  equivalents, 60% of the outstanding letters of credit under
                  its senior credit facility by August 1, 2003 and is therefore
                  in default with respect to the senior notes and certain other
                  indebtedness. Additionally, certain insurance subsidiaries of
                  Trenwick do not meet risk based capital levels or levels of
                  surplus required by various insurance regulations to which
                  they are subject. These matters raise substantial doubt about
                  Trenwick's ability to continue as a going concern. The
                  financial statements do not include any adjustments that might
                  result from the outcome of these uncertainties.

                  The interim financial statements are unaudited; however, in
                  the opinion of management, the interim financial statements
                  include all adjustments, consisting only of normal recurring
                  adjustments, necessary for a fair statement of the results for
                  interim periods. These interim statements should be read in
                  conjunction with the audited financial statements and related
                  notes included in the Annual Report on Form 10-K of Trenwick
                  for the year ended December 31, 2002.

Note 2            Effective April 1, 2002, Trenwick sold the in-force property
Sale of           catastrophe reinsurance business of its subsidiary, LaSalle Re
Property          Limited ("LaSalle") to Endurance Specialty Insurance, Ltd.
Catastrophe       ("Endurance"). The sale was effected through a 100% quota
Business of       share reinsurance agreement, with Endurance paying Trenwick a
LaSalle Re        ceding commission of 25% of premiums ceded under the quota
Limited           share agreement and additional profit sharing of 50% if the
                  losses do not exceed a loss ratio of 45%. In addition,
                  Endurance has the right to renew LaSalle's in-force business
                  as it expires in exchange for a 12.5% commission on the
                  business renewed. Included in the 2002 second quarter results
                  are $6,685 in ceding commissions earned on the quota share
                  with Endurance, as well as $3,930 in amortization of
                  acquisition costs on the related assumed business.

                  In connection with this transaction, Trenwick recorded the
                  following non-recurring revenues and expenses during the six
                  months ended June 30, 2002:

<TABLE>
<S>                                                                        <C>
                    Minimum proceeds related to sale of renewal rights     $ 8,000
                    Accelerated amortization of reinsurance
                       contracts not transferred in sale                    (7,824)
                    Legal expenses and investment banking fees              (4,370)
                    Severance and related expenses                          (2,814)
                                                                           -------
                    Net loss on sale of LaSalle's in-force
                       reinsurance business                                $(7,008)
                                                                           =======
</TABLE>

Note 3            During the first quarter of 2003, Trenwick amended the basis
Segment           in which operating segments are determined. This change
Information       followed strategic reviews of Trenwick's operations which
                  resulted in the decision to place four of its operations into
                  voluntary runoff. As a result, the operations of Trenwick and
                  its subsidiaries will now be managed on a legal entity basis
                  combined by region, rather than an operating platform basis,
                  in order to ensure the runoff of these operations is conducted
                  in a manner which will maximize the economic value of these
                  entities.


                                       7
<PAGE>

                  The results of Trenwick's specialty insurance and reinsurance
                  business is reported in the following three business segments:

                  -     Lloyd's operations, written principally through five
                        corporate members of Lloyd's and managed by Trenwick's
                        United Kingdom subsidiary, Trenwick Managing Agents
                        Limited ("TMA");

                  -     North American runoff, which consists of treaty
                        reinsurance formerly written on United States property
                        and casualty risks through Trenwick America Re as well
                        as the results of the Chubb underwriting facility.
                        Additionally, this segment includes the runoff of United
                        States specialty program insurance formerly written by
                        The Insurance Corporation of New York ("INSCORP") and
                        its subsidiary Dakota Specialty Insurance Company
                        ("Dakota). Lastly, this segment includes property
                        catastrophe reinsurance written on a worldwide basis by
                        LaSalle Re until it ceased underwriting effective April
                        1, 2002 when it sold its in-force business to Endurance,
                        effected through a 100% quota share reinsurance
                        agreement; and

                  -     United Kingdom runoff, which consists of international
                        specialty insurance and reinsurance written through
                        Trenwick International, which ceased underwriting
                        substantially all new business effective November 29,
                        2002. Subsequent to June 30, 2003, Trenwick entered into
                        an agreement with Bestpark Limited ("Bestpark"), a
                        subsidiary of Litigation Control Group Limited, for the
                        sale of Trenwick International. The sale of Trenwick
                        International is subject to the approval of the
                        Financial Services Authority in the United Kingdom.(See
                        Note 8)

                  The following tables present business segment financial
                  information for Trenwick at June 30, 2003 and December 31,
                  2002 and for the three and six months ended June 30, 2003 and
                  2002:

                                                 2003           2002
                                              ----------     ----------
                    Total assets:
                    Lloyd's operations        $2,139,227     $2,135,908
                    North American runoff      2,356,000      2,538,326
                    United Kingdom runoff        504,853        568,447
                    Unallocated                   20,524         35,301
                                              ----------     ----------
                    Total assets              $5,020,604     $5,277,982
                                              ==========     ==========

<TABLE>
<CAPTION>
                                                   Three Months                  Six Months
                                              -----------------------     -----------------------
                                                 2003          2002          2003          2002
                                              ---------      --------     ---------      --------
<S>                                           <C>            <C>          <C>            <C>
                    Total revenues:
                    Lloyd's operations        $  89,378      $117,987     $ 173,634      $216,165
                    North American runoff       111,448       143,965       241,333       296,469
                    United Kingdom runoff        22,466        50,129        48,058        98,658
                    Unallocated                    (500)           58          (749)          185
                                              ---------      --------     ---------      --------
                    Total revenues            $ 222,792      $312,139     $ 462,276      $611,477
                                              =========      ========     =========      ========
</TABLE>


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                       Three Months                 Six Months
                                                  ----------------------      ----------------------
                                                    2003          2002          2003          2002
                                                  --------      --------      --------      --------
<S>                                               <C>           <C>           <C>           <C>
      Net income (loss):
      Lloyd's operations                          $ (5,233)     $   (607)     $ (3,392)     $ (2,833)
      North American runoff                        (42,488)       35,350       (38,490)       38,988
      United Kingdom runoff                          3,429        (9,308)        4,087       (16,318)
      Unallocated interest expense and
         subsidiary preferred share dividends       (3,655)       (6,903)       (7,576)      (13,524)
      Other unallocated and change in
         accounting principle                       (3,684)      (14,743)       (5,811)      (57,087)
                                                  --------      --------      --------      --------
      Net income (loss)                           $(51,631)     $  3,789      $(51,182)     $(50,774)
                                                  ========      ========      ========      ========
</TABLE>

                  Transactions between operating segments have been eliminated
                  in consolidation.

Note 4            Effective January 1, 2002, Trenwick adopted a new Financial
Accounting        Accounting Standards Board statement which amended the
Standards         accounting for goodwill and other intangible assets. This new
                  statement suspended systematic goodwill amortization and its
                  implementation resulted in LaSalle Re Holdings crediting
                  negative goodwill of $11,586 to operations as of January 1,
                  2002 as a cumulative effect of an accounting change. The
                  statement also required that the remaining goodwill balance of
                  $53,239 at December 31, 2001 be tested for impairment under
                  either market value or cash flow tests. The market value test
                  was performed using the Income Forecast Model, which uses
                  discounted cash flows. Cash flow tests were also performed,
                  and as a result of the tests performed, it was determined that
                  the goodwill was impaired and the entire remaining goodwill
                  balance was charged to operations as of January 1, 2002 as a
                  cumulative effect of an accounting change.

Note 5            The components of premiums written and earned for the three
Underwriting      and six months ended June 30, 2003 and 2002 are as follows:
Activities

<TABLE>
<CAPTION>
                                                       Three Months                   Six Months
                                                 ------------------------      ------------------------
                                                    2003           2002           2003           2002
                                                 ---------      ---------      ---------      ---------
<S>                                              <C>            <C>            <C>            <C>
                    Assumed premiums written     $  73,346      $ 149,425      $ 157,399      $ 358,308
                    Direct premiums written        101,838        292,722        275,577        549,409
                                                 ---------      ---------      ---------      ---------
                    Gross premiums written         175,184        442,147        432,976        907,717
                    Ceded premiums written         (18,752)      (186,215)       (84,201)      (334,636)
                                                 ---------      ---------      ---------      ---------
                    Net premiums written         $ 156,432      $ 255,932      $ 348,775      $ 573,081
                                                 =========      =========      =========      =========

                    Assumed premiums earned      $  93,527      $ 170,998      $ 209,593      $ 297,205
                    Direct premiums earned         182,943        248,189        402,619        515,410
                                                 ---------      ---------      ---------      ---------
                    Gross premiums earned          276,470        419,187        612,212        812,615
                    Ceded premiums earned          (61,557)      (141,926)      (175,794)      (269,330)
                                                 ---------      ---------      ---------      ---------
                    Net premiums earned          $ 214,913      $ 277,261      $ 436,418      $ 543,285
                                                 =========      =========      =========      =========
</TABLE>


                                       9
<PAGE>

Note 6            The following table sets forth the computation of basic and
Earnings          diluted earnings per share for the three and six months ended
Per Share         June 30, 2003 and 2002:

<TABLE>
<CAPTION>
                                                 Three Months                    Six Months
                                          --------------------------     ----------------------------
                                             2003            2002           2003              2002
                                          ----------      ----------     ----------      ------------
<S>                                       <C>             <C>            <C>             <C>
Net income (loss) available to common
  shareholders                            $  (52,717)     $    3,789     $  (53,341)     $    (50,774)
                                          ==========      ==========     ==========      ============

Weighted average shares
  outstanding - basic and diluted         36,773,865      36,786,434     36,765,462        36,800,824
                                          ==========      ==========     ==========      ============

Basic and diluted earnings
  (loss) per common share                 $    (1.43)     $     0.10     $    (1.45)     $      (1.38)
                                          ==========      ==========     ==========      ============
</TABLE>

                  For the three and six months ended June 30, 2003 and 2002,
                  962,365, 962,365; 1,744,077 and 1,737,077, respectively,
                  aggregate share options and warrants were excluded from the
                  computation of diluted earnings per share because their effect
                  would have been antidulutive on the calculation for the
                  respective periods.

                  During the three months ended June 30, 2002, 1,365,187 share
                  options were cancelled pursuant to the employee stock option
                  exchange program. This voluntary program offered all active
                  employees with the exception of the Chief Executive Officer a
                  one-time opportunity to exchange stock options for new options
                  at a grant price equal to the fair market value of Trenwick
                  common shares on December 16, 2002, which was $0.89.

                  Trenwick has several plans through which it makes options in
                  common shares available to employees at the discretion of its
                  board of directors. Non-employee directors receive automatic
                  grants under a separate plan. 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. Transactions under
                  the share option plans during the periods presented were as
                  follows:

<TABLE>
<CAPTION>
                                                                        June 30
                                                               -------------------------
                                                                  2003           2002
                                                               ----------     ----------
<S>                                                            <C>            <C>
                  Number of shares:
                  Options outstanding, beginning of period      1,847,429      3,385,379
                  Options granted                                      --          7,000
                  Options canceled                               (885,064)    (1,801,565)
                                                               ----------     ----------
                  Options outstanding, end of period              962,365      1,590,814
                                                               ==========     ==========

                  Options exercisable, end of period              756,943      1,283,077
                                                               ==========     ==========

                  Range of exercise price:
                  Options outstanding, end of period           $  1 - $40     $  8 - $41
                  Options exercisable, end of period           $  8 - $40     $ 13 - $41
                                                               ==========     ==========

                  Weighted average exercise price:
                  Options granted                                      --     $     8.00
                  Options outstanding, end of period           $    23.34     $    26.56
                  Options exercisable, end of period           $    28.75     $    28.44
                                                               ==========     ==========
</TABLE>


                                       10
<PAGE>

                  Further details on options outstanding and exercisable at June
                  30, 2003 follow:

<TABLE>
<CAPTION>
                                   Options outstanding               Options currently exercisable
                         -----------------------------------------   -----------------------------
                                                         Weighted
                                                         Average
                         Weighted                       Remaining     Weighted
                         Average                       Contractual    Average
                         Exercise         Number         Life in      Exercise          Number
Exercise price range      Price         Of Options        Years         Price         of Options
--------------------     --------       ----------     -----------    --------        ----------
<S>                       <C>             <C>              <C>         <C>             <C>
Under $10.00              $ 1.18          180,676          10          $ 8.40            7,000
$10.01-$25.00             $18.44          204,797           5          $18.69          173,051
$25.01 and over           $32.02          576,892           3          $32.02          576,892
                                          -------                                      -------
                          $23.34          962,365           5          $28.75          756,943
                                          =======                                      =======
</TABLE>

                  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. Trenwick
                  continues to account for the share option grants in accordance
                  with the previous standard; the pro forma disclosures required
                  by the fair value based method are presented below.

                  All of the outstanding share options were issued at an
                  exercise price equal to fair market value on the date of
                  grant; therefore no compensation expense has been recognized
                  for these grants. Had the fair value based method described
                  above been applied, net income (loss) available to common
                  shareholders and net income (loss) per common share for the
                  six months ended June 30, 2003 and 2002, respectively, would
                  have been the pro forma amounts shown below:

<TABLE>
<CAPTION>
                                                   Three Months             Six Months
                                                -------------------    ---------------------
                                                  2003        2002       2003         2002
                                                --------     ------    --------     --------
<S>                                             <C>          <C>       <C>          <C>
                  Net loss available to
                      common shareholders
                      As reported               $(52,717)    $3,789    $(53,341)    $(50,774)
                      Pro forma                 $(52,737)    $3,857    $(53,398)    $(50,945)

                  Basic and diluted loss per
                      common share
                      As reported               $  (1.43)    $ 0.10    $  (1.45)    $  (1.38)
                      Pro forma                 $  (1.43)    $ 0.10    $  (1.45)    $  (1.38)
</TABLE>


                                       11
<PAGE>

                  The pro forma adjustments relating to options granted from
                  1995 to 2002 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 and no options were granted
                  in 2003. Valuation and related assumption information for
                  options granted in 2002 are as follows:

                  Expected volatility                    53.0%
                  Risk-free interest rate                 4.0%
                  Common share dividend yield             1.2%

                  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'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 Trenwick's
                  opinion the existing models do not necessarily provide a
                  reliable measure of the fair value of its share options.

Note 7            On May 5, 2003, INSCORP entered into a "letter of
Insurance         understanding" with the New York Insurance Department pursuant
Regulation        to which INSCORP agreed that it would not take any of the
                  following actions without the prior written approval of the
                  Department:

                  o     Withdraw funds from its bank accounts, or make
                        disbursements or payments outside of the ordinary course
                        of business in amounts exceeding 3% of its aggregate
                        cash and investments.

                  o     Incur any debt obligation or liability for borrowed
                        money not related directly to the ordinary course of
                        business.

                  o     Settle any intercompany balances or pay any dividends.

                  o     Enter into any new material reinsurance agreement or
                        modify in any material respect any existing material
                        reinsurance agreement other than customary renewals.

                  o     Add new members to its board of directors other than
                        current senior executive officers of INSCORP or its
                        affiliates without notification to the department.

                  o     Change the compensation terms for directors, officers or
                        employees.

                  o     Pledge or assign any of its assets to secure
                        indebtedness for borrowed money.

                  Senior management of Trenwick has also agreed to meet with the
                  New York Insurance Department, in person or by conference
                  call, with such frequency as may be deemed necessary by the
                  Department to provide updates on the status of Trenwick and
                  any changes in the status of INSCORP. INSCORP is also required
                  to provide to the New York Insurance Department a monthly
                  financial statement consisting of a balance sheet and income
                  statement within 45 days following the end of such month. The
                  above described terms will remain in effect until such time as
                  the New York Insurance Department provides INSCORP written
                  notice of its release or the agreement is superceded by
                  administrative or court order.


                                       12
<PAGE>

Note 8            On August 20, 2003, Trenwick and its affiliates, LaSalle Re
Subsequent        Holdings Limited ("LaSalle Re Holdings") and Trenwick America
Events            (collectively with LaSalle Re Holdings and Trenwick, the
                  "Debtors"), filed for protection from their creditors under
                  chapter 11 of the United States Bankruptcy Code (the
                  "Bankruptcy Code") with the United States Bankruptcy Court for
                  the District of Delaware (the "Bankruptcy Court"). On that
                  same date, Trenwick and LaSalle Re Holdings were in the
                  process of filing proceedings in the Supreme Court of Bermuda
                  known under Bermudian law as "winding up". Trenwick and
                  LaSalle Re Holdings will petition the Supreme Court of Bermuda
                  to issue an order appointing Joint Provisional Liquidators for
                  Trenwick and LaSalle Re Holdings and will request that
                  deference be paid in the "winding up" to the jurisdiction of
                  the Bankruptcy Court and the Debtors' restructuring efforts in
                  accordance with the Bankruptcy Code. It is the intention of
                  the Debtors to implement the restructuring agreed to among the
                  Debtors and their creditor constituencies as discussed above
                  through the bankruptcy process.

                  Included in the accompanying consolidated balance sheet are:
                  i) indebtedness of $76,784, ii) mandatorily redeemable
                  preferred capital securities of $68,350, and iii) $75,000 in
                  preferred shares of Bermuda subsidiary, all of which are
                  expected to be subject to the bankruptcy filing.

                  The majority of the assets and liabilities (other than those
                  previously mentioned) included in the consolidated balance
                  sheet are assets and liabilities of the regulated insurance
                  company subsidiaries, which are not subject to the proceedings
                  in the Bankruptcy Court or the Supreme Court of Bermuda.

                  On August 20, 2003, Trenwick Holdings Limited, a aubsidiary of
                  Trenwick, entered into an agreement with Bestpark, a
                  subsidiary of Litigation Control Group Limited, to sell to
                  Bestpark all of the capital stock of Trenwick International,
                  as well as all of the capital stock of Trenwick Management
                  Services Ltd ("TMS") and Specialist Risk Underwriters Limited
                  ("SRU"). TMS is Trenwick International's management services
                  company. SRU is a company that in the past has carried out
                  underwriting agency services for Trenwick International and
                  other entities. It is anticipated that substantially all of
                  the (pound)2.0 million in initial consideration to be paid by
                  Bestpark will be used to pay transactional fees and expenses.
                  The remaining consideration, if any, is contingent upon a
                  successful runoff of the Trenwick International business.


                                       13
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion highlights material factors affecting Trenwick Group
Ltd's results of operations for the three and six months ended June 30, 2003 and
2002. This discussion and analysis should be read in conjunction with the
unaudited interim financial statements and notes thereto of Trenwick contained
in this filing as well as in conjunction with the audited financial statements
and related notes included in the Annual Report on Form 10-K of Trenwick for the
year ended December 31, 2002.

Overview

Trenwick Group Ltd. ("Trenwick") is a Bermuda-based specialty insurance and
reinsurance holding company with subsidiaries located in the United States and
the United Kingdom, including four runoff operations. Trenwick's operations at
Lloyd's of London ("Lloyd's") underwrite specialty property and casualty
insurance as well as treaty and facultative property and casualty reinsurance on
a worldwide basis.

In 2002, Trenwick conducted several strategic reviews of its operations in light
of its capital constraints and determined that it was necessary for Trenwick to
reduce its operating leverage by reducing premium volumes to a level more
commensurate with its capital base and to concentrate its limited financial
resources on its core franchises and businesses, its United States treaty
reinsurance business and its Lloyd's operations, where it would be able to write
insurance and reinsurance based on direct or indirect financial support. As a
result, Trenwick voluntarily placed into runoff its United States specialty
program business formerly operated through its subsidiary, Canterbury Financial
Group, Inc., effective October 30, 2002, and its London-based specialty
insurance and reinsurance company, Trenwick International Limited ("Trenwick
International"), effective November 29, 2002. Additionally, in light of the
increasing capital requirements imposed by the market on catastrophe insurance
providers, Trenwick sold the in-force property catastrophe reinsurance business
of its Bermuda subsidiary, LaSalle Re Limited ("LaSalle Re"), to Endurance
Specialty Insurance, Ltd. ("Endurance"). Little or no new insurance or
reinsurance is presently being offered in these runoff operations.

Trenwick's United States treaty reinsurance business, formerly written through
its subsidiary, Trenwick America Reinsurance Corporation ("Trenwick America
Re"), has been limited since November 2002 to providing, through an underwriting
facility with Chubb Re, Inc. and its affiliate Federal Insurance Company
(together, "Chubb"), treaty reinsurance to insurers of property and casualty
risks. Since inception in November 2002, Trenwick underwrote approximately $128
million of reinsurance under the facility. Trenwick announced on April 15, 2003
that it would cease underwriting reinsurance business under the Chubb facility.
Trenwick will continue to be entitled to the economic benefits of, and will bear
losses on, existing business under the facility, subject to the terms and
conditions of the facility. Trenwick's ability to write reinsurance business
under the facility was severely constrained by its financial condition and
concerns arising with respect to its ongoing stability. As a result, Trenwick
ceased underwriting activities under the facility in order to reduce Trenwick's
costs and on June 18, 2003 the underwriting agreement was cancelled by Chubb.
The effect of this cessation is that Trenwick America Re is now in runoff.
Trenwick will continue to service and pay claims for all business previously
written through Trenwick America Re outside of the Chubb facility and will
jointly adjust and settle with Chubb any claims arising under the business
written under the Chubb facility, subject to Chubb's final authority.


                                       14
<PAGE>

Trenwick announced on August 7, 2003 that that it has entered into a letter of
intent with respect to an agreement in principle on a long-term restructuring of
its debt obligations, the sale of its business operations at Lloyd's, and the
runoff of its remaining businesses with (i) the majority of the beneficial
holders (the "Senior Noteholders") of its 6.70% Senior Notes (the "Senior
Notes"), (ii) the steering committee (the "Steering Committee") of the lending
institutions (the "Banks") that have issued letters of credit under a senior
secured credit facility (the "LoC Facility") on behalf of certain subsidiaries
of Trenwick in support of Trenwick's Lloyd's operations, and (iii) a group
composed of current members of management of Trenwick's Lloyd's operations (the
"Management Team"). Trenwick did not pay principal and interest on the Senior
Notes due on August 1, 2003, which also created an event of default with respect
to the LoC Facility and under certain other indebtedness of Trenwick.

The restructuring is intended to be implemented through various means, including
but not limited to the following: (i) the filing by Trenwick and/or one or more
of its subsidiaries of chapter 11 bankruptcy proceedings in the United States
and the filing of similar proceedings in Bermuda, Barbados or the United
Kingdom, as the case may be; (ii) the sale by Trenwick of substantially all of
its Lloyd's operations to a company controlled by the Management Team and with
capital provided by the Management Team, third-party investors and the Banks and
(iii) the retention of third party run-off advisors and the continued runoff or
disposition of all of Trenwick's other insurance and reinsurance operations. In
light of the foregoing, Trenwick announced that it believes that it is unlikely
that any of the holders of the shares of Trenwick or of its wholly-owned Bermuda
subsidiary, LaSalle Re Holdings Ltd, will receive any return on their investment
in the near term if at all.

The terms of the restructuring are subject to the satisfaction of numerous
conditions precedent including, but not limited to, the following: (i) approval
of the restructuring by the Banks; (ii) negotiation of definitive documentation
(iii) receipt of all requisite regulatory and other approvals in the United
States, Bermuda and the United Kingdom; (iv) due diligence by Englefield Capital
LLP, the proposed equity sponsor of the Management Team, which has entered into
an exclusive negotiation agreement with Trenwick, and (v) approval of any court
having jurisdiction over the above-referenced insolvency proceedings.

On August 20, 2003, Trenwick and its affiliates, LaSalle Re Holdings Limited
("LaSalle Re Holdings") and Trenwick America Corporation ("Trenwick America,"
and collectively with LaSalle Re Holdings and Trenwick, the "Debtors"), filed
for protection from their creditors under chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). On that same date,
Trenwick and LaSalle Re Holdings were in the process of filing proceedings in
the Supreme Court of Bermuda known under Bermudian law as "winding up". Trenwick
and LaSalle Re Holdings will petition the Supreme Court of Bermuda to issue an
order appointing Joint Provisional Liquidators for Trenwick and LaSalle Re
Holdings and will request that deference be paid in the "winding up" to the
jurisdiction of the Bankruptcy Court and the Debtors' restructuring efforts in
accordance with the Bankruptcy Code. It is the intention of the Debtors to
implement the restructuring agreed to among the Debtors and their creditor
constituencies as discussed above through the bankruptcy process.

The majority of the assets and liabilities included in the consolidated balance
sheet, are assets and liabilities of the regulated insurance company
subsidiaries, which are not subject to the proceedings in the Bankruptcy Court
or the Supreme Court of Bermuda.


                                       15
<PAGE>

During the first quarter of 2003, Trenwick amended the basis in which operating
segments are determined. This change followed strategic reviews of Trenwick's
operations which resulted in the decision to place four of its operations into
voluntary runoff. As a result, the operations of Trenwick and its subsidiaries
will now be managed on a legal entity basis combined by region, rather than an
operating platform basis, in order to ensure the runoff of these operations is
conducted in a manner which will maximize the economic value of these entities.

      The results of Trenwick's specialty insurance and reinsurance business is
      reported in the following three business segments:

      -     Lloyd's operations, written principally through five corporate
            members of Lloyd's and managed by TMA;

      -     North American runoff, which consists of treaty reinsurance formerly
            written through Trenwick America Re as well as the results of the
            Chubb underwriting facility, the runoff of United States specialty
            program insurance formerly written by The Insurance Corporation of
            New York ("INSCORP") and its subsidiary Dakota Specialty Insurance
            Company ("Dakota) and property catastrophe reinsurance written on a
            worldwide basis by LaSalle Re until it ceased underwriting effective
            April 1, 2002 effected through a 100% quota share reinsurance
            agreement; and

      -     United Kingdom runoff, which consists of international specialty
            insurance and reinsurance written through Trenwick International,
            until it ceased underwriting substantially all new business
            effective November 29, 2002.

Effective April 1, 2002, Trenwick sold the in-force property catastrophe
reinsurance business of its subsidiary, LaSalle Re to Endurance. The sale was
effected through a 100% quota share reinsurance agreement, with Endurance paying
Trenwick a ceding commission of 25% of premiums ceded under the quota share
agreement and additional profit sharing of 50% if the losses do not exceed a
loss ratio of 45%. In addition, Endurance has the right to renew LaSalle Re's
in-force business as it expires in exchange for a 12.5% commission on the
business renewed. Included in the 2002 second quarter results are $6.7 million
in ceding commissions earned on the quota share with Endurance, as well as $3.9
million in amortization of acquisition costs on the related assumed business.

Critical Accounting Policies

The accounting policies described below are those Trenwick 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.

Unpaid Claims and Claims Expenses

Claims and claims expenses are recorded 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


                                       16
<PAGE>

estimated salvage and subrogation. The estimates for claims and claims expenses
incurred but not reported were developed based on historical claims and claims
expense experience and an actuarial evaluation of expected claims and claims
expense experience. Workers' compensation indemnity liabilities that are
considered fixed and determinable are discounted using an interest rate of 3.5%.
Reserves for unpaid claims and claims expenses, by their very nature, do not
represent an exact calculation of the liability and, while Trenwick has
established reserves equal to the current best estimate of ultimate losses,
there remains a likelihood that further changes in such claim estimates, either
upward or downward, will occur in the future. Adjustments to previously reported
reserves for unpaid claims and claims expenses are considered changes in
estimates for accounting purposes and are reflected in the income statement in
the period in which the adjustment becomes known.

Unpaid claims and claims expenses are recorded based on actuarial estimates of
losses inherent in that period's claims, including losses for which claims have
not yet been reported. Estimates of unpaid claims and claims expenses rely on
actuarial observations of ultimate loss experience for similar historical
events. Historical insurance industry experience indicates that a high degree of
inherent variability exists in assessing the ultimate amount of losses under
short-duration property and casualty contracts. This inherent variability is
particularly significant for liability-related exposures, including latent
claims issues (such as asbestos and environmental related coverage disputes),
because of the extended period of time, often many years, that transpires
between when a given claim event occurs and the ultimate full settlement of such
claim. This situation is then further exacerbated for reinsurance entities (as
opposed to primary insurers) due to coverage often being provided on an
"excess-of-loss" basis and the resulting time lags in receiving current claims
data. Additionally, the uncertainty is increased as a result of the diversity of
development patterns among different types of reinsurance and the necessary
reliance on ceding companies for information regarding reported claims and
differing reserving practices among ceding companies. Other items that have been
considered in determining reserves but may develop differently than currently
estimated include:

      o     September 11, 2001 related claims, particularly with respect to
            catastrophe coverage underwritten in LaSalle Re;

      o     United Kingdom liability claims;

      o     Claims against insured financial services companies for certain
            types of practices including alleged misallocations of shares in
            initial public offerings;

      o     Directors and Officers liability insurance in the United States;

      o     Ultimate losses on business underwritten in the last four years, as
            reserve estimates are inherently more uncertain on recent business,
            where reported loss activity is still low relative to ultimate
            losses;

      o     Claims liabilities also include provisions for latent injury or
            toxic tort claims that cannot be estimated with traditional
            reserving 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;

      o     Reinsurance collectibility - Trenwick reviews and monitors its
            reinsurance recoverables from its reinsurers and makes provision for
            uncollectible reinsurance as appropriate. However, given the
            magnitude of reinsurance recoverables, $1.8 billion at June 30,
            2003, Trenwick has a significant exposure to collectibility issues.

Trenwick's management continually evaluates the potential for changes in unpaid
claims and claims expenses to adjust recorded reserves and to proactively modify
underwriting criteria and


                                       17
<PAGE>

product offerings. In recent periods and continuing throughout 2002, the level
of reported claims activity related to prior year loss events, particularly for
liability-related exposures underwritten in 1997 through 2001, has been
significantly higher than anticipated. Full consideration of these trends was
incorporated into a comprehensive reserve study completed in the fourth quarter
of 2002. Insurance reserves, by their very nature, do not represent an exact
calculation of liability and, while Trenwick has established reserves equal to
the current best estimate of ultimate losses, there remains a likelihood that
further changes in such loss estimates, either upward or downward, will occur in
the future.

Reinsurance Recoverable Balances

Trenwick has purchased reinsurance to reduce its exposure on individual risks,
catastrophic losses and other large losses. Trenwick estimates the amount of
uncollectible receivables from its reinsurers each period and establishes an
allowance for uncollectible amounts. The amount of the allowance is based on the
age of unpaid amounts, information about the creditworthiness of Trenwick's
reinsurers, and other relevant information. Estimates of uncollectible
reinsurance amounts are reviewed quarterly, and changes are recorded in the
period they become known. A significant change in the level of uncollectible
reinsurance amounts would have a significant effect on Trenwick's results of
operations and financial position.

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 seeks to match the maturities of invested assets with the payment of
expected liabilities. By doing this, Trenwick 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 had to liquidate investments prior to
their maturity, it may incur realized losses and the effect on Trenwick's
results of operations could be significant.

Deferred Income Taxes

Deferred income tax assets and liabilities are computed based on temporary
differences between financial statement and income tax bases of assets and
liabilities using enacted income tax rates in effect for the year in which the
differences are expected to reverse. FASB Statement No. 109 requires a valuation
allowance to be recorded when it is more likely than not that some or all of the
deferred tax assets will not be realized. Due to Trenwick's cumulative losses
generated in


                                       18
<PAGE>

recent years and uncertainties as to the amount of taxable income to be
generated in future years, as of December 31, 2002, Trenwick could not support
the future realizability of its net deferred tax asset. The effects of this
determination on Trenwick's results from operations were significant. As of June
30, 2003, Trenwick maintained a valuation allowance for the full amount of its
net deferred tax asset. Trenwick's Bermuda operations are not subject to income
tax.

Results of Operations - Three Months Ended June 30, 2003 and 2002

Trenwick's net loss available to common shareholders was $52.7 million in the
three months ended June 30, 2003 compared to net income available to common
shareholders of $3.8 million recorded in the same period in 2002. The 2003
results included adverse development on prior year reserves for unpaid claims
and claims expenses combined with one-time charges incurred related to the
cancellation of the Chubb underwriting facility as well as continued costs for
legal and advisory fees.

Underwriting income (loss)

Trenwick produced an underwriting loss of $50.9 million in the second quarter of
2003 compared to an underwriting loss of $12.3 million in the second quarter of
2002. Details of underwriting income and loss are produced below:

<TABLE>
<CAPTION>
                                                  2003           2002         Change
                                               ---------      ---------      --------
                                                            (in thousands)
<S>                                            <C>            <C>            <C>
Net premiums earned                            $ 214,913      $ 277,261      $(62,348)
                                               ---------      ---------      --------

Claims and claims expenses incurred              180,786        194,025       (13,239)
Acquisition costs and underwriting expenses       84,988         95,524       (10,536)
                                               ---------      ---------      --------
Total expenses                                   265,774        289,549       (23,775)
                                               ---------      ---------      --------
Net underwriting loss                          $ (50,861)     $ (12,288)     $(38,573)
                                               =========      =========      ========

Loss ratio                                          84.1%          70.0%         14.1%
Underwriting expense ratio                          39.5%          34.4%          5.1%
Combined ratio                                     123.6%         104.4%         19.2%
</TABLE>

The underwriting loss of $50.9 million in the second quarter of 2003 represented
a $38.6 million greater loss compared to the second quarter of 2002. The
underwriting result in 2003 is a result of a decrease in earned premiums as a
result of the runoff status of all of Trenwick's insurance and reinsurance
operations other than its Lloyd's operations, combined with adverse development
recorded on prior year reserves for unpaid claims and claims expenses.

The increase in the combined ratio in the second quarter of 2003 compared to the
second quarter of 2002 resulted mainly from the decrease in earned premiums and
adverse development noted above.

Premiums written

Gross premiums written for the three months ended June 30, 2003 were $175.2
million compared to $442.1 million for the three months ended June 30, 2002, a
decrease of $267.0 million or 60.4%. Details of gross premiums written are
provided below:


                                       19
<PAGE>

                                              2003         2002        Change
                                            --------     --------     ---------
                                                      (in thousands)
Lloyd's syndicates                          $109,681     $180,170     $ (70,489)
North American runoff                         60,150      218,296      (158,146)
United Kingdom runoff                          5,353       43,681       (38,328)
                                            --------     --------     ---------
Gross premiums written                      $175,184     $442,147     $(266,963)
                                            ========     ========     =========

The decrease of $70.5 million in Lloyd's syndicates gross written premiums for
the second quarter of 2003 compared to $180.2 million in the second quarter of
2002 was due primarily to the significant decrease in premiums written on
aviation business in 2003. This decrease is a result of the decrease in the
number of airline passengers due to recent security concerns together with the
impact of SARS and the Iraq war. In addition, Trenwick ceased underwriting
aviation business during the quarter ended June 30, 2003 which resulted in
return premiums.

North American runoff gross premium writings for the three months ended June 30,
2003 decreased by $158.1 million, or 72.4% from the three months ended June 30,
2002 as a result of the sale of LaSalle Re's in-force property catastrophe
reinsurance business, effective April 1, 2002, combined with the effects of the
current financial condition of Trenwick which prevented Trenwick America Re from
writing any new business outside of that written through the Chubb underwriting
facility as well as Trenwick's decision to cease underwriting specialty program
insurance effective October 30, 2002.

The decrease of $38.3 million in United Kingdom runoff's gross premiums written
in the second quarter of 2003 compared to the second quarter of 2002 was
attributable to Trenwick's decision to discontinue writing substantially all new
business through Trenwick International effective November 29, 2002.

Premiums earned

Net premiums earned for the three months ended June 30, 2003 were $214.9 million
compared to $277.3 million for the same period in 2002. Details of premiums
earned are provided below:

                                             2003          2002         Change
                                          ---------     ---------     ---------
                                                      (in thousands)
Gross premiums written                    $ 175,184     $ 442,147     $(266,963)
Change in gross unearned premiums           101,286       (22,960)      124,246
                                          ---------     ---------     ---------
Gross premiums earned                       276,470       419,187      (142,717)
                                          ---------     ---------     ---------

Gross premiums ceded                        (18,752)     (186,215)      167,463
Change in ceded unearned premiums           (42,805)       44,289       (87,094)
                                          ---------     ---------     ---------
Ceded premiums earned                       (61,557)     (141,926)       80,369
                                          ---------     ---------     ---------
Net premiums earned                       $ 214,913     $ 277,261     $ (62,348)
                                          =========     =========     =========

Gross premiums ceded for the three months ended June 30, 2003 were $18.8 million
compared to $186.2 million for the same period in 2002. The decrease of $167.5
million in gross premiums ceded is the result of Trenwick placing all of its
insurance and reinsurance operations other than its Lloyd's syndicates into
voluntary runoff.

Claims and claims expenses

Claims and claims expenses for the three months ended June 30, 2003 were $180.8
million, a decrease of $13.2 million compared to claims and claims expenses of
$194.0 million for the same period in 2002. The decrease in claims and claims
expenses in 2003 is attributable to the runoff


                                       20
<PAGE>

status of Trenwick's insurance and reinsurance operations other than at Lloyd's
combined with $52.2 million of adverse development on prior year reserves for
unpaid claims and claims expenses. Approximately 38.1 million of this adverse
development related to Trenwick's North American runoff segment, and related
primarily to higher than expected reported losses on its directors and officers
and excess general liability lines of business as well as an unexpected
arbitration settlement related to a pool in which Trenwick participated in 1995.
Trenwick's United Kingdom runoff segment's liability business contributed $6.1
million to the adverse development, and its Lloyd's operations professional
indemnity and financial institutions lines of business contributed $8.0 million.

Underwriting expenses

                                            2003          2002         Change
                                          -------       -------       --------
                                                     (in thousands)
Policy acquisition costs                  $63,863       $74,843       $(10,980)
Underwriting expenses                      21,125        20,681            444
                                          -------       -------       --------
Total underwriting expenses               $84,988       $95,524       $(10,536)
                                          =======       =======       ========

Underwriting expense ratio                   39.5%         34.4%           5.1%
                                          =======       =======       ========

Total underwriting expenses, comprising policy acquisition costs and
underwriting expenses, for the second quarter of 2003 decreased by $10.5 million
compared to underwriting expenses for the second quarter of 2002. The decrease
was attributable to the decrease in premium volume as previously discussed
offset in part by increased legal and advisory fees incurred in 2003 related to
the ongoing efforts of senior management of Trenwick's Lloyd's operations to
seek alternate sources of capital to replace Trenwick's ownership of its Lloyd's
operations and the current underwriting capacity provided by Trenwick. In
addition, Trenwick's Lloyd's operations increased staffing levels in 2003 over
2002, which contributed additional expenses. Finally, severance costs of
approximately $1.5 million were incurred during the second quarter of 2003 in
connection with Trenwick's decision to cease underwriting through Trenwick
America Re and the cancellation of the Chubb facility. Total underwriting
expenses as a percentage of net premiums earned, or the underwriting expense
ratio, was 39.5% for the three months ended June 30, 2003 compared to 34.4% for
the same period in 2002. The increase in the underwriting expense ratio occurred
principally because of the decrease in premiums previously discussed.

Underwriting expenses for the three months ended June 30, 2003 as a percentage
of earned premium was 9.8%, an increase of 2.4% from 7.4% for the same period in
2002. The increase in the underwriting expense ratio resulted principally from
the decrease in earned premiums and additional costs incurred for legal and
advisory fees and severance costs, combined with the decrease in aviation
premiums in 2003, which generally carry a significantly lower rate than that of
personal lines business.

Net Investment Income

                                        2003             2002          Change
                                    -----------      -----------      --------
                                                    (in thousands)
Average invested assets             $ 2,256,068      $ 2,329,867      $(73,799)
Average annualized yields                  3.52%            5.39%        (1.87)%

Investment income - portfolio       $    20,297      $    31,388      $(11,091)
Investment income - non-portfolio           735               57           678
Investment expenses                      (2,583)          (3,560)          977
                                    -----------      -----------      --------
Net investment income               $    18,449      $    27,885      $ (9,436)
                                    ===========      ===========      ========


                                       21
<PAGE>

Net investment income for the three months ended June 30, 2003 was $18.4 million
compared to $27.9 million for the same period in 2002. The decrease in net
investment income in the second quarter of 2003 was due to the overall decline
in market yields during the quarter combined with a decrease in average invested
assets. Investment expenses for the second quarters of both 2003 and 2002
includes interest expense on funds withheld of $1.8 million and $2.4 million,
respectively, under the terms of stop loss reinsurance agreements purchased by
Trenwick America Re prior to 2001.

Net Realized Gains (Losses)

Net realized losses on investments were $0.6 million during the three months
ended June 30, 2003, compared to net realized gains of $4.0 million for the
three months ended June 30, 2002. The 2003 losses were primarily the result of a
write-down of an investment that was determined to be permanently impaired,
while the 2002 gains were a result of the sale of investments made in order to
repay Trenwick's term loan facility during the second quarter of 2002.

Other income (expense)

Trenwick recorded other expenses of $10.0 million for the quarter ended June 30,
2003 as compared to other income of $3.0 million for the same period in 2002.
Other expenses for the 2003 quarter consists mainly of $10.0 million in fronting
fees incurred related to the Chubb underwriting facility. As a result of the
cancellation of the agreement on June 18, 2003, the remainder of the unpaid
minimum fronting fees of $3.8 million was accrued as of June 30, 2003.
Additionally, the remaining deferred fronting fee ($6.2 million at March 31,
2003) was fully amortized, as Trenwick will no longer benefit from future
underwriting under the contract. Trenwick will continue to be entitled to the
economic benefits of, and will bear losses on, business underwritten through the
facility prior to the cancellation date.

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2003
were $3.5 million, a decrease of $1.2 million as compared to $4.7 million
incurred during the same period in 2002. The decrease in 2003 is primarily the
result of the runoff status of Trenwick's insurance and reinsurance business
other than its Lloyd's operations which have led to decreasing costs offset in
part by legal and advisory fees incurred as a result of Trenwick's financial
condition.

Interest Expense and Subsidiary Preferred Share Dividends

Interest expense and subsidiary preferred share dividends were $9.0 million for
the second quarter of 2003, a decrease of $1.9 million from the same period in
2002. The decrease resulted from the inclusion of $2.4 million of interest on
Trenwick's term loan facility in the 2002 quarter, which was paid in full during
June 2002, offset in part by increased Letter of Credit fees, which were $1.5
million higher in the second quarter of 2003 than during the same period in
2002.

Foreign Currency Gains (Losses)

Trenwick recorded foreign currency gains of $5.0 million for the three months
ended June 30, 2003, compared to foreign currency losses of $1.8 million for the
three months ended June 30, 2002. The 2003 gains were a result of the
strengthening of the Euro against the British pound during the period.

Loss on sale of LaSalle Re's in-force Reinsurance Business

The loss on the sale of LaSalle Re's in-force reinsurance business recorded
during the second quarter of 2002 represents the net of the non-recurring
revenue and expense items incurred as a result of the sale of LaSalle Re's
in-force reinsurance business as of April 1, 2002.


                                       22
<PAGE>

Results of Operations - Six Months Ended June 30, 2003 and 2002

Trenwick's net loss available to common shareholders of $53.3 million in the six
months ended June 30, 2003 represented a $2.6 million greater loss than the net
loss available to common shareholders of $50.8 million recorded in the same
period in 2002. The loss for the six months ended June 30, 2003 included
one-time charges related to the cancellation of the Chubb underwriting
agreement, legal and advisory fees related to Trenwick's current financial
condition, as well as adverse development on prior year reserves for unpaid
claims and claims expenses. The 2002 results included underwriting losses
incurred related to the September 11th terrorist attacks.

Underwriting income (loss)

Trenwick produced an underwriting loss of $54.3 million in the first half of
2003 compared to an underwriting loss of $49.9 million in the first half of
2002. Details of underwriting income and loss follow:

<TABLE>
<CAPTION>
                                                  2003           2002          Change
                                               ---------      ---------      ---------
                                                            (in thousands)
<S>                                            <C>            <C>            <C>
Net premiums earned                            $ 436,418      $ 543,285      $(106,867)
                                               ---------      ---------      ---------

Claims and claims expenses incurred              319,269        401,602        (82,333)
Acquisition costs and underwriting expenses      171,411        191,603        (20,192)
                                               ---------      ---------      ---------
Total expenses                                   490,680        593,205       (102,525)
                                               ---------      ---------      ---------
Net underwriting loss                          $ (54,262)     $ (49,920)     $  (4,342)
                                               =========      =========      =========

Loss ratio                                          73.2%          73.9%          (0.7)%
Underwriting expense ratio                          39.3%          35.3%           4.0%
Combined ratio                                     112.5%         109.2%           3.3%
</TABLE>

The underwriting loss of $54.3 million in the first half of 2003 represented a
$4.3 million greater loss compared to the first half of 2002. The greater loss
is primarily due adverse development on reserves for unpaid claims and claims
expenses. This was offset in part by underwriting losses recorded during the
first half of 2002 related to the September 11th terrorist attacks.

The increase in the combined ratio in the first half of 2003 compared to the
first half of 2002 resulted mainly from a decrease in business written that
carries lower commission costs combined with the decrease in earned premiums as
a result of the runoff status of all of Trenwick's insurance and reinsurance
business other than through its Lloyd's syndicates.

Premiums written

Gross premiums written for the six months ended June 30, 2003 were $433.0
million compared to $907.7 million for the six months ended June 30, 2002, a
decrease of $474.7 million or 52.3%. Details of gross premiums written are
provided below:

                                          2003           2002           Change
                                        --------       --------       ---------
                                                    (in thousands)
Lloyd's syndicates                      $270,296       $307,610       $ (37,314)
North American runoff                    148,776        503,347        (354,571)
United Kingdom runoff                     13,904         96,760         (82,856)
                                        --------       --------       ---------
Gross premiums written                  $432,976       $907,717       $(474,741)
                                        ========       ========       =========


                                       23
<PAGE>

The decrease of $37.3 million in Lloyd's syndicates gross written premiums for
the first half of 2003 compared to the first half of 2002 was due primarily to a
significant decrease in premiums from the aviation line of business. This
decrease is a result of the reduced number of airline passengers due to recent
security concerns together with the impact of SARS and the Iraq war as well as
Trenwick's decision to cease underwriting aviation business during the second
quarter of 2003 which resulted in return premiums. This decrease was offset in
part by the addition of treaty reinsurance and other casualty lines of business
formerly underwritten by Trenwick International which are now written through
Trenwick's Lloyd's syndicates.

North American runoff gross premium writings for the first six months of 2003
decreased by $354.6 million, or 70.4% from the first half of 2002 as a result of
the sale of LaSalle Re's in-force property catastrophe reinsurance business,
effective April 1, 2002, as well as the runoff status of Trenwick's United
States insurance and reinsurance business.

The decrease of $82.9 million in United Kingdom runoff's gross premiums written
in the first half of 2003 compared to the first half of 2002 was attributable to
Trenwick's decision to discontinue writing substantially all new business
through Trenwick International effective November 29, 2002.

Premiums earned

Net premiums earned for the six months ended June 30, 2003 were $436.4 million
compared to $543.3 million for the same period in 2002. Details of premiums
earned are provided below:

                                             2003          2002         Change
                                          ---------     ---------     ---------
                                                      (in thousands)
Gross premiums written                    $ 432,976     $ 907,717     $(474,741)
Change in gross unearned premiums           179,236       (95,102)      274,338
                                          ---------     ---------     ---------
Gross premiums earned                       612,212       812,615      (200,403)
                                          ---------     ---------     ---------

Gross premiums ceded                        (84,201)     (334,636)      250,435
Change in ceded unearned premiums           (91,593)       65,306      (156,899)
                                          ---------     ---------     ---------
Ceded premiums earned                      (175,794)     (269,330)       93,536
                                          ---------     ---------     ---------
Net premiums earned                       $ 436,418     $ 543,285     $(106,867)
                                          =========     =========     =========

Gross premiums ceded for the six months ended June 30, 2003 were $84.2 million
compared to $334.6 million for the same period in 2002. The decrease in gross
premiums ceded of $250.4 million was a result of the placement of all of
Trenwick's insurance and reinsurance operations other than its Lloyd's
syndicates into voluntary runoff as previously discussed.

Claims and claims expenses

Claims and claims expenses for the six months ended June 30, 2003 were $319.3
million, a decrease of $82.3 million compared to claims and claims expenses of
$401.6 million for the same period in 2002. The decrease in claims and claims
expenses in 2003 is attributable to Trenwick's decision to cease underwriting
through all of its insurance and reinsurance subsidiaries other than its Lloyd's
syndicates combined with the inclusion of $23.0 million of claims and claims
expenses in the first half of 2002 related to the September 11th terrorist
attacks. These decreases were offset in part by $74.4 million of adverse
development on prior year reserves for unpaid claims and claims expenses.
Approximately $51.7 million of this adverse development related to Trenwick's
North American runoff segment and related primarily to higher than expected
reported losses on its directors and officers and excess general liability lines
of business as well as an unexpected arbitration settlement related to a pool in
which Trenwick participated in 1995. Trenwick's United Kingdom runoff segment
contributed $8.3 million to the adverse development, which stemmed from its
liability business. Trenwick's Lloyd's operations contributed the remaining
$14.4 million of adverse development, which relates to its professional
indemnity and financial institutions business.


                                       24
<PAGE>

Underwriting expenses

                                          2003           2002          Change
                                        --------       --------       --------
                                                    (in thousands)
Policy acquisition costs                $126,292       $147,915       $(21,623)
Underwriting expenses                     45,119         43,688          1,431
                                        --------       --------       --------
Total underwriting expenses             $171,411       $191,603       $(20,192)
                                        ========       ========       ========

Underwriting expense ratio                  39.3%          35.3%           4.0%
                                        ========       ========       ========

Total underwriting expenses, comprising policy acquisition costs and
underwriting expenses, for the first six months of 2003 decreased by $20.2
million compared to underwriting expenses for the first six months of 2002. The
decrease was attributable to the decrease in premium volume as previously
discussed offset in part by an increase in underwriting expenses. The increase
in underwriting expenses for 2003 over 2002 is mainly the result of increased
legal and advisory fees incurred in 2003 related to the ongoing efforts of
senior management of Trenwick's Lloyd's operations to seek alternate sources of
capital to replace Trenwick's ownership of its Lloyd's operations and the
current underwriting capacity provided by Trenwick. In addition, Trenwick's
Lloyd's operations increased staffing levels in 2003 over 2002, which
contributed additional expenses. Finally, severance costs of approximately $1.5
million were incurred during the second quarter of 2003 in connection with
Trenwick's decision to cease underwriting through Trenwick America Re. Total
underwriting expenses as a percentage of net premiums earned, or the
underwriting expense ratio, was 39.3% for the six months ended June 30, 2003
compared to 35.3% for the same period in 2002. The increase in the underwriting
expense ratio occurred principally because of increased underwriting expenses
and decreased earned premiums, both as described above. This increase in the
ratio was further driven by the decrease in aviation premiums in 2003, which
generally carry a significantly lower commission rate than that of personal
lines of business.

Net Investment Income

                                          2003            2002         Change
                                      -----------     -----------     --------
                                                     (in thousands)
Average invested assets               $ 2,281,758     $ 2,274,242     $  7,516
Average annualized yields                    3.77%           5.70%       (1.93)%

Investment income - portfolio         $    43,039     $    64,827     $(21,788)
Investment income - non-portfolio           1,125            (114)       1,239
Investment expenses                        (6,077)         (7,573)       1,496
                                      -----------     -----------     --------
Net investment income                 $    38,087     $    57,140     $(19,053)
                                      ===========     ===========     ========

Net investment income for the six months ended June 30, 2003 was $38.1 million
compared to $57.1 million for the same period in 2002. The decrease in net
investment income in the first half of 2003 was due to an overall decline in
market yields combined with a decrease in average invested assets. Investment
expenses for the first six months of both 2003 and 2002 included interest
expense on funds withheld of $4.2 million and $5.3 million, respectively, under
the terms of stop loss reinsurance agreements purchased by Trenwick America Re
prior to 2001.

Net Realized Gains (Losses)

Net realized losses on investments were $0.2 million during the six months ended
June 30, 2003, compared to net realized gains of $5.4 million for the six months
ended June 30, 2002. The 2003


                                       25
<PAGE>

losses are primarily the result of a write-down of an investment that was
determined to be permanently impaired, while the 2002 gains are a result of the
sale of investments made in order to repay Trenwick's term loan facility during
the second quarter of 2002.

Other income (expense)

Trenwick recorded other expenses of $12.0 million for the six months ended June
30, 2003 as compared to other income of $5.6 million for the same period in
2002. The 2003 amount consists primarily of $13.0 million of fronting fees
incurred related to Trenwick's underwriting facility with Chubb Re which was
cancelled in June of 2003. As a result of the cancellation of the agreement on
June 18, 2003, the remainder of the unpaid minimum fronting fee of $3.8 million
was accrued as of June 30, 2003. Additionally, the remaining deferred fronting
fee ($8.0 million at December 31, 2002) was fully amortized, as Trenwick will no
longer benefit from future underwriting under the contract. Trenwick will
continue to be entitled to the economic benefits of, and will bear losses on,
business underwritten through the facility prior to the cancellation date.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2003 were
$7.3 million, a decrease of $0.7 million as compared to $8.0 million incurred
during the same period in 2002. The decrease in 2003 is primarily the result of
the runoff status of Trenwick's insurance and reinsurance business other than
that written through its Lloyd's syndicates, offset in part by the inclusion of
$2.0 million of legal and advisory fees related to Trenwick's ongoing efforts to
restructure its outstanding indebtedness and preferred equity.

Interest Expense and Subsidiary Preferred Share Dividends

Interest expense and subsidiary preferred share dividends were $20.8 million for
the first six months of 2003, consistent with the expense from the same period
in 2002. The 2003 expense was $4.6 million less than that for 2002 as a result
of the absence of interest expense on Trenwick's term loan facility, which was
repaid during the second quarter of 2002. This decrease was offset by an
increase in letter of credit fees which were $6.2 million higher in the first
half of 2003 than during the same period in 2002.

Foreign Currency (Gains) Losses

Trenwick recorded foreign currency gains of $4.5 million for the six months
ended June 30, 2003, compared to $1.2 million of losses for the six months ended
June 30, 2002, primarily due to the strengthening of the Euro relative to the
British pound during the 2003 period.

Liquidity and Capital Resources

Trenwick is a holding company whose principal assets are its investments in the
common stock of its operating subsidiaries. As a holding company, Trenwick's
principal source of ongoing funding consists of permissible dividends, tax
allocation payments and other statutorily permissible payments from its
operating subsidiaries. Trenwick's ability to generate operating capital is
limited and its ability to meet its obligations is dependent upon funding from
its operating subsidiaries. There is substantial uncertainty as to what amount
of future funds it will receive from its operating subsidiaries. Trenwick's
principal use of cash has been operating expenses and dividends paid to its
shareholders. Trenwick America Corporation ("Trenwick America") and Trenwick
Holdings Limited ("Trenwick Holdings"), Trenwick's U.S. and U.K. holding
companies, have utilized cash in order to service their respective debt
obligations; LaSalle Re Holdings Limited ("LaSalle Re Holdings") has used cash
to pay dividends on its preferred shares. Trenwick's operating subsidiaries
receive cash from premiums, investment


                                       26
<PAGE>

income and proceeds from sales and maturities of portfolio investments. They
utilize cash to pay claims, purchase their own reinsurance protections, meet
operating and capital expenses and purchase investment securities.

Trenwick and its insurance and reinsurance company subsidiaries are subject to
regulatory oversight under the insurance statutes and regulations of the
jurisdictions in which they conduct business, including all states of the United
States, Bermuda and the United Kingdom. These regulations vary from jurisdiction
to jurisdiction and are generally designed to protect ceding insurance companies
and policyholders by regulating Trenwick's financial integrity and solvency in
its business transactions and operations. Many of the insurance statutes and
regulations applicable to Trenwick's subsidiaries relate to reporting and enable
regulators to closely monitor Trenwick's performance. Typical required reports
include information concerning Trenwick's capital structure, ownership,
financial condition, and general business operations.

As of both June 30, 2003 and December 31, 2002, Trenwick's consolidated
investments and cash totaled $2.3 billion. The fair value of Trenwick's debt
securities exceeded amortized cost by $33.1 million at June 30, 2003 and by
$12.6 million at December 31, 2002.

As of June 30, 2003, Trenwick's consolidated common shareholders' equity totaled
$48.0 million, or $1.30 per common share, compared to $77.5 million, or $2.11
per common share at December 31, 2002. During the six months ended June 30,
2003, the unrealized appreciation of debt and equity securities increased by
$19.4 million net of tax or $0.53 per share.

Cash used in Trenwick's operating activities for the six months ended June 30,
2003 was $109.4 million compared to cash provided by Trenwick's operating
activities of $57.9 million in the comparable period of 2002. The increase in
cash used in operations was due primarily to a significant decrease in premiums
collected in 2003 from 2002, a result of the runoff status of all of Trenwick's
insurance and reinsurance operations other than through its Lloyd's syndicates.
This decrease is in addition to a decrease in net investment income received, a
result of lower yields and a decrease in Trenwick's average invested assets.

Net cash used in financing activities during the six months ended June 30, 2002
included $2.9 million of dividends paid to common shareholders. Additionally,
net cash used in financing activities in 2002 included $195.2 million related to
the repayment of Trenwick's term loan facility.

Trenwick paid a dividend of $0.04 per common share in both the first and second
quarters of 2002 and LaSalle Re Holdings Limited paid a quarterly dividend of
$.55 per share on the Series A preferred shares of LaSalle Re Holdings Limited
in each of the quarters ended March 31 and June 30, 2002. In concert with other
actions being taken in the fourth quarter of 2002, on November 7, 2002,
Trenwick's Board of Directors announced that it had elected to suspend, with
immediate effect and for an indefinite period, dividends payable on Trenwick's
common and preferred shares. In December 2002, Trenwick's credit facility was
amended to prohibit the payment of dividends. On November 29, 2002, Trenwick
also ceased payment of dividends on the capital securities of Trenwick America
and on the preferred stock of LaSalle Re Holdings.

Trenwick's total debt to capital ratio (indebtedness divided by the sum of
indebtedness, minority interest, convertible preferred stock and shareholders'
equity) increased to 24.9% at June 30, 2003 from 22.7% on December 31, 2002,
mainly as a result of the decrease in common shareholders' equity.


                                       27
<PAGE>

Financings, Financing Capacity and Capitalization

Concurrently with the business combination involving LaSalle Re Holdings and
Trenwick Group Inc. in September of 2000, Trenwick America and Trenwick
Holdings, Trenwick's United States and United Kingdom holding companies, entered
into an amended and restated $490 million credit agreement with various lending
institutions ("the Banks"), which was guaranteed by LaSalle Re Holdings. The
credit agreement consisted of both a $260 million revolving credit facility and
a $230 million letter of credit facility. The revolving credit facility was
subsequently converted into a four-year term loan and repaid in full on June 17,
2002. Additionally, on December 24, 2002, the credit agreement was amended to
reduce the letter of credit facility, which is utilized by Trenwick to support
its underwriting operations at Lloyd's, to the currently outstanding $182.5
million. The letter of credit facility is scheduled to terminate on December 31,
2003, although the letters of credit issued pursuant to the facility will not
expire until December 31, 2006.

Pursuant to a guaranty agreement entered into concurrently with the credit
agreement, Trenwick has guaranteed the obligations of Trenwick America and
Trenwick Holdings under the credit agreement. In April of 2002, Trenwick pledged
the capital stock of LaSalle Re Holdings, which was a guarantor of the
obligations under the credit agreement, and LaSalle Re as collateral to the
Banks. In December of 2002, Trenwick, Trenwick America and Trenwick Holdings
agreed to provide the Banks additional security interests as described below.

On October 18, 2002, A.M. Best Company lowered the financial strength ratings of
Trenwick's operating subsidiaries below "A-". The lowered A.M. Best Company
ratings constituted an event of default under the credit agreement. In addition,
increases in Trenwick's reserves for unpaid claims and claims expenses and the
establishment of a deferred tax asset valuation allowance in the third quarter
of 2002 resulted in violations of the financial covenants in the credit
agreement requiring Trenwick to maintain a minimum tangible net worth and
minimum risk-based capital. On November 13, 2002, Trenwick, its subsidiaries and
the Banks executed a forbearance agreement with respect to the events of default
arising from the lowered A.M. Best Company ratings and financial covenant
violations.

Subsequently, an amendment and waiver of default under the credit agreement and
amendments to the guaranty agreement were entered into on December 24, 2002 (the
"December Amendments"). The December Amendments extended the letter of credit
facility through December 31, 2003 to support Trenwick's underwriting operations
at Lloyd's for the 2003 year of account. To those Banks extending their letters
of credit, Trenwick agreed to pay a 5% per annum cash letter of credit fee,
issue pay-in-kind notes bearing interest at LIBOR plus 2.5% per annum to
evidence an additional 3.16% per annum letter of credit fee, issue warrants
equal to 10% of Trenwick's fully diluted equity capital, and pay 15% of the
profits earned by Trenwick and its subsidiaries for the 2002 and 2003 Lloyd's
years of account. In addition, Trenwick, Trenwick America and Trenwick Holdings
agreed to provide the Banks a security interest in all of their respective
equity interests in, and the assets and property of, their direct and indirect
subsidiaries as additional collateral for the Banks, and to cause the
subsidiaries to provide a guaranty to the Banks subject to applicable laws and
regulations and certain existing contractual rights of holders of other
indebtedness. On April 25, 2003, Trenwick issued to the Banks an aggregate of
3,678,686 warrants to purchase common stock, representing 10% of the fully
diluted equity capital of Trenwick as of such date. The warrants have a term of
eight years from the date of issuance and have an exercise price of $0.19 per
share.


                                       28
<PAGE>

The December Amendments also prohibit Trenwick and its subsidiaries from
declaring or paying any dividends (including on Trenwick's common shares, the
Series A preferred shares of LaSalle Re Holdings and the capital securities of
Trenwick Capital Trust I). The December Amendments and the other amendments and
waivers entered into in the first and second quarters of 2003 waive certain
other defaults, add covenants further restricting the operation of business,
prohibit Trenwick and its respective subsidiaries from making certain payments
without the Banks' approval, prohibit Trenwick and its respective subsidiaries
from selling or otherwise disposing of any assets or property, require Trenwick
to regularly report certain financial information to the Banks, and adjust
downward certain of the financial covenants.

Pursuant to the December Amendments, Trenwick was required to collateralize with
cash, cash equivalents and marketable securities 60% of the outstanding letters
of credit by August 1, 2003. As it was unable to do so, Trenwick's insurance
company subsidiaries are now prohibited from underwriting any insurance or
reinsurance without the Banks' prior approval. In addition, Trenwick is required
to use its best efforts to terminate the letters of credit by December 31, 2003.
In order to do so, the letters of credit would need to be replaced with other
letters of credit or collateral acceptable to Lloyd's. In the event Trenwick has
not terminated the letters of credit by December 31, 2003, it is required on
such date to collateralize with cash, cash equivalents and marketable securities
the full amount of the outstanding letters of credit. At this time, Trenwick
does not have sufficient available liquidity to collateralize the letters of
credit as required by the December Amendments.

Since December 2002, Trenwick has entered into additional amendments and
numerous waivers with the Banks providing for, among other things, waivers of
potential covenant defaults, further reductions in certain financial covenants,
additional financial reporting, approval of certain employee and other payments,
approval of the extension of Trenwick America's senior notes from April 1, 2003
to August 1, 2003, the related payment of interest accrued through April 1, 2003
to the holders of the senior notes and extension of numerous deadlines imposed
under the December Amendments.

Trenwick America did not pay principal and interest on its Senior Notes due on
August 1, 2003, which also created an event of default with respect to the
letter of credit facility and under certain other indebtedness of Trenwick.
Therefore, Trenwick may be required to fully and immediately collateralize the
outstanding letters of credit under the terms of the credit agreement and the
guaranty agreement. No liability for any such amounts has been reflected in
Trenwick's financial statements. As announced on August 7, 2003, Trenwick has
entered into an agreement in principle on a long-term restructuring of its debt
obligations, the sale of its business operations at Lloyd's, and the runoff of
its remaining businesses with (i) the majority of the beneficial holders of its
Senior Notes, (ii) the steering committee of the Banks, and (iii) a group
composed of current members of management of Trenwick's Lloyd's operations (the
"Management Team").

The restructuring is intended to be implemented through various means, including
but not limited to the following: (i) the filing by Trenwick and/or one or more
of its subsidiaries of chapter 11 bankruptcy proceedings in the United States
and the filing of similar proceedings in Bermuda, Barbados or the United
Kingdom, as the case may be; (ii) the sale by Trenwick of substantially all of
its Lloyd's operations to a company controlled by the Management Team and with
capital provided by the Management Team, third-party investors and the Banks and
(iii) the retention of third party run-off advisors and the continued runoff or
disposition of all of Trenwick's other insurance and reinsurance operations. In
light of the foregoing, Trenwick believes that it is unlikely that any of the
holders of the shares of Trenwick or of its wholly-owned Bermuda


                                       29
<PAGE>

subsidiary, LaSalle Re Holdings Ltd, will receive any return on their investment
in the near term if at all.

The terms of the restructuring are subject to the satisfaction of numerous
conditions precedent including, but not limited to, the following: (i) approval
of the restructuring by the Banks; (ii) negotiation of definitive documentation
(iii) receipt of all requisite regulatory and other approvals in the United
States, Bermuda and the United Kingdom; (iv) due diligence by Englefield Capital
LLP, the proposed equity sponsor of the Management Team, which has entered into
an exclusive negotiation agreement with Trenwick, and (v) approval of any court
having jurisdiction over the above-referenced insolvency proceedings.

On August 20, 2003, Trenwick and its affiliates, LaSalle Re Holdings and
Trenwick America (collectively with LaSalle Re Holdings and Trenwick, the
"Debtors"), filed for protection from their creditors under chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code") with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). On that
same date, Trenwick and LaSalle Re Holdings were in the process of filing
proceedings in the Supreme Court of Bermuda known under Bermudian law as
"winding up". Trenwick and LaSalle Re Holdings will petition the Supreme Court
of Bermuda to issue an order appointing Joint Provisional Liquidators for
Trenwick and LaSalle Re Holdings and will request that deference be paid in the
"winding up" to the jurisdiction of the Bankruptcy Court and the Debtors'
restructuring efforts in accordance with the Bankruptcy Code. It is the
intention of the Debtors to implement the restructuring agreed to among the
Debtors and their creditor constituencies as discussed above through the
bankruptcy process.

The majority of the assets of, and claims against, the Trenwick subsidiaries lie
at the regulated insurance company subsidiaries, which are not subject to the
proceedings in the Bankruptcy Court or the Supreme Court of Bermuda.

In addition to the foregoing, at any time, one or more of the insurance
regulatory authorities having jurisdiction over Trenwick's insurance company
subsidiaries may commence voluntary or involuntary proceedings for the formal
supervision, rehabilitation or liquidation of such subsidiaries, or one or more
of the creditors of Trenwick or its subsidiaries may commence proceedings
against Trenwick or its unregulated subsidiaries seeking their liquidation.

The accompanying financial statements have been prepared assuming Trenwick will
continue as a going concern. As discussed above, Trenwick was unable to repay
certain senior notes by April 1, 2003 and collateralize, with cash or cash
equivalents, 60% of the outstanding letters of credit under its senior credit
facility by August 1, 2003 and is therefore in default with respect to the
senior notes and certain other indebtedness. Additionally, certain insurance
subsidiaries of Trenwick do not meet risk based capital levels or levels of
surplus required by various insurance regulations to which they are subject.
These matters raise substantial doubt about Trenwick's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.

In connection with the Trenwick/LaSalle business combination, Trenwick America
assumed, effective September 27, 2000, Trenwick Group Inc.'s obligations with
respect to $75 million aggregate principal amount of 6.70% senior notes (the
"Senior Notes"), which were initially due on April 1, 2003 and pursuant to an
amendment were extended to August 1, 2003. They are unsecured obligations and
rank senior in right of payment to all existing and future subordinated
indebtedness of Trenwick America. Interest on the Senior Notes is payable
semi-annually at a rate of 6.7%. In connection with the amendment that extended
the maturity date of the Senior


                                       30
<PAGE>

Notes from April 1, 2003 to August 1, 2003, interest payable through April 1,
2003, in the aggregate amount of $2.5 million, was paid. Trenwick was unable to
make payment of principal and interest on the Senior Notes on August 1, 2003 and
is therefore currently in default under the terms of the Senior Notes. As
discussed, Trenwick has entered into an agreement in principle to restructure
the Senior Notes in addition to its other outstanding indebtedness.

Trenwick America also assumed, effective September 27, 2000, Trenwick Group
Inc.'s $113.4 million 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 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 ("Chartwell")
in 1999, Trenwick Group Inc. became the successor obligor under Chartwell's
Contingent Interest Notes due June 30, 2006. Effective September 27, 2000,
Trenwick America 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 interest notes held by them, an aggregate of from $0 up to $55
million in contingent interest. The amount of contingent interest payable under
the contingent interest notes is dependent upon the level of unpaid claims and
claims expenses related to business written by Trenwick America's subsidiary,
INSCORP, prior to 1996. The contingent interest notes mature on June 30, 2006.
Trenwick America's failure to pay principal and interest on the Senior Notes
constituted an event of default with respect to the contingent interest notes
which would enable the trustee or the required amount of contingent interest
noteholders to accelerate the maturity of the contingent interest notes.

During the year ended December 31, 2002 and prior, Trenwick recorded significant
adverse development related to the subject business, and as a result, the
carrying value of the contingent interest notes at June 30, 2003 is equal to the
minimum principal value of $1 million plus accrued interest, which is the
present value of the amount expected to be paid at maturity. The contingent
interest notes will continue to accrue interest at a rate of 8% per year. The
contingent interest notes contain covenants which relate to the maintenance of
certain records and limitations on certain indebtedness. At June 30, 2003,
Trenwick was in compliance with these covenants.

Trenwick'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. As a result of the
continued deterioration of Trenwick's financial condition, its senior debt
ratings have been downgraded by Standard & Poor's Corporation to "D" and
withdrawn by Moody's Investors Service. Trenwick's ability to refinance its
outstanding debt obligations, as well as the cost of such borrowings, has been
materially adversely affected by these ratings downgrades and withdrawals.

Because Trenwick's operations are conducted through its operating subsidiaries,
Trenwick is dependent upon the ability of its operating subsidiaries to transfer
funds, principally in the form of cash dividends, tax reimbursements and other
statutorily permissible payments. In addition to general legal restrictions on
payments of dividends and other distributions to shareholders


                                       31
<PAGE>

applicable to all corporations, Trenwick's insurance subsidiaries are subject to
insurance laws and regulations in the jurisdictions in which they operate that,
among other things, restrict the amount of dividends and other distributions
that may be paid to their parent corporations without prior approval by the
insurance regulatory authorities. Moreover, Trenwick has entered into letter
agreements with the insurance departments of the states of Connecticut and New
York which restrict Trenwick America Re and INSCORP from taking certain actions
such as paying dividends or dispensing of assets. As previously discussed, the
December Amendments to Trenwick's letter of credit facility prohibit Trenwick
and its subsidiaries from declaring or paying any dividends (including on
Trenwick's common and preferred shares, the preferred shares of LaSalle Re
Holdings and the capital securities issued by Trenwick Capital Trust I). The
amendments also prohibit Trenwick from making certain payments without the
Banks' approval.

Series B Preferred Shares

On September 27, 2000, Trenwick assumed the benefits and obligations of LaSalle
Re Limited under a $100 million catastrophe equity put option. The catastrophe
equity put option was amended and restated as of January 1, 2001 and amended as
of January 25, 2002. As amended, the catastrophe equity put option enabled
Trenwick to raise up to $55 million of equity, through the issue of convertible
preferred shares to European Reinsurance Company of Zurich ("European Re"), a
subsidiary of Swiss Reinsurance Company, in the event there was a qualifying
catastrophic event or events occurring prior to January 1, 2002.

As a result of the terrorist attacks of September 11, 2001, LaSalle Re incurred
in excess of $140 million in catastrophe losses as defined under the catastrophe
equity put option agreement and Trenwick delivered notice of exercise of the
catastrophe equity put on March 28, 2002. On July 1, 2002, Trenwick commenced an
arbitration proceeding seeking $55 million in damages and other relief against
European Re. The claims arose out of European Re's failure to meet its
obligations under the catastrophe equity put. On September 6, 2002, the
catastrophe equity put option was amended and restated and the pending
arbitration proceedings were terminated. Under the terms of the second restated
agreement, European Re purchased 550,000 of Trenwick's Series B Cumulative
Perpetual Preferred Shares (the "Series B Shares") with a liquidation preference
of $100 per share for an aggregate purchase price of $40 million. The Series B
Shares bear cumulative dividends, payable quarterly in arrears, based upon the
Series B Shares' Standard & Poor's rating at LIBOR plus a margin. At March 31,
2003, the Series B Shares were rated "D" by Standard & Poor's, therefore the
current dividend rate is 6.0%. If the Standard & Poor's rating remains below
BBB- on the fifth anniversary, the factors adjust upward by an additional
0.50%.

The Series B Shares are convertible into common shares of Trenwick after five
years or upon the occurrence of certain "special conversion events" or the
failure of Trenwick to maintain certain levels of capital. On February 20, 2003,
Trenwick delivered a notice to European Re that Trenwick's GAAP Net Worth (as
defined in the Certificate of Designation, Preferences and Rights (the
"Certificate of Designation") of the Series B Shares) had fallen below $225
million. Trenwick's GAAP Net Worth did not equal or exceed $225 million during
the period from February 20, 2003 through April 21, 2003 (which is 60 days after
the date of notice). As a result, a Net Worth Conversion Event (as defined in
the Certificate of Designation) occurred on April 21, 2003, and the Series B
Shares are now convertible at the option of European Re into Trenwick common
shares upon no less than 60 trading days advance notice to Trenwick. European Re
has not delivered to Trenwick such a notice of conversion. As of December 31,
2002, the Series B Shares would be settled upon conversion with approximately
12.2 million common shares, or 33% of Trenwick's common shares, based on the
year end figures for 2002. Trenwick has been notified by European Re that
European Re believes Trenwick's calculation of the number of common shares to be
received upon conversion of the Series B Preferred Shares is


                                       32
<PAGE>

erroneous and that under European Re's interpretation of the documentation the
Series B Preferred Shares would have been entitled to convert into approximately
48.1 million shares, or 56.6% of the common shares, based on the year end
figures for 2002. Trenwick believes its calculation is correct but intends to
discuss this issue with European Re. If European Re converts its Series B
Preferred Shares, there would be substantial dilution to the holders of the
common shares, and this conversion could result in European Re obtaining control
of Trenwick, subject to compliance with applicable insurance law and regulation.

Accounting Standards

In January 2003, the FASB issued Interpretation No. ("FIN") 46, Consolidation of
Variable Interest Entities, which Trenwick intends to adopt on July 1, 2003. FIN
46's consolidation criteria are based on analysis of risks and rewards, not
control, and represent a significant and complex modification of previous
accounting principles. FIN 46 represents an accounting change, not a change in
the underlying economics of asset sales. Under its provisions, certain assets
previously sold to special purpose entities (SPEs) could be consolidated and, if
consolidated, any assets and liabilities now on the books related to those SPEs
would be removed. Because Trenwick America has not traditionally engaged in the
types of securitization transactions within the scope of FIN 46, management does
not believe adoption of the interpretation will impact future results.

                           FUTURE BUSINESS OPERATIONS

The future operations of Trenwick and its financial results are likely to differ
materially from those of 2002 and prior years as Trenwick has placed into runoff
several of its operations, from which a significant portion of its revenue in
2002 and prior years were derived. As described above in "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
Trenwick, Trenwick America and LaSalle Re Holdings on August 20, 2003 filed for
protection from their creditors under chapter 11 of the United States Bankruptcy
Code with the United States Bankruptcy Court for the District of Delaware and
Trenwick and LaSalle Re Holdings were in the process of filing proceedings in
the Supreme Court of Bermuda known under Bermudian law as "winding up."
Trenwick, Trenwick America and LaSalle Re Holdings will be operating under the
supervision of the Bankruptcy Court (and, in the case of Trenwick and LaSalle Re
Holdings, also under the Supreme Court of Bermuda), and, as a result, certain of
their expenditures will be subject to the approval of such court or courts, as
the case may be.

The result of the foregoing is that the future operations of Trenwick are likely
to consist substantially of the sale, or management in runoff, of some or all of
its existing insurance and reinsurance businesses including administration of
claims, regulatory reporting, settlement of reinsurance agreements (including
commutations thereof where appropriate), cash and investment management and
related matters. The costs involved in such operations are likely to differ
significantly from those of prior years, where a significant portion of the
operating costs related to underwriting, marketing and securing reinsurance for
new business. The reimbursement of costs as they relate directly to the
insurance entities themselves will be subject to review by regulatory
authorities which may challenge these costs, impose other restrictions with
respect to the runoff including the provision of an acceptable runoff plan and
retention of advisors who specialize in various aspects of runoff operation.
Adverse loss developments or weakness in reinsurance recoveries, among other
factors, could significantly and negatively impact the success of any runoff. It
is unlikely that any amounts will be available to the creditors or equity
holders of the direct and indirect parent companies of any regulated insurance
subsidiary of Trenwick until such time as the regulator having jurisdiction over
such subsidiary has been assured of the solvency of such entity, which may
require several years if achievable at all. It is possible that one or more of


                                       33
<PAGE>

Trenwick's insurance company subsidiaries may be placed under the control of the
regulatory body with jurisdiction over such entity, voluntarily or
involuntarily, through rehabilitation, liquidation or other proceedings.

                                  RISK FACTORS

You should carefully consider the risks described below regarding us and our
securities. The risks and uncertainties described below are not the only ones we
face. There may be additional risks and uncertainties. If any of the following
risks actually occur or continue to occur, our business, financial condition or
results of operations could be materially and adversely affected and the trading
price of our securities could decline further.

Our auditors have expressed doubt as to our ability to continue as a going
concern.

Our independent accountants, PricewaterhouseCoopers LLP, have stated, in their
audit report with respect to our financial statements as at and for the twelve
months ended December 31, 2002, that substantial doubt exists as to our ability
to continue as a going concern.

We are in default under our senior credit facility and our subsidiary Trenwick
America has defaulted on its Senior Notes. We have filed for protection under
chapter 11 of the United States Bankruptcy Code and are in the process of filing
"winding up" proceedings in the Supreme Court of Bermuda.

We currently have outstanding $182.5 million of letters of credit issued by the
banks under our credit facility. We are obligated to reimburse the banks for any
amounts drawn on these letters of credit, and for related fees and expenses. No
amounts have been drawn on the letters of credit to date. However, Trenwick
America was unable to make payment of principal and interest due on its Senior
Notes on August 1, 2003 and is therefore currently in default under the terms of
the Senior Notes. This default constituted an event of default under our letter
of credit facility and we are required under that facility to collateralize,
with cash or cash equivalents, 60% of the letters of credit. We are unable to
provide such security.

On August 20, 2003, we and our affiliates LaSalle Re Holdings and Trenwick
America Corporation filed for protection under chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware. On that same date, we and LaSalle Re Holdings were in the process of
filing proceedings in the Supreme Court of Bermuda known under Bermudian law as
"winding up." We and LaSalle Re Holdings will petition the Supreme Court of
Bermuda to issue an order appointing Joint Provisional Liquidators for us and
LaSalle Re Holdings and will request that deference be paid in the "winding up"
to the jurisdiction of the Bankruptcy Court and our restructuring efforts in
accordance with the Bankruptcy Code. It is our intention to implement the
restructuring agreed to among us, Trenwick America, LaSalle Re Holdings and our
and their creditor constituencies as discussed above through the bankruptcy
process.

Our common shares and the Series A Preferred Shares of LaSalle Re Holdings
Limited have been delisted and deregistered by the New York Stock Exchange

The New York Stock Exchange's application for removal from listing of our common
shares and the Series A Preferred Shares of our subsidiary LaSalle Re Holdings
was granted by the Securities and Exchange Commission by order dated April 29,
2003, and the removal from listing and registration became effective prior to
the opening of the New York Stock Exchange on April


                                       34
<PAGE>

30, 2003. Our common shares and the Series A Preferred Shares of LaSalle Re
Holdings were quoted on the Over-The-Counter (OTC) Bulletin Board beginning on
Tuesday, March 25, 2003.

In light of the significant developments and other factors referred to in this
Report, which have materially and adversely impacted Trenwick, its operations
and its future prospects, it is unlikely that the common shares of Trenwick will
realize significant value in the near term, if at all. As a result, it is
possible that a market will not continue in the common shares of Trenwick, in
which case the liquidity of the securities may be severely limited.

We are unable to pay dividends and will continue to be unable to do so for the
foreseeable future.

In connection with other actions being taken in the fourth quarter of 2002, on
November 7, 2002, our Board of Directors elected to suspend the payment of
dividends to holders of our common shares effective immediately and for an
indefinite period of time. In addition, our credit agreement has been amended to
prohibit us from paying dividends without the approval of our lenders, and we
are prohibited from paying dividends as the result of the deferral of dividend
payments on our Series A Preferred Shares, Series B Preferred Shares and the
capital securities of Trenwick America. We do not expect to be able to pay
dividends to holders of our common shares for the foreseeable future.

Covenants in our senior credit facility significantly limit our financial and
operational flexibility.

We have entered into many covenants in our senior credit facility and related
agreements that limit our ability to take certain actions without the consent of
the banks, including our ability to borrow money, to make particular types of
investments or other restricted payments (including dividend payments), to sell
our assets, or to merge or consolidate. These restrictions significantly limit
our financial and operational flexibility.

We have issued convertible preferred shares that may result in substantial
dilution to existing common shareholders and/or a change in control. We do not
have the ability to control settlement of these convertible preferred shares.

As a result of the September 11, 2001 terrorist attacks, LaSalle Re incurred
large catastrophe losses that enabled us to exercise our rights under a
catastrophe equity put option with European Reinsurance Company of Zurich, a
subsidiary of Swiss Reinsurance Company ("European Re"). In this transaction, we
issued Series B convertible preferred shares to European Re for a purchase price
of $40 million. These Series B shares are convertible into our common shares
upon the occurrence of certain events, including our failure to maintain a net
worth (as defined) under generally accepted accounting principles of $225
million. Our net worth is below $225 million, and a net worth conversion event
has occurred. European Re is able to convert the Series B Shares into common
shares upon not less than 60 trading days' notice to us, and in the event of
such conversion, substantial dilution to our existing common shareholders will
occur.

As of December 31, 2002, the Series B Shares would be settled upon conversion
with approximately 12.2 million common shares, or 33% of Trenwick's common
shares, based on the year end figures for 2002. We have recently been notified
by European Re that European Re believes our calculation of the number of common
shares to be received upon conversion of the Series B Preferred Shares is
erroneous and that under European Re's interpretation of the documentation the
Series B Preferred Shares would have been entitled to convert into approximately
48.1 million shares, or 56.6% of the common shares, based on the year end
figures


                                       35
<PAGE>

for 2002. We believe its calculation is correct but intend to discuss this issue
with European Re. If European Re converts its Series B Preferred Shares, there
would be substantial dilution to the holders of the common shares, and this
conversion could result in European Re obtaining control of Trenwick, subject to
compliance with applicable insurance law and regulation.

We are a holding company and substantially all of our assets are held in our
insurance company subsidiaries. These assets are generally unavailable to pay
the debts of the holding company and there is substantial uncertainty as to
whether we will ultimately receive any value from our insurance company
subsidiaries.

We are a holding company with intermediate holding companies between us and our
operating insurance company subsidiaries. Neither we, nor our intermediary
holding companies, have material assets other than direct or indirect ownership
of the stock of our operating subsidiaries. Our ability to meet our operating
expenses, as well as debt and securities obligations and those of our
subsidiaries and the ability to pay dividends will be dependent on the earnings
and cash flows of our subsidiaries and the ability of the subsidiaries to pay
dividends or to advance or repay funds to us. Payment of dividends and advances
and repayments from our operating insurance company subsidiaries are regulated
by state and foreign insurance laws and regulatory restrictions, including
minimum solvency and liquidity thresholds. We are required to maintain specified
minimum levels of capital and surplus and risk-based capital at our insurance
subsidiaries, which could restrict their ability to pay dividends, even if the
dividends were permitted by relevant insurance laws and regulations. We do not
expect the majority of our operating subsidiaries will be able to pay dividends
or advance or repay any funds to us in the foreseeable future, which would
prevent us from paying our operating expenses or making payments on our debt or
securities obligations.

We are in discussions with insurance regulators concerning capital impairment
and other issues relating to our insurance company subsidiaries, and these
regulators may institute supervision, rehabilitation, conservation or
liquidation proceedings with respect to these subsidiaries.

We have been engaged in discussions with the insurance regulators of the
jurisdictions in which our insurance company subsidiaries are domiciled. We have
been required to restrict our Connecticut and New York insurance company
subsidiaries from taking certain actions such as paying dividends or disposing
of assets, and we have been required to submit a plan of action to eliminate the
statutory capital impairment at our New York insurance company subsidiary.
Trenwick has also been notified by the New York Insurance Department ("NYID")
that, in the NYID's view, approximately $26 million in loans made to Trenwick
America by INSCORP in 2002 were in contravention of New York regulatory
requirements. As a result, INSCORP and Trenwick may be the subject of regulatory
action brought by the NYID. Each of these regulators, as well as the State of
North Dakota, may act independently of one another with respect to the insurance
company domiciled in its jurisdiction. The insolvency of any of the insurance
company subsidiaries or any action by an insurance regulator, such as the
commencement of voluntary or involuntary supervision, rehabilitation,
conservation or liquidation proceedings with respect to one of these companies,
could precipitate additional actions by the other insurance regulators. In the
event of any such proceedings, it is unlikely that the assets of the insurance
companies will be available to satisfy each others' liabilities, or the
liabilities of Trenwick.


                                       36
<PAGE>

Our financial strength ratings have been significantly downgraded or withdrawn
by Standard & Poor's, Moody's Investor Services and Fitch.

Our financial strength and other ratings have been downgraded significantly by
Standard & Poor's and Fitch and have been withdrawn by Moody's Investor
Services. These downgrades and withdrawal generally reflect the ratings
services' views that our business prospects and financial flexibility are very
limited and their substantial doubt as to our ability to restructure our senior
debt. In addition, these downgrades significantly and negatively affect our
ability to raise capital and to negotiate favorable terms in restructuring our
debt.

Several of the business lines from which we historically derived a significant
portion of our revenue have ceased to write new business and are in runoff.

We have placed four of our operating businesses, worldwide property catastrophe
reinsurance, international specialty insurance and reinsurance, United States
specialty program insurance and United States treaty reinsurance, into runoff.
Little or no new business is being written in these lines. These four lines
provided approximately 73% of our gross premiums written in 2002. Our objective
is to maximize the economic value of the runoff through effective claims
settlement, commutation of assumed obligations where appropriate, collection of
reinsurance recoverables and effective cash management. While it is possible
that some positive economic value may result over time from the runoff of these
operations, we do not expect them to contribute significantly to our revenue or
results of operations and there are significant uncertainties that could if
realized adversely affect our ability to continue a solvent runoff of these
operations. Trenwick has historically not operated in runoff and may not have
internal expertise, or may not be able to retain external support such as
experienced consultants, to do so effectively.

We do not have adequate capital to continue to support our Lloyd's operations
and if our proposed restructuring is not completed in the near future it is
likely that our Lloyd's operations will be placed into runoff.

We do not currently have sufficient capital to provide continued financial
support to permit us to continue to operate Syndicates 839 and 44 at Lloyd's.
Trenwick has entered into a letter of intent with respect to an agreement in
principle which includes the sale of substantially all of its Lloyd's operations
to a company controlled by the current members of management of Trenwick's
Lloyd's operations and with capital provided by the Management Team, third-party
investors and the Banks. In the event that we are unable to complete the
proposed restructuring or raise substitute capital or to transfer our ownership
to an entity with adequate financial strength to support the continued
operations, it is likely that Lloyd's will withdraw the authority of these
syndicates to continue to write business and we will place these syndicates in
runoff. There can be no assurance that there will be any proceeds derived from
Trenwick's Lloyd's operations in the event that they are placed in runoff.

Our ability to attract and retain key management personnel has been negatively
affected.

We have experienced the loss of several senior executive officers in the last
year. A number of executive positions at Trenwick and its subsidiaries,
including Trenwick's Chief Executive Officer and Chief Actuary positions, are
now being filled by consultants under short term arrangements. Our ability to
operate our business has been, and will continue to be, dependent on our ability
to retain the services of our existing key senior executive officers and to
attract and retain additional qualified personnel in the future as employees and
consultants. The loss of the services of any of our key executive officers or
the inability to hire and retain other highly qualified personnel in the future
could adversely affect our ability to conduct our business. Our


                                       37
<PAGE>

financial situation and that of our subsidiaries has accelerated turnover of our
experienced employees and has made it and likely will continue to make it
difficult to retain key employees.

Our reinsurers may not satisfy their obligations to us.

Our business model relied to a large extent on reinsurance to reduce our
underwriting risk. As of June 30, 2003, our reinsurance recoverable balance was
approximately $1.8 billion. Our subsidiaries are subject to credit risk with
respect to their reinsurers because the transfer of risk to a reinsurer does not
relieve the insurers of their liability to the insureds. In addition, reinsurers
may be unwilling to pay our insurance company subsidiaries even though they have
the financial resources and are contractually obligated to do so. Unfavorable
arbitration decisions or the failure of one or more of the reinsurers to honor
their obligations or make timely payments would impact our subsidiaries' cash
flow and could cause us to incur significant losses. In the event of the
rehabilitation, supervision, conservation or liquidation of any of our insurance
company subsidiaries, we may not be able to influence the outcome of the
collectibility of reinsurance recoverables, in that it will be the
responsibility of the regulators supervising such proceedings.

If actual claims exceed our loss reserves, our financial results could be
significantly adversely affected.

We establish loss reserves to cover our estimated liability for the payment of
all losses and loss expenses incurred with respect to premiums earned on the
policies that we write. We utilize actuarial models as well as historical
insurance industry loss development patterns to establish appropriate loss
reserves, as well as estimates of future trends in claims severity, frequency
and other factors. Establishing an appropriate level of loss reserves is an
inherently uncertain process. Accordingly, actual claims and claim expenses paid
will likely deviate, perhaps substantially, from the reserve estimates reflected
in our consolidated financial statements.

In 2002 we increased our loss reserves for unpaid claims and claims expenses by
$285.1 million. The reserve increases reflect a reassessment of our reserves in
light of recent reported loss activity trends across our major business groups.

Our results of operations and financial condition depend upon our ability to
assess accurately the potential losses associated with the risks that we insure
and reinsure. To the extent actual claims continue to exceed our expectations,
we will be required to immediately recognize the less favorable experience. This
could cause a material increase in our liabilities and a reduction in our
profitability, including an operating loss and reduction of capital in the
period in which such action occurs.

The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and legal, judicial, social and other environmental
conditions change, unexpected and unintended issues related to claims and
coverage may emerge. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the number or
size of claims. In some instances, these changes may not become apparent until
some time after we have issued insurance or reinsurance contracts that are
affected by the changes. As a result, the full extent of liability under our
insurance or reinsurance contracts may not be known for many years after a
contract is issued.


                                       38
<PAGE>

The regulatory system under which we operate, and potential changes thereto,
could have a material adverse effect on our business.

Our insurance and reinsurance subsidiaries may not be able to obtain or maintain
necessary licenses, permits, authorizations or accreditations in locales where
we currently engage in business, or may be able to do so only at significant
cost. In addition, we may not be able to comply fully with, or obtain
appropriate exemptions from, the wide variety of laws and regulations applicable
to insurance or reinsurance companies or holding companies. As a result of the
events of the past several months, we are presently in discussions with, or
subject to orders issued by, insurance regulators in all of the jurisdictions in
which we and our insurance company subsidiaries are domiciled. Our inability to
comply with or to obtain appropriate authorizations and/or exemptions under any
applicable laws, regulations or orders could result in further restrictions on
our ability to do business and could subject us to fines and other sanctions
including the ceasing of our ongoing operations.

Recent events may result in political, regulatory and industry initiatives which
could adversely affect our business.

The supply of insurance and reinsurance coverage has decreased due to withdrawal
of capacity and substantial reductions in capital resulting from, among other
things, the terrorist attacks of September 11, 2001. This tightening of supply
may result in governmental intervention in the insurance and reinsurance
markets, both in the United States and worldwide. For example, on November 26,
2002, the Terrorism Risk Insurance Act was enacted to ensure the availability of
insurance coverage for certain specific terrorist acts in the United States.
This law requires insurers writing certain lines of property and casualty
insurance to offer coverage against certain acts of terrorism causing damage
within the United States or to United States flagged vessels or aircraft. In
return, the law requires the federal government to indemnify such insurers for
90% of insured losses resulting from covered acts of terrorism, subject to a
premium-based deductible. The law expires automatically at the end of 2005.
Currently there is a great deal of uncertainty as to what effect the law will
have on the insurance industry. We are currently unable to predict the extent to
which the foregoing and other new initiatives may affect the demand for our
products or the risks which may be available for us to consider underwriting. At
the same time, threats of further terrorist attacks and the military initiatives
and political unrest in the Middle East and Asia have adversely affected general
economic, market and political conditions, increasing many of the risks
associated with the insurance markets worldwide.

The insurance and reinsurance business is historically cyclical, and we expect
to experience periods with excess underwriting capacity and unfavorable premium
rates.

Currently, only our Lloyd's operations continue to actively pursue new insurance
business. Historically, insurers and reinsurers have experienced significant
fluctuations in operating results due to competition, frequency of occurrence or
severity of catastrophic events, levels of capacity, general economic conditions
and other factors. The supply of insurance and reinsurance is related to
prevailing prices, the level of insured losses and the level of industry surplus
which, in turn, may fluctuate in response to changes in rates of return on
investments being earned in the insurance and reinsurance industry. As a result,
the property and casualty insurance and reinsurance industry historically has
been a cyclical industry characterized by periods of intense price competition
due to excessive underwriting capacity as well as periods when shortages of
capacity permitted favorable premium levels. Although premium levels for many
products have increased recently, the supply of insurance and reinsurance may
increase, either by capital provided by new entrants or by the commitment of
additional capital by existing insurers or reinsurers, which may cause prices to
decrease. Any of these factors could lead to a significant reduction in premium
rates, less favorable policy terms and fewer submissions for our


                                       39
<PAGE>

underwriting services. In addition to these considerations, changes in the
frequency and severity of losses suffered by insureds and insurers may affect
the cycles of the insurance and reinsurance business significantly, and we
expect to experience the effects of such cyclicality.

Applicable insurance laws may make it difficult to effect a change of control of
our company.

Before a person can acquire control of a U.S. insurance company, prior written
approval must be obtained from the insurance commissioner of the state where the
domestic insurer is domiciled. Prior to granting approval of an application to
acquire control of a domestic insurer, the state insurance commissioner will
consider such factors as the financial strength of the applicant, the integrity
and management of the applicant's board of directors and executive officers, the
acquiror's plans for the management of the applicant's board of directors and
executive officers, the acquiror's plans for the future operations of the
domestic insurer and any anti-competitive results that may arise from the
consummation of the acquisition of control. Generally, state statutes provide
that control over a domestic insurer is presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to vote, or holds
proxies representing, 10% or more of the voting securities of the domestic
insurer. Because a person acquiring 10% or more of our common shares would
indirectly control the same percentage of the stock of our U.S. insurance
company, the insurance change of control laws of Connecticut, New York and North
Dakota would likely apply to such a transaction.

U.S. persons who own our common shares may have more difficulty in protecting
their interests than U.S. persons who are shareholders of a U.S. corporation.

The Bermuda Companies Act, which applies to us, differs in certain material
respects from laws generally applicable to U.S. corporations and their
shareholders. Set forth below is a summary of certain significant provisions of
the Companies Act which includes, where relevant, information on modifications
thereto adopted pursuant to our bye-laws, applicable to us, which differ in
certain respects from provisions of Delaware corporate law. Because the
following statements are summaries, they do not discuss all aspects of Bermuda
law that may be relevant to us and our shareholders.

Interested Directors. Under Bermuda law and our bye-laws, a transaction entered
into by us, in which a director has an interest, will not be voidable by us, and
such director will not be liable to us for any profit realized pursuant to such
transaction, provided the nature of the interest is disclosed at the first
opportunity at a meeting of directors, or in writing to the directors. In
addition, our bye-laws allow a director to be taken into account in determining
whether a quorum is present and to vote on a transaction in which that director
has an interest following a declaration of the interest pursuant to the
Companies Act provided that the director is not disqualified from doing so by
the chairman of the meeting. Under Delaware law, such transaction would not be
voidable if:

      o The material facts as to such interested director's relationship or
      interests were disclosed or were known to the board of directors and the
      board of directors in good faith authorized the transaction by the
      affirmative vote of a majority of the disinterested directors;

      o Such material facts were disclosed or were known to the shareholders
      entitled to vote on such transaction and the transaction was specifically
      approved in good faith by vote of the majority of shares entitled to vote
      thereon; or


                                       40
<PAGE>

      o The transaction was fair as to the corporation as of the time it was
      authorized, approved or ratified.

Certain Transactions with Significant Shareholders. As a Bermuda company, we may
enter into certain business transactions with our significant shareholders,
including asset sales, in which a significant shareholder receives, or could
receive, a financial benefit that is greater than that received, or to be
received, by other shareholders with prior approval from our board of directors
but without obtaining prior approval from our shareholders.

Shareholders' Suits. The rights of shareholders under Bermuda law are not as
extensive as the rights of shareholders in many U.S. jurisdictions. Class
actions and derivative actions are generally not available to shareholders under
the laws of Bermuda. However, the Bermuda courts ordinarily would be expected to
follow English case law precedent, which would permit a shareholder to commence
an action in the name of the company to remedy a wrong done to the company where
an act is alleged to be beyond the corporate power of the company, is illegal or
would result in the violation of our memorandum of association or bye-laws.
Furthermore, courts would review acts that are alleged to constitute a fraud
against the minority shareholders or where an act requires the approval of a
greater percentage of our shareholders than actually approved it. The winning
party in such an action generally would be able to recover a portion of
attorneys' fees incurred in connection with such action. Our bye-laws provide
that shareholders waive all claims or rights of action that they might have,
individually or in the right of the company, against any director or officer for
any act or failure to act in the performance of such director's or officer's
duties, except with respect to any fraud or dishonesty of such director or
officer.

Indemnification of Directors and Officers. Under Bermuda law and our bye-laws,
we may indemnify our directors, officers or any other person appointed to a
committee of the board of directors (and their respective heirs, executors or
administrators) to the full extent permitted by law against all actions, costs,
charges, liabilities, loss, damage or expense incurred or sustained by such
person by reason of any act done, concurred in or omitted in the conduct of our
business or in the discharge of his/her duties; provided that such
indemnification shall not extend to any matter in which any of such persons is
found, in a final judgment or decree not subject to appeal, to have committed
fraud or dishonesty.

Trenwick is a Bermuda company and it may be difficult for you to enforce
judgments against it or its directors and executive officers.

We are incorporated pursuant to the laws of Bermuda and our business is based in
Bermuda. In addition, certain of our current and former directors and officers
may reside outside the United States, and all or a substantial portion of our
assets and the assets of such persons are located in jurisdictions outside the
United States. As such, it may be difficult or impossible to effect service of
process within the United States upon us or those persons or to recover against
us or them on judgments of U.S. courts, including judgments predicated upon
civil liability provisions of the U.S. federal securities laws. Further, no
claim may be brought in Bermuda against us or our directors and officers in the
first instance for violation of U.S. federal securities laws because these laws
have no extraterritorial jurisdiction under Bermuda law and do not have force of
law in Bermuda. A Bermuda court may, however, impose civil liability on us or
our directors and officers if the facts alleged in a complaint constitute or
give rise to a cause of action under Bermuda law.

Further, there is no treaty in effect between the United States and Bermuda
providing for the enforcement of judgments of U.S. courts, and there are grounds
upon which Bermuda courts may not enforce judgments of U.S. courts. Because
judgments of U.S. courts are not automatically enforceable in Bermuda, it may be
difficult for you to recover against us based upon such judgments.


                                       41
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information concerning market risk as
stated in Trenwick's 2002 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

(a) The Acting Chief Executive Officer and Chief Financial Officer of Trenwick
have evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of
1934, as amended) as of the end of the period covered by this Quarterly Report.
Based on that evaluation, such officers have concluded that Trenwick's
disclosure controls and procedures are effective as of the end of such period.

(b) There have been no changes during the period covered by this Quarterly
Report in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, Trenwick's internal
control over financial reporting.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 2. Changes in Securities and Use of Proceeds

      As discussed above in Part I, Item 2 -- "Management's Discussion and
      Analysis of Financial Condition and Results of Operations - Financings,
      Financing Capacity and Capitalization," the December 2002 amendments to
      Trenwick's credit agreement prohibit Trenwick from declaring or paying any
      dividends on its common shares.


                                       42
<PAGE>

Item 3. Defaults Upon Senior Securities

      Trenwick America, a wholly owned subsidiary of Trenwick, did not pay
      principal and interest on its 6.70% senior notes, due on August 1, 2003,
      which also created an event of default with respect to Trenwick's letter
      of credit facility and under certain other indebtedness of Trenwick.

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

      None.

Item 5. Other Information

      On May 5, 2003, Clement S. Dwyer, Jr. resigned as a member of Trenwick's
      Board of Directors.

Item 6. Exhibits and Reports on Form 8-K

      (a)   Exhibits

      10.1  Fifth Waiver to the Credit Agreement, dated as of March 21, 2003,
            among Trenwick America Corporation, Trenwick Holdings Limited,
            Trenwick UK Holdings Limited, the lending institutions from time to
            time party to the Credit Agreement, Wachovia Bank, National
            Association, Fleet National Bank and JPMorgan Chase Bank.
            Incorporated by reference to Exhibit 99.1 to the Company's Current
            Report on Form 8-K, filed on April 10, 2003. (File No. 1-16089)

      10.2  Eighth Amendment to the Holdings Guaranty, dated as of March 24,
            2003, among Trenwick Group Ltd. and the lending institutions party
            to the Credit Agreement. Incorporated by reference to Exhibit 99.2
            to the Company's Current Report on Form 8-K, filed on April 10,
            2003. (File No. 1-16089)

      10.3  Eighth Amendment and Waiver to the Credit Agreement, dated as of
            March 28, 2003, among Trenwick America Corporation, Trenwick
            Holdings Limited, Trenwick UK Holdings Limited, the lending
            institutions from time to time party to the Credit Agreement,
            Wachovia Bank, National Association, Fleet National Bank and
            JPMorgan Chase Bank. Incorporated by reference to Exhibit 99.3 to
            the Company's Current Report on Form 8-K, filed on April 10, 2003.
            (File No. 1-16089)

      10.4  Ninth Amendment to the Holdings Guaranty, dated as of March 28,
            2003, among Trenwick Group Ltd. and the lending institutions party
            to the Credit Agreement. Incorporated by reference to Exhibit 99.4
            to the Company's Current Report on Form 8-K, filed on April 10,
            2003. (File No. 1-16089)

      10.5  Ninth Amendment and Waiver to the Credit Agreement, dated as of
            April 8, 2003, among Trenwick America Corporation, Trenwick Holdings
            Limited, Trenwick UK Holdings Limited, the lending institutions from
            time to time party to the Credit Agreement, Wachovia Bank, National
            Association, Fleet National


                                       43
<PAGE>

            Bank and JPMorgan Chase Bank. Incorporated by reference to Exhibit
            99.5 to the Company's Current Report on Form 8-K, filed on April 10,
            2003. (File No. 1-16089)

      10.6  Tenth Amendment and Consent to the Holdings Guaranty, dated as of
            April 8, 2003, among Trenwick Group Ltd. and the lending
            institutions party to the Credit Agreement. Incorporated by
            reference to Exhibit 99.6 to the Company's Current Report on Form
            8-K, filed on April 10, 2003. (File No. 1-16089)

      10.7  Eleventh Amendment and Consent to the Holdings Guaranty, dated as of
            April 16, 2003, among Trenwick Group Ltd. and the lending
            institutions party to the Credit Agreement.

      10.8  Amendment No. 1 to the Rights Agreement, dated as of April 18, 2003,
            by and between Trenwick Group Ltd. and EquiServe Trust Company, N.A.
            (successor to First Chicago Trust Company of New York). Incorporated
            by Reference to Exhibit 99.1 to the Company's Current Report on Form
            8-K, filed on April 22, 2003. (File no. 1-16089)

      10.9  Agreement between the New York Insurance Department and The
            Insurance Corporation of New York dated May 5, 2003. Incorporated by
            reference to Exhibit 10.16 of the Company's Quarterly Report on Form
            10-Q, filed on May 14, 2003. (File no. 1-16089)

      10.10 Sixth Waiver to the Credit Agreement, dated as of July 16, 2003, by
            and among Trenwick America Corporation, Trenwick Holdings Limited,
            Trenwick UK Holdings Limited, the lending institutions from time to
            time party to the Credit Agreement, Wachovia Bank, National
            Association, as Syndication Agent, Fleet National Bank, as
            Documentation Agent, and JPMorgan Chase Bank, as Administrative
            Agent. Incorporated by Reference to Exhibit 99.1 to the Company's
            Current Report on Form 8-K, filed on July 18, 2003. (File no.
            1-16089)

      10.11 Third Consent to the Holdings Guaranty, dated as of July 16, 2003,
            by and among Trenwick Group Ltd. and the lending institutions from
            time to time party to the Credit Agreement. Incorporated by
            Reference to Exhibit 99.2 to the Company's Current Report on Form
            8-K, filed on July 18, 2003. (File no. 1-16089)

      10.12 Letter of Intent, dated as of August 6, 2003, by and among Trenwick
            and its subsidiaries, LaSalle Re Limited, Trenwick America and
            Trenwick Managing Agents Limited, the majority of the beneficial
            holders of the 6.70% Senior Notes of Trenwick America, the steering
            committee of the lending institutions that have issued letters of
            credit under a senior secured credit facility on behalf of certain
            subsidiaries of Trenwick in support of Trenwick's Lloyd's operations
            and a group composed of current members of management of Trenwicks
            Lloyd's operations. Incorporated by reference to Exhibit 99.2 to the
            Company's Current Report on Form 8-K, filed on August 18, 2003.
            (File no. 1-16089)

      31.1  Certification of Acting CEO Per Section 302 of the Sarbanes - Oxley
            Act


                                       44
<PAGE>

      31.2  Certification of CFO Per Section 302 of the Sarbanes- Oxley Act

      32.1  Certification of Acting CEO Per Section 906 of the Sarbanes- Oxley
            Act

            (This exhibit is intended to be furnished in accordance with
            regulation S-K item 601(b)(32)(ii) and shall not be deemed to be
            filed for purposes of section 18 of the Securities Exchange Act of
            1934, as amended, or incorporated by reference into any filing under
            the Securities Act of 1933, except as shall be expressly set forth
            by specific reference.)

      32.2  Certification of Acting CFO Per Section 906 of the Sarbanes-Oxley
            Act

            (This exhibit is intended to be furnished in accordance with
            regulation S-K item 601(b)(32)(ii) and shall not be deemed to be
            filed for purposes of section 18 of the Securities Exchange Act of
            1934, as amended, or incorporated by reference into any filing under
            the Securities Act of 1933, except as shall be expressly set forth
            by specific reference.)

      (b) Reports on Form 8-K

      Trenwick filed Current Reports on Form 8-K on the following dates during
      the second quarter of 2003:

      April 10, 2003, reporting (a) certain amendments to Trenwick's credit
      agreement and related guaranty, and a waiver agreement under Trenwick's
      credit agreement to provide for, among other things, waivers of potential
      covenant defaults and extension of a number of deadlines imposed under the
      credit agreement and related guaranty. (b) Trenwick's delivery of notice
      to the holder of Trenwick's Series B Cumulative Perpetual Preferred Shares
      that Trenwick's GAAP net worth had fallen below $225 million and that a
      Net Worth Conversion Event would occur on April 21, 2003 if Trenwick's
      GAAP net worth did not equal or exceed $225 million on or before such
      date, (c) certain risk-based capital (RBC) and statutory capital
      impairment issues relating to Trenwick's subsidiaries Trenwick America
      Reinsurance Corporation and The Insurance Corporation of New York, and
      discussions with the insurance departments of Connecticut and New York
      relating thereto, (d) the receipt by Trenwick of notice from the New York
      Stock Exchange of the potential suspension from trading and delisting of
      Trenwick's common shares and the Series A Preferred Shares of LaSalle Re
      Holdings Limited and (e) the contribution of the Oak Entities to LaSalle
      Re Limited.

      April 22, 2003, reporting an amendment to the Rights Agreement with
      Equiserve Trust Company.

      July 18, 2003, reporting a Sixth Waiver and Third Consent to Trenwick's
      credit agreement.

      August 18, 2003, reporting that Trenwick, Trenwick America, LaSalle Re
      Holdings Limited and Trenwick Managing Agents Limited had entered into a
      letter of intent, dated August 6, 2003, with respect to an agreement in
      principle on a long-term restructuring of Trenwick's debt obligations.


                                       45
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the 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 GROUP LTD.


Date: August 20, 2003                   By:    /s/  W. Marston Becker
                                        ----------------------------------------
                                        Name:  W. Marston Becker
                                        Title: Acting Chairman and
                                               Acting Chief Executive Officer


Date: August 20, 2003                   By:    /s/ Alan L. Hunte
                                        ----------------------------------------
                                        Name:  Alan L. Hunte
                                        Title: Executive Vice President and
                                               Chief Financial Officer


                                       46