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
September 30, 1996, or

                                  -------------

( ) TRANSITION  REPORT  PURSUANT  TO  SECTION  13 or 15(d) OF THE  SECURITIES
    EXCHANGE ACT OF 1934 for the transition period from ____ to _____.

For the Quarter Ended September 30, 1996    Commission file number 0-28188
                      ------------------                           ------- 
                                  -------------

                        Chartwell Re Holdings Corporation
             (Exact name of registrant as specified in its charter)

                                  -------------

           Delaware                                 06-1438493
-------------------------------                  ------------------
(State or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                  Identification No.)

    Four Stamford Plaza,
    P. O. Box 120043
    Stamford, Connecticut                             06912-0043
    ---------------------                             -----------
(Address of principal executive offices)            (zip code)

                                  -------------

       Registrant's telephone number, including area code (203) 705-2532
                                                          --------------
     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 the number of shares  outstanding of each of the issuer's  classes
of common stock as of the latest practicable date.

Common Stock - $1.00 par value                            100
------------------------------                            ---
    Description of Class                            Shares Outstanding
                                                    as of November 14, 1996
                                              (All shares are privately held, 
                                              and there is no public market
                                              for the Company's common shares)

<PAGE>

                        Chartwell Re Holdings Corporation


                               Index To Form 10-Q

PART I   FINANCIAL INFORMATION

Item 1 - Financial Statements                                           Page
                                                                        ----
   Condensed  Consolidated  Balance Sheets at September 30, 1996
   and December 31, 1995 .............................................   2

   Condensed Consolidated Statements of Operations for the three and
   nine month periods ended September 30, 1996 and 1995 ..............   3

   Condensed Consolidated Statements of Cash Flows for the nine
   month periods ended September 30, 1996 and 1995 ...................   4

   Notes to Condensed Consolidated Financial Statements ..............   5

Item 2 - Management's Discussion and Analysis of
         Financial Condition and Results of Operations...............    8

PART II  OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K............................   17

Signatures...........................................................   18


                                       1

<PAGE>
  PART I.   FINANCIAL INFORMATION
    ITEM 1 -  Financial Statements

               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES
                     Condensed Consolidated Balance Sheets
                             (Dollars in Thousands)

                                                    September 30, December 31,
                                                         1996         1995
                                                    ------------- ------------  
ASSETS:                                              (Unaudited)
      Investments:
        Fixed maturities:
          Held-to-maturity (market value
          September 30, 1996, $30,271; December 31,
          1995, $27,965).............................    $28,891       $26,691
          Available for sale (amortized cost
          September 30, 1996, $589,332; December 31,
          1995, $481,175)............................    576,459       489,107
        Other investments (cost September 30, 1996,
          $43,335; December 31, 1995, $33,862).......     44,915        33,837
      Cash and cash equivalents......................     63,735       152,507
                                                          ------       -------
          Total investments and cash.................    714,000       702,142
      Premiums in process of collection..............     97,057        73,620
      Reinsurance recoverable........................    191,976       195,434
      Prepaid reinsurance............................     23,915        18,212
      Deferred income taxes..........................     48,144        39,517
      Deferred policy acquisition costs..............     18,333        18,809
      Deposits ......................................     18,221        17,481
      Other assets...................................     54,158        55,132
                                                          ------        ------
          Total assets............................... $1,165,804    $1,120,347
                                                      ==========    ==========

    LIABILITIES:
      Loss and loss adjustment expenses..............   $736,267      $741,467
      Unearned premiums..............................     85,117        90,573
      Other reinsurance balances.....................     26,152         4,689
      Accrued expenses and other liabilities.........     29,152        20,190
      Long-term debt.................................     68,750        95,000
                                                          ------        ------
          Total liabilities..........................    945,438       951,919 
                                                         -------       -------

    COMMON STOCKHOLDER'S EQUITY:
      Common stock, par value $1.00 per share;
      authorized: 1,000 shares; issued and
      outstanding: 100shares ........................                         
      Additional paid-in capital.....................    217,866       169,320
      Net unrealized appreciation (depreciation)
      of investments ................................    (7,340)         5,219
      Foreign currency translation adjustment........         48             9
      Retained earnings (deficit)....................      9,792       (6,120)
                                                           -----       ------
          Total common stockholder's equity .........    210,366       168,428
                                                         -------       -------
          Total liabilities and stockholder's equity. $1,165,804    $1,120,347
                                                      ==========    ==========


            See notes to condensed consolidated financial statements.

                                       2

<PAGE>


               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES
             CHARTWELL RE CORPORATION AND SUBSIDIARIES (Predecessor)
                Condensed Consolidated Statements of Operations
                  (Dollars in Thousands, except share amounts)
                                   (Unaudited)

                                         Three Months Ended   Nine Months Ended
                                            September 30,       September 30,
                                           1996    1995       1996     1995
                                        -------- --------  --------  --------
                                               (Predecessor)      (Predecessor)
REVENUES:
  Premiums earned......................   $47,982  $25,988  $153,186   $87,355
  Net investment income................    11,675    5,375    32,967    14,743
  Net realized capital gains ..........        81      304     1,002     1,707
  Service and other revenue............     1,842      265     5,068       796
                                           ------   ------   -------    ------
    Total revenues.....................    61,580   31,932   192,223   104,601
                                           ------   ------   -------   -------


LOSSES AND EXPENSES INCURRED:
  Loss and loss adjustment expenses        34,579   18,899   110,593    63,712
  Policy acquisition costs.............    11,566    6,353    37,511    20,598
  Other expenses.......................     4,593    2,644    13,279     7,846
  Interest and amortization............     1,655    1,996     5,706     5,750
                                           ------   ------   -------    ------
    Total losses and expenses incurred.    52,393   29,892   167,089    97,906
                                           ------   ------   -------    ------

Income before income taxes and
   extraordinary item..................     9,187    2,040   25,134      6,695
Income tax.............................     2,744      577    7,347      2,152
                                           ------   ------   ------     ------
Net income before extraordinary item...     6,443    1,463   17,787      4,543
Extraordinary item, net of income tax..                      (1,874)
                                           ------   ------   ------     ------
Net income.............................    $6,443   $1,463  $15,913     $4,543
                                           ======   ======  =======     ======

            See notes to condensed consolidated financial statements.

                                        3

<PAGE>

               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES
             CHARTWELL RE CORPORATION AND SUBSIDIARIES (Predecessor)
                 Condensed Consolidated Statements of Cash Flows
                             (Dollars in Thousands)
                                   (Unaudited)

                                                      Chartwell Re  Chartwell Re
                                                         Holdings    Corporation
                                                       Corporation (Predecessor)

                                                          Nine Months Ended
                                                             September 30,
                                                            1996       1995
                                                        ----------  ----------
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net premiums collected.............................. $145,426      $59,154
    Ceded premiums paid.................................  (57,936)      (3,306)
    Net losses & LAE....................................  (96,906)     (33,113)
    Overhead expenses...................................  (10,792)      (7,769)
    Service and other revenue...........................    5,068          796
    Net income taxes paid ..............................   (2,247)      (2,043)
    Interest received on investments....................   32,407       14,712
    Interest paid.......................................   (7,662)      (7,220)
    Other, net..........................................    4,884          227
                                                          -------       ------
        Net cash provided by operating activities.......   12,242       21,438
                                                          -------       ------

  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of Held-to-maturity Securities............   (5,391)      (5,359)
    Purchases of Available-for-sale Securities.......... (326,143)    (237,505) 
    Maturities of Held-to-maturity Securities...........      675        3,730
    Maturities of Available-for-sale Securities.........   26,770          830 
    Sales of Available-for-sale Securities..............  183,022      204,627
                                                          -------      -------
        Net cash used in investing activities........... (121,067)     (33,677)
                                                          --------    --------

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Capital contribution from parent....................   48,545
    Redemption of Senior Notes..........................  (28,280)
    Other, net..........................................     (250)       (250)
                                                           ------       ------
        Net cash provided by (used in)
           financing activities ........................   20,015        (250)
                                                           ------       ------

    Effect of exchange rate on cash.....................       38           6
                                                           ------       ------

  Net decrease in cash and cash equivalents.............  (88,772)     (12,483)
  Cash and cash equivalents at beginning of year........  152,507       37,005
                                                          -------       ------
  Cash and cash equivalents at end of period............  $63,735     $ 24,522
                                                          =======     ========
 
  RECONCILIATION OF NET INCOME TO NET CASH
  PROVIDED BY OPERATING ACTIVITIES:
    Net income..........................................  $15,913      $4,543
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Extraordinary item ...............................    1,874
      Net realized capital gains........................   (1,002)     (1,677)
      Deferred policy acquisition costs.................      475      (1,428)
      Deferred income taxes.............................     (115)       (115)
      Unpaid loss and loss adjustment expenses..........   (5,199)     25,562
      Unearned premiums.................................   (5,456)      6,957
      Other reinsurance balances........................      108       3,968
      Reinsurance recoverable...........................   (2,467)      1,047
      Net change in receivables and payables............    8,574     (15,214)
      Other, net........................................     (463)     (2,205)
                                                            -----     --------
        Net cash provided by operating activities.......  $12,242     $21,438
                                                           ======     ========

           See notes to condensed consolidated financial statements.

                                       4
<PAGE>
              Notes to Condensed Consolidated Financial Statements
                               September 30, 1996
                                   (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

         The accompanying  unaudited  interim Condensed  Consolidated  Financial
Statements  of Chartwell Re Holdings  Corporation  ("Chartwell  Holdings" or the
"Company") have been prepared in accordance with generally  accepted  accounting
principles for interim financial information,  the instructions to Form 10-Q and
Article  10 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and notes required by generally accepted  accounting  principles for
complete  financial  statements.  In the opinion of management,  all adjustments
(consisting  of  normal  recurring  accruals)   considered  necessary  for  fair
presentation  have been included.  Operating  results for any interim period are
not  necessarily  indicative  of results that may be expected for the full year.
These  interim   statements   should  be  read  in  conjunction  with  the  1995
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-K as filed with the Securities and Exchange Commission.


NOTE 2 - PUBLIC STOCK OFFERING

         The Company's parent, Chartwell Re Corporation ("Chartwell"), completed
a public offering of 2,725,000 shares of common stock at $23.00 per share during
the first half of 1996.  The net proceeds to Chartwell  were $58.5 million after
deduction of  underwriting  discount and expenses.  Of the net  proceeds,  $48.5
million was contributed to the Company of which $20.0 million was contributed to
the statutory surplus of Chartwell Reinsurance Company ("Chartwell Reinsurance")
and $28.5  million was used to retire (the  "Redemption")  35% of the  Company's
outstanding  10.25%  Senior  Notes due 2004 (the  "Senior  Notes")  plus accrued
interest (See Note 3).

NOTE 3 - SENIOR NOTE REDEMPTION

         On April 8, 1996,  the  Company  redeemed  35% of the Senior  Notes for
approximately $28.3 million including the redemption premium.  Due to this early
extinguishment  of debt, the Company  recognized an  extraordinary  loss of $1.9
million net of  applicable  income taxes of  approximately  $1.0  million.  This
extraordinary  charge represents the redemption premium and 35% of the remaining
original debt issuance costs relating to the Senior Notes.

NOTE 4 - PRO FORMA DATA

         On December  13, 1995,  Piedmont  Management  Company Inc.  ("PMC") was
merged with and into Chartwell (the  "Merger"),  with Chartwell as the surviving
corporation.  The Merger has been  accounted  for under the  purchase  method of
accounting  effective  December 31, 1995. The results of operations for the nine
months ended September 30, 1996 include the results of PMC's former  subsidiary,
The Insurance  Corporation of New York  ("INSCORP")  (formerly,  The Reinsurance
Corporation of New York).

         The following  supplementary  consolidated income statement information
for the Company for the three and nine month  periods  ended  September 30, 1996
assumes the  Redemption  occurred on January 1, 1995.  The  information  for the
three and nine month  periods  ended  September  30, 1995 is presented as though
both the Merger and Redemption had occurred on January 1, 1995.





                                        5

<PAGE>


                              (Dollars in Thousands, except share amounts)
                              Three Months Ended          Nine Months Ended
                                September 30,               September 30,
                               1996          1995         1996        1995
                             ---------    ----------   ---------   ----------
Total revenues               $ 61,580     $ 68,911     $ 192,223   $ 216,116
Net income                   $  6,433     $(14,982)    $  18,282   $  (9,780)


         Since all common  shares of the  Company  are owned by  Chartwell,  net
income per common share is not considered meaningful and therefore not included.

NOTE 5 - RESERVE INDEMNIFICATION AGREEMENT

         On June 28, 1996,  the Company  received  $7.9 million as settlement of
the  receivable  arising  from  an   indemnification   agreement  (the  "Reserve
Indemnification")  between Chartwell and its former parent,  ReliaStar Financial
Corporation   ("RLR")  (formerly,   The  NWNL  Companies,   Inc.).  The  Reserve
Indemnification, which by its terms was scheduled to be settled as of the end of
1996,  was settled early by mutual  agreement  with RLR. The  settlement did not
affect operating results for the period.

NOTE 6 - NEW ACCOUNTING STANDARD

         In October  1995,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 123,  "Accounting for
Stock-Based  Compensation,"  which became  effective  for the Company  beginning
January 1, 1996.  SFAS No. 123  requires  expanded  disclosures  of  stock-based
compensation  arrangements  with employees and encourages (but does not require)
compensation  cost  to be  measured  based  on the  fair  value  of  the  equity
instrument awarded.  Companies are permitted,  however, to continue to apply APB
Opinion No. 25, which recognizes  compensation cost based on the intrinsic value
of the equity instrument awarded. The Company will continue to apply APB Opinion
No. 25 to its stock based compensation awards to employees and will disclose the
required pro forma effect on net income and earnings per share.

NOTE 7 - PENDING ACQUISITION OF ARCHER GROUP HOLDINGS

         On October  14,  1996,  Chartwell  announced  that  Chartwell  Holdings
Limited, a newly-formed,  indirect  wholly-owned  subsidiary of the Company, had
made a recommended  cash offer (the "Offer") of 92.5 pence for each  outstanding
ordinary  share  (each,  an  "Archer  Share")  of  Archer  Group  Holdings  plc,
("Archer").   The  Offer  values  the  existing   share  capital  of  Archer  at
approximately  35 million Pounds Sterling ($55.7 million at the exchange rate on
October 14, 1996, the date the Offer was announced, excluding approximately $4.7
million of expenses and the cost of purchasing all outstanding Archer Management
options).

         The Offer,  which will be financed from Chartwell's  existing resources
and a new credit  facility,  includes  a Loan Note  alternative  whereby  Archer
stockholders  may elect to receive 1 Pound  Sterling  Loan Note for each 1 Pound
Sterling of cash  consideration.  The Loan Notes,  which will be  guaranteed  by
First Union National Bank N.A., will pay interest  semi-annually at the rate per
annum  calculated to be one percent below Sterling LIBOR and will mature in June
2002. The Loan Notes will be transferable,  subject to certain restrictions, but
will not be listed on any stock exchange.

         On  November  5,  1996,  the Offer was  declared  unconditional  in all
respects,  and by the close of business on November 6, 1996,  valid  acceptances
had been received in respect of 36,892,147





                                        6

<PAGE>



Archer Shares  representing  approximately  97.5% of the issued share capital of
Archer.  In accordance  with the  requirements  of U.K. law regarding  statutory
acquisitions,  Chartwell  Holdings  Limited  will be  issuing  a notice to those
Archer  shareholders  who had not  accepted  the Offer by November 5, 1996 which
notice  shall state that it intends to exercise its rights to acquire all Archer
Shares still outstanding at the end of the notice period.

         The Offer remains open until  further  notice,  however,  the Loan Note
Alternative  will  close  on  November  19,1996.  It  is  anticipated  that  the
acquisition of Archer will be consummated by the end of November, 1996.







                                        7

<PAGE>



ITEM 2 - Management's Discussion and Analysis


               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations
                               September 30, 1996
                                   (Unaudited)



Overview

         The condensed consolidated financial statements include the accounts of
Chartwell  Holdings  and  its  principal   wholly-owned  operating  subsidiaries
Chartwell  Reinsurance,  Chartwell Advisers Limited  ("Chartwell  Advisers") and
INSCORP.   Chartwell   Reinsurance   underwrites  treaty   reinsurance   through
reinsurance  intermediaries  for  both  property  and  casualty  risks.  INSCORP
underwrites  a  book  of  select  specialty   property  and  casualty  insurance
underwritten  through program  administrators.  Chartwell Advisers is a licensed
Lloyd's of London  ("Lloyd's")  adviser which acts as the exclusive adviser to a
non-affiliated  company that was formed to underwrite at Lloyd's through a group
of wholly-owned  subsidiaries  that are limited  liability  corporate members of
certain select Lloyd's syndicates.

         On  December  13,  1995,  Chartwell,  the parent  company of  Chartwell
Holdings,  acquired  INSCORP  as a result of the  Merger.  Since the  Merger was
completed  in December  1995,  the  financial  statements  for the period  ended
September 30, 1995 do not include the operations of PMC or INSCORP.


Recent Developments:

         On October  14,  1996,  Chartwell  announced  that  Chartwell  Holdings
Limited had made an Offer of 92.5 pence for each  outstanding  Archer Share. The
Offer values the existing  share capital of Archer at  approximately  35 million
Pounds  Sterling  ($55.7  million at the exchange rate on October 14, 1996,  the
date the Offer was announced,  excluding  approximately $4.7 million of expenses
and the cost of purchasing all outstanding Archer management options).

         The Offer,  which will be financed from Chartwell's  existing resources
and a new credit  facility,  includes  a Loan Note  alternative  whereby  Archer
stockholders  may elect to receive 1 Pound  Sterling  Loan Note for each 1 Pound
Sterling of cash  consideration.  The Loan Notes,  which will be  guaranteed  by
First Union National Bank N.A., will pay interest  semi-annually at the rate per
annum  calculated to be one percent below Sterling LIBOR and will mature in June
2002. The Loan Notes will be transferable,  subject to certain restrictions, but
will not be listed on any stock exchange. The maximum amount of Loan Notes to be
issued will be limited to 26.3 million Pounds Sterling.

         On  November  5,  1996,  the Offer was  declared  unconditional  in all
respects,  and by the close of business on November 6, 1996,  Chartwell owned or
had  received  valid   acceptances  in  respect  of  36,982,147   Archer  Shares
representing  approximately  97.5% of the issued  share  capital  of Archer.  In
accordance with the requirements of U.K. law regarding  statutory  acquisitions,
Chartwell Holdings Limited will be issuing a notice to those Archer shareholders
who have not





                                        8

<PAGE>



accepted  the Offer,  which  notice  shall state that it intends to exercise its
rights to acquire all Archer Shares still  outstanding  at the end of the notice
period.

         The Offer remains open until  further  notice,  however,  the Loan Note
alternative  will  close  on  November  19,  1996.  It is  anticipated  that the
acquisition of Archer will be consummated by the end of November, 1996.

         Chartwell may, from time to time,  evaluate other opportunities for the
acquisition  of books of  business  or of  reinsurance  or  specialty  insurance
companies as a going concern,  for business  combinations with other reinsurance
or insurance  concerns  and for the  provision  of  insurance  related  advisory
services to third  parties.  There can be no assurance,  however,  that any such
business opportunities will arise.


Results of Operations - Nine Months Ended September 30, 1996 Compared With Nine
Months Ended September 30, 1995:

                  Revenues:  Total revenues for the nine months ended  September
30, 1996  increased 84% to $192.2  million,  compared to $104.6  million for the
comparable  period in 1995.  The  accompanying  table  summarizes  gross and net
premiums written,  earned premiums,  net investment income, net realized capital
gains, service and other revenue and total revenues for the periods indicated:



                                     Nine Months Ended
                                       September 30,
(Dollars in Thousands)              1996         1995
                                 ----------    ---------
Gross premiums written           $ 196,080     $ 95,681                        
                                 =========     =========                        
Net premiums written             $ 140,960     $ 92,376
                                 ==========    =========
Earned premiums                  $ 153,186     $ 87,355
Net investment income               32,967       14,743
Net realized capital gains           1,002        1,707
Service and other revenue            5,068          796
                                 ---------      --------
Total revenues                   $ 192,223      $104,601
                                 =========      ========


Gross  Premiums  Written;  Net  Premiums  Written;  Net Premiums  Earned.  Gross
premiums  written  for the nine  months  ended  September  30,  1996 were $196.1
million,  an increase of 105% compared to the same period in 1995.  The increase
in gross premiums  written was  attributable to business  acquired in the Merger
and continued growth with existing and new clients in the Regional and Specialty
Accounts client segments. Business emanating from the Merger consisted of: (a) a
seasoned  book of  specialty  insurance  business  which  is the  basis  for the
Controlled Source Insurance business, the Company's newest client segment; (b) a
marine  pool which is  included  with  Chartwell's  other  marine  and  aviation
business in the  Regional  Accounts  client  segment;  (c) certain of  INSCORP's
reinsurance  contracts  which met Chartwell's  underwriting  standards and which
were renewed in Chartwell Reinsurance and included primarily in the Regional and
Specialty  Accounts client  segments;  and (d) certain of INSCORP's  reinsurance
contracts  that  were  not  renewed  because  they  did  not  meet   Chartwell's
underwriting  standards and which are classified below as "INSCORP  Run-off." In
addition,  premiums in the Regional Accounts client segment increased because of
continuing  increases  in its book of  marine  and  general  aviation  business.
Specialty Accounts gross premiums written for





                                        9

<PAGE>



the nine months ended  September  30, 1996  increased  46.5% over the prior year
primarily due to continued  expansion of existing clients and development of new
clients.  Global Accounts  continues to focus on the international  market place
rather  than  the  large  domestic  insurance  market  place  where  competition
continues to stiffen.  The  distribution of the Company's gross premiums written
among its underwriting client segments was as follows:



                                    Nine Months Ended September 30,
                            --------------------------------------------------
(Dollars in Thousands)                1996                     1995
                            ----------------------  --------------------------
Specialty                                $ 65,992                     $ 45,046
Global:
   Domestic                  14,972                  16,729
   International             16,477                  13,145
                          ---------                --------
Subtotal Global                            31,449                       29,874
Regional:
   Property & Casualty       20,681                  13,278
   Marine & Aviation         24,177                   7,483
                          ---------                --------
Subtotal Regional                          44,858                       20,761
Controlled Source                          46,356                           -
INSCORP Run - off                           7,425                           -
                                         --------                     --------
                                         $196,080                     $ 95,681
                                         ========                     ========



           Net premiums  written for the first nine months of 1996 increased 53%
to $141.0  million,  compared to $92.4 million for the same period in 1995.  The
increase in net premiums  written was  principally  attributable  to the reasons
described above for the increase in gross premiums written.  Net premiums earned
for the nine months ended September 30, 1996 were $153.2 million, an increase of
$65.8  million or 75%  compared to the same period in 1995.  The increase in net
premiums earned was principally attributable to premium writings by INSCORP.

         Loss and Loss Adjustment  Expenses.  The Company's  principal  expense,
loss and loss adjustment  expenses  ("LAE") related to the settlement of claims,
was $110.6  million for the nine months  ended  September  30, 1996  compared to
$63.7 million for the  comparable  period in 1995.  The increase is  principally
attributable to the increase in earned  premiums as noted above.  Net losses and
LAE  expressed as a percentage  of net earned  premiums (the loss and LAE ratio)
improved  to 72.2% for the nine  months  ended  September  30,  1996 from  73.3%
recorded for the same period in 1995. The  improvement of 1.1 percentage  points
in the loss and LAE ratio for the nine months ended  September  30, 1996 was due
to an increase in the amount of  proportional  business  written by the Company,
which  generally has a lower loss and LAE ratio than excess of loss business but
modestly higher commissions.

         Policy   Acquisition  Costs.   Policy  acquisition  costs,   consisting
primarily of  commissions  paid to ceding  companies and brokerage  fees paid to
intermediaries, less commissions received on business ceded to other reinsurers,
were $37.5  million for the nine months ended  September  30, 1996,  compared to
$20.6 million for the same period in 1995. Policy acquisition costs expressed as
a percentage of net earned premiums (the acquisition expense ratio) increased to
24.5% from 23.6% in 1995. The increase is due both to the INSCORP Run-off and to
a  modestly  higher  commission  structure,  as noted  above,  for  proportional
business.

         Other  Expenses.   Other  expenses,   which  include  underwriting  and
administrative  expenses, were $13.3 million for the nine months ended September
30, 1996  compared to $7.8 million for the same period in 1995.  Other  expenses
(excluding the expenses associtaed with non-insurnace





                                       10

<PAGE>



operations)  expressed as a percentage of net earned premiums  decreased to 7.7%
for the nine  months  ended  September  30,  1996  compared to 8.0% for the same
period in 1995.


         Net Underwriting  Results.  The Company  incurred an underwriting  loss
(net premiums earned minus losses, LAE and underwriting expenses,  excluding the
expenses associated with non-insurance  operations) of $6.7 million for the nine
months  ended  September  30, 1996 as compared to an  underwriting  loss of $4.3
million  for the same  period in 1995.  The  combined  ratio for the nine months
ended  September  30,  1996  computed  in  accordance  with  generally  accepted
accounting principles ("GAAP") was 104.4% compared to 104.9% for the same period
in 1995. Although the loss ratio component improved to 72.2% for the nine months
ended  September 30, 1996 from 73.3%  recorded for the same period in 1995,  the
expense  ratio  increased to 32.2% for the nine months ended  September 30, 1996
from the 31.6 % recorded  for the same  period in 1995,  for the  reasons  noted
above.  On a pro forma basis,  as if the Merger occurred on January 1, 1995, the
expense  ratio  decreased to 32.2% for the nine months ended  September 30, 1996
compared to 34.0% for the same period in 1995, and the combined ratio  decreased
to 104.4% for the nine months ended  September  30, 1996  compared to 123.8% for
the same  period in 1995.  The pro forma loss and LAE ratio for the nine  months
ended September 30, 1995 includes a strengthening of INSCORP's net loss reserves
of $25.0 million for losses  incurred but not reported with respect to INSCORP's
business  written  in  prior  years.  This  reserve  strengthening,   which  was
undertaken  by PMC prior to the Merger,  increased  the Company's pro forma loss
and LAE ratio by 13.9 percentage points for the nine month period.

         Net  Investment  Income and Net Realized  Capital Gains  (Losses).  Net
investment  income  for the nine  months  ended  September  30,  1996 was  $33.0
million,  an increase of $18.2 million,  or 123%,  over the same period in 1995.
The improvement  reflects the increase in invested assets  principally  from the
net proceeds of Chartwell's  public stock offering and subsequent paydown to the
Company in the first half of 1996.  In addition,  on June 28, 1996,  the Company
received  $7.9  million in  settlement  of a Reserve  Indemnification  Agreement
between   Chartwell   and   ReliaStar   Financial   Corporation   (the  "Reserve
Indemnification Agreement") which further increased the Company's invested asset
base.  (See Note 5.) The average annual tax equivalent  yield on invested assets
before  investment  expenses  increased  to  6.78%  for the  nine  months  ended
September 30, 1996 compared to 6.48% for the same period in 1995.

         The Company  realized  net capital  gains of $1.0  million for the nine
months ended  September 30, 1996 compared to $1.7 million for the same period in
1995.  Both the 1996 and 1995 net capital  gains were  realized  principally  to
reposition  certain  sectors of the  portfolio  and to modify the  portfolio  to
improve credit quality without sacrificing yield.

         Service and Other Revenue.  Service and other revenue increased 537% to
$5.1  million  for the nine months  ended  September  30, 1996  compared to $0.8
million for the same  period in 1995.  The  improvement  reflects  increases  in
advisory fee revenues,  equity in the earnings of investee companies acquired in
the Merger and development of new non-risk bearing revenue sources.

         Interest and Amortization. Interest and amortization expenses were $5.7
million for the nine months ended  September  30, 1996  compared to $5.8 million
for the same period in 1995.  Interest and  amortization on the Company's 10.25%
Senior  Notes due 2004  (the"Senior  Notes") was $4.7 million for the first nine
months of 1996 and $5.8  million  for the  comparable  period in 1995.  The 1996
amount was  reduced  due to the  redemption  of 35% of the  principal  amount of
outstanding  Senior Notes on April 8, 1996.  Interest expense for the first nine
months of 1996 also includes $1.0 million of interest and  amortization  expense
on a $20.0 million bank facility established on the date of Merger.

                                       11

<PAGE>

         Income Before Income Taxes and Extraordinary Item.  Net income before
income taxes and  extraordinary  items  increased to $25.1  million for the nine
months ended  September  30, 1996 compared to $6.7 million for the same period
in 1995. The increase resulted primarily  from the  increase in earned premiums,
thefavorable  results  in both  loss  and  loss  adjustment  expense  and in 
other expenses,  and from the increases in net investment income and service and
other revenue.

         Income Tax Expense. The provision for Federal income taxes for the nine
months ended  September  30, 1996  increased to $7.3 million  compared with $2.2
million for the same period in 1995.  The effective tax rate  decreased to 29.2%
for the nine months ended  September  30, 1996 as compared to 32.1% for the same
period in 1995. The principal  factor in the decline below the statutory rate of
35% for both nine month periods was the benefit of investments in tax-advantaged
securities which increased in the 1996 period.

         Net Income Before  Extraordinary Item. Net income before  extraordinary
item increased to $17.8 million for the nine months ended  September 30, 1996 as
compared to $4.5 million for the same period in 1995. The largest  components of
this  increase  were  increases in net  investment  income and service and other
revenue as described above.

         Extraordinary  Item,  Net of Income Tax.  The Company  recognized a net
after-tax  extraordinary  expense  of $1.9  million  for the nine  months  ended
September 30, 1996 for the write-off of  unamortized  debt issuance  costs and a
redemption  premium  associated with the redemption of 35% the Senior Notes (See
Note 3.)

         Net Income.  The Company realized a net profit of $15.9 million for the
nine months ended  September 30, 1996 compared with a net profit of $4.5 million
for the comparable 1995 period because of the factors discussed above.


Results of Operations - Three Months Ended September 30, 1996 Compared With 
Three Months Ended September 30, 1995:

         Revenues:  Total revenues for the three months ended September 30, 1996
increased  93% to $61.6  million  compared to $31.9  million for the  comparable
period  in 1995.  The  accompanying  table  summarizes  gross  and net  premiums
written,  earned premiums,  net investment  income,  net realized capital gains,
service and other revenue and total revenues for the periods indicated:



                                      Three Months Ended
                                         September 30,
                                  1996                 1995
(Dollars in Thousands)        ------------        ------------
Gross premiums written          $ 63,613             $ 29,553
                               ============        =============
Net premiums written            $ 45,237             $ 28,095
                               ============        =============
Earned premiums                 $ 47,982             $ 25,988
Net investment income             11,675                5,375
Net realized capital gains            81                  304
Service and other revenue          1,842                  265
                               ------------         ------------
Total revenues                  $  61,580            $ 31,932
                               ============         ============

 
                                       12

<PAGE>



         Gross Premiums  Written;  Net Premiums  Written;  Net Premiums  Earned.
Gross premiums  written for the three months ended September 30, 1996 were $63.6
million,  an increase of 115% compared to the 1995 period. The increase in gross
premiums  written  was  principally  attributable  to  business  acquired in the
Merger,  as  described  previously.  The  distribution  of the  Company's  gross
premiums written among its underwriting client segments was as follows:



                                     Three Months Ended September 30,
                             --------------------------------------------
(Dollars in Thousands)              1996                   1995
                             ------------------    ----------------------
Specialty                             $ 23,163                  $ 14,836
Global:
   Domestic                  3,961                   4,814
   International             7,536                   3,783
                            ------                  ------
Subtotal Global                         11,497                     8,597
Regional:
   Property & Casualty       7,383                   3,486
   Marine & Aviation         7,621                   2,634
                            ------                  ------
Subtotal Regional                       15,004                     6,120
Controlled Source                       15,382                        -
INSCORP Run - off                       (1,433)                       -
                                       -------                    ------
                                      $ 63,613                  $ 29,553
                                      ========                  ========

          Net  premiums  written for the three months ended  September  30, 1996
increased 61% to $45.2 million  compared to $28.1 million for the same period in
1995. The increase in net premiums  written was principally  attributable to the
reasons  described  earlier in conjunction with the comparison of the results of
operations for the nine month periods.  Net premiums earned for the three months
ended  September 30, 1996 were $48.0 million,  an increase of $22.0 million,  or
85% compared to the same period in 1995. The increase in net premiums earned was
principally attributable to premium writings by INSCORP.


         Loss and Loss Adjustment  Expenses.  The Company's  principal  expense,
loss and LAE  related to the  settlement  of claims,  was $34.6  million for the
three  months ended  September  30,1996  compared to $19.0  million for the same
period in 1995.  The  increase is  principally  attributable  to the increase in
earned premiums as noted above.  Net losses and LAE expressed as a percentage of
net earned  premiums  (the loss and LAE ratio)  improved  to 72.1% for the three
months ended September 30, 1996 from 73.1% recorded for the comparable period in
1995.  The  improvement  in the loss and LAE ratio for the  three  months  ended
September 30, 1996 was due to an increase in the amount of proportional business
written  by the  Company,  which  generally  has a lower loss and LAE ratio than
excess of loss business.

         Policy   Acquisition  Costs.   Policy   acquisition  costs,   primarily
commissions paid to ceding  companies and brokerage fees paid to  intermediaries
less  commissions  received on business  ceded to other  reinsurers,  were $11.6
million for the three months ended  September  30, 1996 compared to $6.4 million
for the  comparable  period in 1995.  Policy  acquisition  costs  expressed as a
percentage of net earned premiums (the  acquisition  expense ratio) decreased to
24.1% for the three  months  ended  September  30,  1996 as compared to 24.4% in
1995.

         Other  Expenses.   Other  expenses,   which  include  underwriting  and
administrative  expenses, were $4.6 million for the three months ended September
30, 1996  compared  to $2.6  million for the  comparable  period in 1995.  Other
expenses  (excluding  the expenses  associated  with  non-insurance  operations)
expressed as a percentage of net earned premiums  decreased to 7.9% from 9.0% in
1995 primarily due to the high growth rate in net premiums  earned compared with
the growth rate in overhead expenses.



                                       13

<PAGE>




         Net Underwriting  Results.  The Company  incurred an underwriting  loss
(net premiums  earned minus losses,  LAE and  underwriting  expenses,  excluding
expenses  associated  with  non-insurance  operations) of $1.9 million for three
months  ended  September  30, 1996 as compared to an  underwriting  loss of $1.7
million for the  comparable  period in 1995.  The  combined  ratio for the three
months ended  September 30, 1996 period  computed in accordance  with  generally
accepted  accounting  principles  (GAAP) was 104.1%  compared  to 106.5% for the
comparable  period in 1995. The loss ratio  component  improved to 72.1% for the
three months ended  September 30, 1996  compared to 73.1%  recorded for the same
period in 1995,  and the expense ratio also improved to 32.0% from 33.4% in 1995
for the reasons noted above.  On a pro forma basis, as if the Merger occurred on
January 1, 1995,  the loss and LAE ratio  decreased to 72.1% compared to 126.9%,
the expense ratio  increased to 32.0% compared to 31.3%,  and the combined ratio
decreased  to 104.1%  compared  to 158.2%  for 1995.  The pro forma loss and LAE
ratio for the three months ended September 30, 1995 includes a strengthening  of
INSCORP's net loss reserves of $25.0 million  representing  a  strengthening  in
reserves for losses incurred but not reported with respect to INSCORP's business
written in prior years. This reserve stregnthening,  which was undertaken by PMC
prior to the Merger,  increased the Company's pro forma loss and loss adjustment
expense ratio by 44.3 percentage points for the three month period.

         Net  Investment  Income and Net Realized  Capital Gains  (Losses).  Net
investment  income  for the three  months  ended  September  30,  1996 was $11.7
million,  an increase of $6.3  million,  or 117% over the  comparable  period in
1995. The improvement reflects the increase in invested assets, principally from
the net proceeds of Chartwell's  public stock offering and subsequent paydown to
the Company in the first half of 1996. The average  annual tax equivalent  yield
on invested assets, before investment expenses, increased to 6.90% for the three
months  ended  September  30, 1996 period  compared to 6.40% for the  comparable
period in 1995.

         The Company  realized  only  $81,000 of net capital  gains in the three
months ended  September 30, 1996 compared to $0.3 million for the same period in
1995.  Trading  during the 1995 period was executed  principally  to  reposition
certain  sectors  of  the  portfolio  and  to  improve  credit  quality  without
sacrificing yield.

         Service  and Other  Revenue.  Service  and other  revenue for the three
months ended  September 30, 1996 was $1.8  million,  an increase of $1.6 million
compared to the same  period in 1995.  The  improvement  reflects  increases  in
advisory fee revenues,  equity in the earnings of investee companies acquired in
the Merger and development of new non-risk bearing revenue sources.

         Interest and Amortization. Interest and amortization expenses were $1.7
million for the three months ended  September  30, 1996 compared to $2.0 million
in the same  period in 1995 .  Interest  and  amortization  on the Senior  Notes
decreased to $1.3 million for the three months ended September 30, 1996 compared
to $2.0 million for the same period in 1995 because of the  redemption of 35% of
the principal amount of the Senior Notes on April 8, 1996.  Interest expense for
1996 also  includes $0.4 million of interest &  amortization  on a $20.0 million
bank facility established on the date of Merger.

         Income Before Income Taxes. Net income before income taxes increased to
$9.2 million for the three months ended  September 30, 1996 from $2.0 million in
the same period in 1995.  The increase  resulted  primarily from the increase in
earned premiums, the favorable results in both loss and loss adjustment expenses
and in other  underwriting  expenses,  and the  increase in both net  investment
income and service and other revenue.

         Income Tax Expense.  The provision for Federal income taxes for the
tree months ended September 30, 1996 increased to $2.7 million compared with 
$0.6 million for the same period in



                                       14

<PAGE>



1995.  The  effective tax rates were 29.9% and 28.3% for the three month periods
1996 and 1995,  respectively.  The  principal  factor in the  decline  below the
statutory  rate of 35% for  both  periods  was the  benefit  of  investments  in
tax-advantaged securities.  While the non-taxable investment income increased in
absolute dollars in the 1996 period,  it decreased as a percent of income before
income taxes.

         Net Income.  Net income  increased to $6.4 million for the three months
ended  September 30, 1996 from $1.5 million in the comparable  1995 period.  The
largest  components of this increase were increases in net investment income and
increased service and other revenue as described above.


Liquidity and Capital Resources:

           As a holding company, Chartwell Holdings' assets consist primarily of
the stock of its indirect  subsidiaries,  Chartwell  Reinsurance  and  Chartwell
Advisers, and it's indirect subsidiary,  INSCORP.  Chartwell Holdings' cash flow
therefore  depends  largely  on  dividends  and other  payments  from  Chartwell
Reinsurance.  Chartwell  Reinsurance's sources of funds consist primarily of net
premiums, reinsurance recoveries,  investment income and proceeds from sales and
redemptions of investments.  Funds are applied  primarily to payments of claims,
operating expenses and income taxes and to the purchase of investments,  largely
fixed income securities.  Cash and short-term investments are maintained for the
payment  of claims and  expenses.  Chartwell  Reinsurance's  ability to pay cash
dividends  to the  Company is  restricted  by law or subject to  approval of the
insurance  regulatory authority of Minnesota,  Chartwell  Reinsurance's state of
domicile. The Minnesota authority recognizes only statutory accounting practices
for the ability of an insurer to pay dividends to its shareholders.

         Under  the  insurance  laws  of the  State  of  Minnesota,  payment  of
dividends by Chartwell  Reinsurance in any year is limited to the greater of (i)
10% of capital and surplus as of the prior year end as  determined in accordance
with statutory accounting policies; or (ii) statutory net income from operations
of the next preceding year excluding realized capital gains. Notwithstanding the
foregoing, Chartwell Reinsurance may pay dividends only from its earned surplus,
also known as unassigned  funds.  The maximum  dividend that can be paid in 1996
without prior approval of the Minnesota Department of Commerce is $18.8 million.

         In  addition  to  the  sources  of  funds  described  above,  financing
activities  have also been a source of liquidity for Chartwell  Holdings and its
subsidiaries.  In the first half of 1996,  Chartwell completed a public offering
of  2,725,000  shares of common  stock at $23.00 per share.  The net proceeds to
Chartwell  were $58.5  million  after  deduction  of  underwriting  discount and
expenses.  Of the net proceeds,  $48.5 million was contributed to the Company of
which $20.0  million  was  contributed  to the  statutory  surplus of  Chartwell
Reinsurance  and $28.5  million  was used to retire 35% of the Senior  Notes due
2004 plus  accrued  interest  (See Note 3). This  redemption  reduced  Chartwell
Holdings'  annual expense for interest and  amortization  of debt issuance costs
under the Senior  Notes by $2.8 million per year.  As a result of the  offering,
Standard & Poor's  improved  its rating with respect to the Senior Notes to BBB-
from BB and Moody's improved its rating to Ba1 from Ba2.

         At  September  30,  1996,  the  carrying  value of  total  investments,
including cash and cash  equivalents,  increased by $11.9 million,  or 1.79%, to
$714.0  million  compared to  $702.1million  at December 31,  1995.  The primary
reasons for the increase were (i) the net cash  acquired in the public  offering
and subsequent paydown to Chartwell Holdings of $48.5 million (ii) positive cash
flow from operations of $12.2 million,  (iii) net realized capital gains of $1.0
million and (iv) cash flow from certain deposits of $0.5 million,  offset by (i)
$28.3  million  for the  retirement  of 35% of the  Senior  Notes  plus  accrued
interest,  (ii) the decline in the market value of the  investment  portfolio of
$19.2



                                       15

<PAGE>



million  pre-tax  and  (iii)  $2.8  million  of  amortization  of  fixed  income
securities and changes in unrealized  foreign  currency  exchange  values on the
fixed income portfolio.  At September 30, 1996, 96% of Chartwell Holdings' total
investments  (including  cash and cash  equivalents)  consisted  of fixed income
securities,  of which  99% were  rated "A" or  better  (or "A-1" for  commercial
paper) by Moody's.  The Company's fixed income securities portfolio at September
30, 1996 was comprised primarily of U.S. Treasury and government agency mortgage
pass-through securities, and corporate and municipal bonds.

         Stockholders'  equity  increased 31% to $220.4 million at September 30,
1996,  compared to $168.4  million at December 31, 1995 primarily as a result of
Chartwell's  public  common  stock  offering  described  above as well as record
earnings  during  1996.  Chartwell  Holdings  ratio of  long-term  debt to total
capitalization  was 23.8% as of September 30, 1996, an improvement from 36.1% at
December 31, 1995.

         Statutory surplus of Chartwell  Reinsurance  increased $41.9 million to
$230.0 million,  and the statutory surplus of INSCORP increased $17.9 million to
$93.4  million,  both  compared to the amounts at December 31,  1995.  Chartwell
Reinsurance and INSCORP,  the Company's  principal operating  subsidiaries,  are
rated A (Excellent) and A- (Excellent),  respectively,  by A.M. Best Company and
both  companies  are assigned an A- claims paying  ability  rating by Standard &
Poor's.






                                       16

<PAGE>


               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES


PART II         OTHER INFORMATION


     Item 6  - Exhibits and Reports on Form 8-K

      (a) Exhibits

           27 - Financial Data Schedule.

      (b) Reports on Form 8-K

              On October 18, 1996,  the Company filed a -urrent  Report on Form
          8-K with the Securities and Exchange Commission reporting under Item 5
          - Other  Events - the Company's Recommended  Cash Offer for all of the
          issued share capital of Archer Group Holdings, plc.

                                       17

<PAGE>
                                      
               CHARTWELL RE HOLDINGS CORPORATION AND SUBSIDIARIES


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.


                                    CHARTWELL RE HOLDINGS CORPORATION
                                    (Registrant)



                                    /s/ Charles E. Meyers
                                    --------------------------------------
                                    Charles E. Meyers
                                    Duly Authorized Officer, Senior Vice 
                                    President and Chief Financial Officer


Dated:  November 14, 1996

                                       18