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, 1998
         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, 1998         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) 705-2500
                                                   --------------
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 6, 1998
                                                (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-                                                            Page
                                                                           ----
        Condensed Consolidated Balance Sheets at September 30, 1998
           and December  31, 1997......................................       1
        Condensed Consolidated Statements of Operations for the three
           and nine months ended September 30, 1998 and 1997...........       2
        Condensed Consolidated Statements of Cash Flows for the
            nine months ended September 30, 1998 and 1997..............       3
        Notes to Condensed Consolidated Financial Statements...........       4

        Item 2 - Management's Discussion and Analysis of Financial
            Condition and Results of Operations........................       6

PART II OTHER INFORMATION
        Item 1 - Legal Proceedings.....................................      15

        Item 6 - Exhibits and Reports on Form 8-K .....................      15

        Signatures ....................................................      16














                                        i


<PAGE>


                                                          
PART I.  FINANCIAL INFORMATION
Item 1 - Financial Statements

                        CHARTWELL RE HOLDINGS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except share amounts)

                                            September 30,           December 31,
                                               1998                   1997
                                            --------------        --------------
ASSETS:                                       (Unaudited)
Investments:
   Fixed maturities:
    Held to maturity (market value 1998,
      $33,905; 1997, $37,421)...............$     32,387                 36,630
    Available for sale (amortized cost 1998,
      $654,463; 1997, $645,108).............     682,770                657,973
    Other investments.......................      31,125                 38,043
Cash and cash equivalents  .................      36,241                 29,534
                                            --------------        --------------
         Total investments and cash ........     782,523                762,180
Accrued investment income...................       9,923                 10,667
Premiums in process of collection  .........     177,111                126,537
Reinsurance recoverable: on paid losses.....      20,805                 34,502
                         on unpaid losses...     270,618                202,593
Prepaid reinsurance.........................      49,221                 29,929
Goodwill....................................      54,342                 54,259
Deferred policy acquisition costs...........      23,664                 26,100
Deferred income taxes.......................      22,357                 29,847
Deposits ...................................      19,951                 19,040
Other assets................................      74,817                 69,406
                                            --------------        --------------
                                           $   1,505,332          $   1,365,060
                                           ===============        ==============
LIABILITIES:
Loss and loss adjustment expenses..........$     853,631                788,240
Unearned premiums..........................      118,203                111,149
Other reinsurance balances.................       53,316                 33,723
Accrued expenses and other liabilities.....       59,546                 49,345
Long term debt.............................      109,252                104,126
                                           ---------------        --------------
        Total liabilities..................    1,193,948              1,086,583
                                           ---------------        --------------

COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST..........................        8,679                  9,425
                                           ---------------        --------------
STOCKHOLDER'S EQUITY
Common stock, par value $1.00 per share;
   authorized 1,000 shares; shares issued
   and outstanding 100......................
Additional paid-in capital..................     217,866                217,866
Net unrealized appreciation of investments..      16,892                  8,741
Foreign currency translation adjustment.....         777                    296
Retained earnings...........................      67,170                 42,149
                                           ---------------        --------------
         Total stockholder's equity.........     302,705                269,052
                                           ---------------        --------------
                                           $   1,505,332          $   1,365,060
                                           ===============        ==============

            See notes to condensed consolidated financial statements

                                       1



<PAGE>
<TABLE>

                            CHARTWELL RE HOLDINGS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (dollars in thousands, except share amounts)
                                   (Unaudited)
<CAPTION>

                                       Three Month Periods         Nine Month Periods
                                       Ended September 30,         Ended September 30,
                                     --------------------------    ---------------------
                                       1998            1997          1998        1997
                                     -----------    ----------    ----------  ----------
<S>                                    <C>           <C>           <C>         <C>  

UNDERWRITING OPERATIONS:
Premiums earned....................... $ 59,333      $ 59,002      $ 168,506   $ 194,677
Net investment income.................   11,808        10,665         35,448      31,289
Net realized capital gains (losses)...     (169)          112           (109)         63
                                     -------------   ----------    ----------- -----------
    Total revenues....................   70,972        69,779        203,845     226,029
                                     -------------   ----------    ----------- -----------
Loss and loss adjustment expenses.....   36,108        36,454        101,946     128,299
Policy acquisition costs..............   15,940        19,088         45,524      56,660
Other expenses........................    5,239         4,525         15,519      12,752
                                     -------------   ----------   ------------ -----------
    Total expenses....................   57,287        60,067        162,989     197,711
                                     -------------   ----------   ------------ -----------
Income before taxes - 
underwriting operations...............   13,685         9,712         40,856      28,318
                                     -------------   ----------   ------------ -----------

SERVICE OPERATIONS:
Service and other revenue.............   4,259          7,076         10,898      21,510
Equity in net earnings of investees...     403          1,097          2,474       3,273
Net investment income.................     345            236            682         880
                                     -------------   ----------   ------------ -----------
    Total revenues....................   5,007          8,409         14,054      25,663
                                     -------------   ----------   ------------ -----------
Other expenses........................   3,147          4,184          9,162      13,710
Amortization of goodwill..............     587            476          1,722       1,521
                                     -------------   ----------   ------------ -----------
    Total expenses....................   3,734          4,660         10,884      15,231
                                     -------------   ----------   ------------ -----------
Income before taxes -
service operations....................   1,273          3,749          3,170      10,432
                                     -------------   ----------   ------------ -----------

CORPORATE:
Net investment income.................      24              9             76         103
Net realized capital gains............     368              -            368           -
General and administrative expenses...     577            449          1,755       1,233
Interest expense......................   2,635          2,391          7,517       6,910
Amortization expense..................     221            135            636         370
                                     -------------   ----------   ------------ -----------
Loss before taxes - corporate.........  (3,041)        (2,966)        (9,464)     (8,410)
                                     -------------   ----------   ------------ -----------
Consolidated income before taxes and
    minority interest.................  11,917         10,495         34,562      30,340
Income tax expense....................   3,725          3,097         10,616       8,974
                                     -------------   ----------   ------------ -----------
Net income before minority interest...   8,192          7,398         23,946      21,366
Minority interest.....................     191           (173)         1,075        (518)
                                     -------------   ----------   ------------ -----------
Net income...........................$   8,383       $  7,225      $  25,021    $ 20,848
                                     =============   ==========   ============ ===========

            See notes to condensed consolidated financial statements.

                                       2



</TABLE>                                          
<PAGE>



                        CHARTWELL RE HOLDINGS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)
                                                         Nine Month Periods
                                                         Ended September 30,
                                                 -------------------------------
                                                        1998            1997
                                                 -------------     -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net premiums collected...........................$    99,919       $    129,852
Net losses and loss adjustment expenses paid......  (104,580)          (117,330)
Overhead expenses.................................   (18,018)           (17,083)
Service and other revenue, net of related
  expenses........................................      (245)            (4,111)
Net income taxes paid.............................    (5,772)            (2,093)
Interest received on investments..................    35,666             32,656
Interest paid.....................................    (8,336)            (8,267)
Other, net........................................    (2,727)            (5,898)
                                                 -------------     -------------
    Net cash provided by (used in)
    operating activities.........................     (4,093)             7,726
                                                 -------------     -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities........  (141,607)          (123,692)
Net cash acquired from investment in
   Oak Dedicated Two Limited......................     6,901                  -
Maturities of available for sale securities.......     8,075                  -
Maturities of held to maturity securities.........     2,430             18,860
Sales of available for sale securities............   130,598             81,547
                                                 -------------     -------------
    Net cash provided by (used in) 
    investing activities..........................     6,397            (23,285)
                                                 -------------     -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt........................     5,624                812
Repayment of long-term debt.......................      (241)                 -
                                                 -------------     -------------
    Net cash provided by financing activities.....     5,383                812
                                                 -------------     -------------
    Effect of exchange rate on cash...............      (980)            (1,276)
                                                 -------------     -------------
Net increase (decrease) in cash and
   cash equivalents...............................     6,707            (16,023)
Cash and cash equivalents at beginning of period..    29,534             50,343
                                                 -------------     -------------
Cash and cash equivalents at end of period.......$    36,241       $     34,320
                                                 =============     =============
RECONCILIATION OF NET INCOME TO NET CASH
    PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income.......................................$    25,021       $     20,848
Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
    Equity in net earnings of investees..........       (759)            (3,273)
    Net realized capital gains ..................       (259)               (63)
    Minority interest............................     (1,075)               518
    Deferred policy acquisition costs............      2,436             (9,786)
    Unpaid loss and loss adjustment expenses.....     65,391             18,045
    Unearned premiums............................      7,054             39,277
    Other reinsurance balances...................        301              3,198
    Reinsurance recoverable......................    (54,328)            (5,030)
    Net change in receivables and payables.......    (44,250)           (45,335)
    Other, net...................................     (3,625)           (10,673)
                                                 -------------     -------------
       Net cash provided by (used in)
       operating activities......................$    (4,093)      $      7,726
                                                 =============     =============

            See notes to condensed consolidated financial statements.




                                       3
<PAGE>

                               


                        CHARTWELL RE HOLDINGS CORPORATION
              Notes to Condensed Consolidated Financial Statements
                               September 30, 1998
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

         The accompanying  unaudited  interim Condensed  Consolidated  Financial
Statements  of  Chartwell  Re Holdings  Corporation  (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 1997  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.

         Certain account balances from the prior year's  presentation  have been
reclassified to conform to the current year's presentation.

NOTE 2 - NEW ACCOUNTING STANDARD

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive  Income"
("SFAS No.  130"),  which became  effective  for the Company on January 1, 1998.
SFAS No. 130  establishes  standards for reporting and display of  comprehensive
income and its components (revenues,  expenses,  gains and losses) in a full set
of general-purpose financial statements.  This statement requires that all items
that are required to be recognized under  accounting  standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same  prominence  as other  financial  statements.  It does  not  require  a
specific  format for that  financial  statement  but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement.

         The  components of the Company's  comprehensive  income are net income,
changes in foreign  currency  translation  adjustments and changes in unrealized
appreciation  of  investments.  Total  comprehensive  income for the three month
periods ended September 30, 1998 and 1997 was $13,276 and $12,690, respectively.
Total  comprehensive  income for the nine month periods ended September 30, 1998
and 1997 was $33,653 and $24,672, respectively.

NOTE 3 - CONTINGENCIES

         American  Eagle--In  1996 and early  1997,  the  Company  entered  into
certain assumption of liability  endorsements  ("ALEs") pursuant to an agreement
with American Eagle Insurance Company ("American Eagle"), which provided for the
assumption  of  certain  policy  liabilities  by the  Company in the event of an
insolvency of American Eagle. As part of such arrangements, the Company obtained
from American  Eagle a trust fund to  collateralize  any  potential  obligations
arising  out of the  issuance of the ALEs by the  Company.  On December 3, 1997,
American Eagle was placed in receivership by the Texas Department of Insurance.


                                       4

<PAGE>

         On June  16,  1998,  the  California  Insurance  Guarantee  Association
("CIGA") filed suit in the Superior Court of California,  County of Los Angeles,
against the Company's wholly-owned subsidiary,  The Insurance Corporation of New
York ("INSCORP"),  seeking,  among other things, a declaratory judgment that the
ALEs covered  claims  arising prior to the date upon which the ALEs were issued.
On September 1, 1998, the Superior Court of California  granted INSCORP's motion
to strike those portions of CIGA's complaint which sought a general  declaratory
judgment that all claims under  American  Eagle  policies with ALEs attached are
the obligation of INSCORP  rather than CIGA.  CIGA's claim is now solely related
to the specific American Eagle policy and accompanying ALE initially giving rise
to the dispute.

         The Company  believes,  and has been so advised by counsel handling the
case,  that it has a number of valid defenses to the litigation  pending against
it. Such case is, and will continue to be, vigorously  defended.  However, it is
not possible to predict the outcome of such case.  Litigation is subject to many
uncertainties,  and it is  possible  that such case  could be decided or settled
unfavorably.  The  Company  does not  believe  that an  unfavorable  decision or
settlement of such case would materially  adversely affect the Company's results
of operations or financial position.







                                       5
<PAGE>


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

Chartwell Re Holdings Corporation
         Chartwell Re Holdings  Corporation is an insurance holding company with
global  underwriting  and service  operations,  conducting  its  business in the
United  States  and  in the  Lloyd's  market  through  its  principal  operating
subsidiaries,  Chartwell  Reinsurance  Company  ("Chartwell  Reinsurance"),  The
Insurance  Corporation of New York  ("INSCORP")  and Chartwell  Managing  Agents
Limited  ("CMA").  Chartwell Re Holdings  Corporation and its  subsidiaries  are
collectively  referred to as the Company.  The Company was formed in 1995 to act
as  an  intermediate  level  holding  company  for  its  parent,   Chartwell  Re
Corporation,  a company  whose  common  stock is  traded  on the New York  Stock
Exchange.

Results of Operations - Nine Months Ended  September 30, 1998 Compared With Nine
Months Ended September 30, 1997:

         Revenues: Total revenues for the nine months ended  September 30, 1998
decreased 13.3% to $218.3 million, compared to $251.8 million for the comparable
period in 1997.

           The accompanying  table summarizes gross and net premiums written and
total revenues for the periods indicated:
                                                Nine Month Periods
                                                Ended September 30,
                                       -----------------------------------------
                                              1998                    1997
                                       -----------------        ----------------
                                                      (in thousands)

Gross premiums written                $          256,535    $          298,040
                                      ==================    ====================
Net premiums written                  $          157,640    $          220,760
                                      ==================    ====================
Premiums earned                       $          168,506    $          194,677
Net investment income                             36,206                32,272
Net realized capital gains                           259                    63
Service and other revenue                         10,898                21,510
Equity in net earnings of investees                2,474                 3,273
                                      -------------------   --------------------
Total Revenues                        $          218,343    $          251,795
                                      ===================   ====================


Underwriting Operations
         Gross Premiums  Written;  Net Premiums  Written;  Net Premiums  Earned.
Gross premiums  written for the nine months ended September 30, 1998 were $256.5
million,  a  decrease  of  13.9%  compared  to the  same  period  in  1997.  The
distribution of the Company's gross premiums written among its business segments
was as follows:

                                             Nine Month Periods
                                             Ended September 30,       % Change
                                          --------------------------  ----------
                                               1998         1997
                                          -------------   ----------
Gross Premiums Written from
    Reinsurance Operations                 $  128,681      $202,604      -36.5%
Gross Premiums Written from 
   Specialty Insurance Operations             127,854        95,436       34.0%
                                          -------------   ----------
                        Total                $256,535     $298,040       -13.9%
                                          =============   ==========


         Net  premiums  written for the nine  months  ended  September  30, 1998
decreased 28.6% to $157.6 million compared to $220.8 million for the same period
in 1997.  The  decrease  in gross  and net  premiums  written  from  reinsurance
operations  is  primarily  attributable  to the  non-renewal  of  several  large
treaties  written  in 1997.  Certain of the  treaties  were  non-renewed  at the
Company's  option  because the price fell below  levels at which the Company was
willing  to write  business,  and others  were not  renewed  because  the ceding
companies were directly affected by consolidation  activity in the industry. Pro
forma for the  elimination  of these  contracts,  gross  premiums  written  from
reinsurance  operations for the nine months ended September 30, 1998 were $116.0
million, a decrease of 19.4% from $143.9 million for the same period in 1997.

                                       6

<PAGE>

         The  decrease  in  gross  and net  premiums  written  from  reinsurance
operations is offset in part by the continued  growth of the  Controlled  Source
Insurance  business,  which increased 7.9% in gross premiums  written during the
nine months ended  September  30, 1998 from the same period in 1997,  as well as
the addition of premiums  from the Company's  two  dedicated  corporate  capital
vehicles  which  participate  on  syndicates  managed  by  CMA  (the  "Dedicated
Vehicles")  amounting  to $40.5  million  and $36.3  million  on a gross and net
basis,  respectively,  for the nine months ended  September 30, 1998 compared to
$14.5  million and $14.4  million for the nine months ended  September 30, 1997.
Net  premiums  earned for the nine months ended  September  30, 1998 were $168.5
million,  a decrease of 13.4%  compared to $194.7 million for the same period in
1997.

         Loss and Loss Adjustment  Expenses.  The Company's  principal  expense,
loss and loss adjustment  expenses  ("LAE") related to the settlement of claims,
was $101.9  million  for the nine  months  ended  September  30,  1998,  a 20.5%
decrease  compared to $128.3  million  for the  comparable  period in 1997.  The
decrease is  principally  attributable  to the decrease in net  premiums  earned
noted above and the decrease in the loss ratio noted  below.  Net losses and LAE
expressed  as a  percentage  of net  premiums  earned  (the loss and LAE  ratio)
improved  to 60.5% for the nine  months  ended  September  30,  1998 from  65.9%
recorded for the same period in 1997. The  improvement of 5.4 percentage  points
in the loss and LAE ratio for the nine  months  ended  September  30, 1998 was a
result  of a  change  in the mix of  business  as well  as the  benefits  of new
reinsurance  programs,  including aggregate excess of loss reinsurance treaties,
and the enhancement of existing reinsurance programs.

         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 $45.5  million for the nine months  ended  September  30, 1998  compared to
$56.7 million for the same period in 1997. Policy acquisition costs expressed as
a percentage of net premiums earned (the acquisition expense ratio) decreased to
27.0% from 29.1% for the same period in 1997.

         Other  Expenses.  Other expenses  related to  underwriting  operations,
which include underwriting and administrative  expenses,  were $15.5 million for
the nine months ended  September 30, 1998 compared to $12.8 million for the same
period in 1997. Other expenses  expressed as a percentage of net premiums earned
increased to 9.2% for the nine months ended  September 30, 1998 compared to 6.6%
for the same  period  in 1997  resulting  primarily  from the  reduced  level of
premium  volume and the  expenses  related  to  participation  by the  Dedicated
Vehicles on syndicates managed by CMA.

         Net Underwriting  Results. For the nine months ended September 30, 1998
the Company's net underwriting result (net premiums earned minus losses, LAE and
underwriting expenses) increased to a net gain of $5.5 million compared to a net
underwriting  loss of $3.0  million  for the same period in 1997.  The  combined
ratio for the nine months ended  September 30, 1998 computed in accordance  with
generally accepted  accounting  principles  improved to 96.7% compared to 101.6%
for the same period in 1997. Although the loss ratio component improved to 60.5%
for the nine months ended  September  30, 1998 from 65.9%  recorded for the same
period in 1997,  the  expense  ratio  increased  slightly  to 36.2% for the nine
months ended  September 30, 1998 from the 35.7%  recorded for the same period in
1997, for the reasons noted above.

                                       7

<PAGE>

Service Operations
         Revenue from service operations decreased to $14.1 million for the nine
months ended September 30, 1998 compared to $25.7 million for the same period in
1997,  principally  reflecting  a reduction  in profit  commissions  at CMA as a
result of competitive market conditions at Lloyd's.

Corporate
         Interest  and  amortization  expenses  were $8.2  million  for the nine
months ended  September 30, 1998 compared to $7.3 million for the same period in
1997.  The increase was due  principally to bank fees paid for letters of credit
used to support the Company's  underwriting  participation on syndicates managed
by CMA and an increase in variable  interest rates on debt denominated in pounds
sterling.

Consolidated
         Net  Investment  Income and Net Realized  Capital  Gains.  Consolidated
after-tax net investment  income,  exclusive of realized and unrealized  capital
gains, for the nine months ended September 30, 1998 was $25.7 million,  compared
to  $22.9  million  for the  same  period  in 1997.  The  carrying  value of the
Company's  invested assets and cash increased to $782.5 million at September 30,
1998 from $762.2  million at December 31, 1997  primarily  due to the  Company's
draw-down  on its  revolving  credit  facility,  changes in the market  value of
investments,  and net cash  acquired  from the  investment  in Oak Dedicated Two
Limited.  The  average  annual tax  equivalent  yield on invested  assets  after
investment  expenses decreased to 6.30% for nine months ended September 30, 1998
compared to 6.49% for the same period in 1997 reflecting the lower interest rate
environment.  The  Company's  pro  rata  share  of  investment  income  from the
Dedicated  Vehicles  is  excluded  from this  calculation  because  the  related
invested assets are not included in the Company's consolidated balance sheet.

         The Company  realized net capital gains of $259,000 for the nine months
ended  September  30, 1998 compared to net capital gains of $63,000 for the nine
months ended September 30, 1997.

         Income Before Income Taxes and Minority Interest.  Income before income
taxes and minority interest increased to $34.6 million for the nine months ended
September 30, 1998  compared to $30.3  million for the same period in 1997.  The
increase  resulted  primarily from the improvement in net  underwriting  results
discussed  above,  offset,  in part,  by the  reduction  in income from  service
operations.

         Income Tax Expense. The provision for Federal income taxes for the nine
months ended  September 30, 1998  increased to $10.6 million  compared with $9.0
million for the same period in 1997.  The effective tax rate was 30.7% and 29.6%
for the nine months ended  September 30, 1998 and 1997,  respectively.  For both
periods,  the  effective  rate is  below  the  statutory  rate of 35% due to the
benefit of investments in tax-advantaged securities.


                                       8

<PAGE>

         Net Income.  The Company realized a net profit of $25.0 million for the
nine months ended September 30, 1998 compared with a net profit of $20.8 million
for the comparable 1997 period because of the factors discussed above.

Results of  Operations - Three Months Ended  September  30, 1998  Compared  With
Three Months Ended September 30, 1997:

         Revenues:  Total revenues for the three months ended September 30, 1998
decreased  2.3% to $76.4  million, compared to $78.2 million for the comparable
period in 1997.

         The  accompanying  table  summarizes gross and net premiums written and
total revenues for the periods indicated:
                                                  Three Month Periods
                                                  Ended September 30,
                                          --------------------------------------
                                               1998                  1997
                                          ----------------       ---------------
                                                    (in thousands)
Gross premiums written                       $   87,870           $   104,425
                                          ================        ==============
Net premiums written                         $   56,112           $    74,498
                                          ================        ==============
Premiums earned                              $   59,333           $    59,002
Net investment income                            12,177                10,910
Net realized capital gains                          199                   112
Service and other revenue                         4,259                 7,076
Equity in net earnings of investees                 403                 1,097
                                          -------------------     --------------
Total Revenues                               $   76,371           $    78,197
                                          ===================     ==============
                                     

Underwriting Operations
         Gross Premiums  Written;  Net Premiums  Written;  Net Premiums  Earned.
Gross  premiums  written  for the third  quarter of 1998 were $87.9  million,  a
decrease of 15.9% compared to the same period in 1997. The  distribution  of the
Company's gross premiums written among its business segments was as follows:


                                            Three Month Periods
                                             Ended September 30,       % Change
                                          --------------------------  ----------
                                               1998         1997
                                          -------------   ----------
Gross Premiums Written from
    Reinsurance Operations                 $  44,051      $66,498      -33.8%
Gross Premiums Written from 
   Specialty Insurance Operations             43,819       37,927       15.5%
                                          -------------   ----------
                        Total                $87,870     $104,425      -15.9%
                                          =============   ==========

                                                             
         Net  premiums  written for the three months  ended  September  30, 1998
decreased  24.7% to $56.1 million  compared to $74.5 million for the same period
in 1997.  The  decrease  in gross  and net  premiums  written  from  reinsurance
operations  is  primarily  attributable  to the  non-renewal  of  several  large
treaties  written  in 1997.  Certain of the  treaties  were  non-renewed  at the
Company's  option  because the price fell below  levels at which the Company was
willing  to write  business,  and others  were not  renewed  because  the ceding
companies were directly affected by consolidation  activity in the industry. Pro
forma for the  elimination  of these  contracts,  gross  premiums  written  from
reinsurance  operations for the three months ended September 30, 1998 were $38.6
million, a decrease of 22.2% from $49.6 million for the same period in 1997.

                                       9

<PAGE>


         The decrease in both gross and net  premiums  written is offset in part
by the addition of premiums from the Dedicated  Vehicles which amounted to $17.8
million and $15.9 million on a gross and net basis, respectively,  for the third
quarter of 1998  compared to $6.3 million on a gross and net basis for the third
quarter of 1997.  Net premiums  earned for the three months ended  September 30,
1998 were $59.3  million,  an increase of 0.6% compared to $59.0 million for the
same period in 1997.

         Loss and Loss Adjustment  Expenses.  The Company's  principal  expense,
loss and LAE  related to the  settlement  of claims,  was $36.1  million for the
three months ended September 30, 1998, a 0.9% decrease compared to $36.5 million
for the comparable  period in 1997. The decrease is principally  attributable to
the  decrease in the loss ratio noted below.  Net losses and LAE  expressed as a
percentage of net premiums earned (the loss and LAE ratio) improved to 60.9% for
the three  months  ended  September  30, 1998 from 61.8%  recorded  for the same
period in 1997. The  improvement  of 0.9  percentage  points in the loss and LAE
ratio for the three months ended  September 30, 1998 was a result of a change in
the mix of  business  as  well  as the  benefits  of new  reinsurance  programs,
including aggregate excess of loss reinsurance treaties,  and the enhancement of
existing reinsurance programs.

         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 $15.9  million for the three months ended  September  30, 1998  compared to
$19.1 million for the same period in 1997. Policy acquisition costs expressed as
a percentage of net premiums earned (the acquisition expense ratio) decreased to
26.9% from 32.4% in the third quarter of 1997.

         Other  Expenses.  Other expenses  related to  underwriting  operations,
which include  underwriting and administrative  expenses,  were $5.2 million for
the three months ended  September 30, 1998 compared to $4.5 million for the same
period in 1997. Other expenses  expressed as a percentage of net premiums earned
increased to 8.8% for the three months ended September 30, 1998 compared to 7.7%
for the same period in 1997  resulting  primarily  from the expenses  related to
participation by the Dedicated Vehicles on syndicates managed by CMA.

         Net Underwriting Results. For the three months ended September 30, 1998
the Company's net underwriting result (net premiums earned minus losses, LAE and
underwriting expenses) increased to a net gain of $2.0 million compared to a net
underwriting  loss of $1.1  million  for the same period in 1997.  The  combined
ratio for the three months ended  September 30, 1998 computed in accordance with
generally accepted  accounting  principles  improved to 96.6% compared to 101.9%
for the same period in 1997. The loss ratio component  improved to 60.9% for the
three months ended September 30, 1998 from 61.8% recorded for the same period in
1997 and the  expense  ratio  decreased  to 35.7%  for the  three  months  ended
September 30, 1998 from the 40.1%  recorded for the same period in 1997, for the
reasons noted above.


                                       10

<PAGE>

Service Operations
         Revenue from service operations decreased to $5.0 million for the three
months ended  September 30, 1998 compared to $8.4 million for the same period in
1997,  principally  reflecting  a reduction  in profit  commissions  at CMA as a
result of competitive market conditions at Lloyd's.

Corporate
         Interest  and  amortization  expenses  were $2.9  million for the three
months ended  September 30, 1998 compared to $2.5 million for the same period in
1997.  The increase was due  principally to bank fees paid for letters of credit
used to support the Company's  underwriting  participation on syndicates managed
by CMA and an increase in variable  interest rates on debt denominated in pounds
sterling.

Consolidated
         Net  Investment  Income and Net Realized  Capital  Gains.  Consolidated
after-tax net investment  income,  exclusive of realized and unrealized  capital
gains, for the three months ended September 30, 1998 was $8.7 million,  compared
to $7.8 million for the same period in 1997. The carrying value of the Company's
invested  assets and cash increased to $782.5 million at September 30, 1998 from
$762.2 million at December 31, 1997 primarily due to the Company's  draw-down on
its revolving credit facility,  changes in the market value of investments,  and
net cash acquired from the investment in Oak Dedicated Two Limited.  The average
annual  tax  equivalent  yield on  invested  assets  after  investment  expenses
decreased to 6.26% for the third  quarter of 1998 compared to 6.68% for the same
period in 1997 reflecting the lower interest rate environment. The Company's pro
rata share of  investment  income from the  Dedicated  Vehicles is excluded from
this  calculation  because the related  invested  assets are not included in the
Company's consolidated balance sheet.

         The  Company  realized  net capital  gains of $199,000  for the quarter
ended September 30, 1998 compared to net capital gains of $112,000 for the three
months ended September 30, 1997.

         Income Before Income Taxes and Minority Interest.  Income before income
taxes and  minority  interest  increased  to $11.9  million for the three months
ended  September 30, 1998 compared to $10.5 million for the same period in 1997.
The increase resulted primarily from the improvement in net underwriting results
discussed  above,  offset,  in part,  by the  reduction  in income from  service
operations.

         Income Tax  Expense.  The  provision  for Federal  income taxes for the
three months ended  September 30, 1998  increased to $3.7 million  compared with
$3.1 million for the same period in 1997.  The  effective tax rate was 31.3% and
29.5% for the three months ended September 30, 1998 and 1997, respectively.  For
both periods,  the effective  rate is below the statutory rate of 35% due to the
benefit of investments in tax-advantaged securities.

         Net Income.  The Company  realized a net profit of $8.4 million for the
three months ended September 30, 1998 compared with a net profit of $7.2 million
for the comparable period in 1997 because of the factors discussed above.

Liquidity and Capital Resources
         As a holding  company,  the Company's  assets consist  primarily of the
stock  of its  direct  and  indirect  subsidiaries.  The  Company's  cash  flow,
therefore,  depends  largely  on  dividends  and other  statutorily  permissible
payments  from its  operating  subsidiaries  whose  principal  sources  of funds
consist 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.  No dividends have been
declared or paid by Chartwell Reinsurance, INSCORP or CMA in 1998.

                                       11
<PAGE>

         Cash used in operations  for the nine month period ended  September 30,
1998 was $4.1 million  compared to cash flow from operations of $7.7 million for
the nine months ended September 30, 1997.
         Sales of available for sale  investments  were $130.6 million and $81.5
million for the nine months  ended  September  30, 1998 and 1997,  respectively.
There was no unusual trading activity in either period.
         The   Company's    investment    portfolio    consists   primarily   of
investment-grade  fixed  maturity  debt  securities.   At  September  30,  1998,
approximately  91.4% of the bond  portfolio  was  rated A or better  ("A-1"  for
commercial paper) by Moody's. While uncertainties exist regarding interest rates
and  inflation,  the Company  attempts to minimize  such risks and  exposures by
balancing the duration of assets in its  investment  portfolio with the duration
of  insurance  and  reinsurance  liabilities.  The current  market  value of the
Company's  fixed  maturity  investments is not  necessarily  indicative of their
future  valuation.  The Company does not have any  investments in real estate or
high-yield  bonds  and  does  not have any  non-income  producing  fixed  income
investments.  The Company's fixed income  securities  portfolio at September 30,
1998 was comprised  primarily of U.S. Treasury and government  agency,  mortgage
pass-through securities and corporate and municipal bonds.
         Stockholder's  equity  increased approximately  12.5% to $302.7 million
at  September  30, 1998 from $269.1 million at December 31, 1997.
         The  Company's  outstanding  long-term  debt as of  September  30, 1998
consists of Senior Notes due 2004, Loan Notes and credit  facilities  agented by
First Union  National  Bank  ("First  Union").  As of September  30,  1998,  the
Company's  Loan  Notes  due June 2002  constituted  approximately  $5.7  million
(denominated in pounds sterling) of indebtedness and the Company had outstanding
$51.2 million of indebtedness  under the credit facilities with First Union. The
Company's ratio of long-term debt to total  capitalization at September 30, 1998
was 26.5% compared to 27.9% at December 31, 1997.
         The Company entered into an interest rate swap (the "Swap"), commencing
July 1, 1998, with First Union in connection with a portion of its  indebtedness
outstanding  under the First Union credit  facilities.  The Swap  exchanges  the
Company's  variable rate interest for fixed rate interest of 6.85% on a notional
principal  amount  of  $16,800,000  ((pound)10,280,000)  and will  terminate  on
December 31, 2002.

Year 2000 Compliance

         The Year 2000 issue is the result of computer  programs  being  written
using two digits rather than four to define the  applicable  year. The Company's
computer equipment,  software and devices with imbedded technology that are time
sensitive  may recognize a date using "00" as the year 1900 rather than the year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process transactions or engage in other normal business activities.

                                       12

<PAGE>

         The Company  believes that it has identified all  significant  computer
hardware and software  applications  and devices with  imbedded  time  sensitive
technology  that are employed by the Company in its operations that will require
modification to ensure Year 2000 Compliance.  The Company is using both internal
and external resources to test all significant computer systems and applications
and to make the  modifications  necessary for Year 2000 Compliance.  The testing
and modification  process,  which is proceeding on schedule, is 95% complete and
is expected to be fully completed by June 30, 1999. The testing and modification
process has not materially interfered with the Company's Information  Technology
operations or the operations of the Company generally.
         In addition,  the Company has contacted all of its significant business
partners and service vendors to determine their Year 2000 Compliance  readiness,
as well as the extent to which the Company is vulnerable to any third party Year
2000  issues.  However,  there can be no  guarantee  that the  systems  of other
companies on which the Company's systems rely will become Year 2000 compliant in
a timely  manner,  or that the  failure  by a third  party to  become  Year 2000
compliant would not have a material adverse effect on the Company.
         The Company is revising  its  existing  disaster  recovery  contingency
plans to address issues  specific to the Year 2000 problem.  These revisions are
expected to be completed by June 30, 1999. Such plans are intended to enable the
Company to  continue  to  operate  by  performing  certain  processes  manually,
changing vendors and repairing or replacing existing systems, where feasible.
         The total cost to the Company to test and modify all systems to be Year
2000  compliant  has  not  been,  and is not  expected  to be,  material  to its
financial  position or results of  operations  in any given year.  To date,  the
Company has budgeted $25,000 to accomplish its Year 2000 testing and remediation
goals  and   approximately  90%  of  the  amount  budgeted  has  been  expended.
Expenditures  to fund Year 2000 testing and  modification  have to date and will
continue to be funded from operating cash flows.
         The  anticipated  completion  dates  for Year 2000  compliance  and the
Company's  contingency  plans and the cost  estimates for the  completion of the
Company's Year 2000 compliance  program are based on management's best estimates
utilizing current data regarding  available  resources,  coordination with third
parties and other relevant  factors and  information  about systems  conversion.
However,  there can be no assurance that these  estimates will be achieved,  and
actual results could differ from the current plan.
         In  addition,  the  Company  may also  have  material  exposure  in its
property and casualty operations to claims related to the Year 2000 issue. It is
not yet  possible  to  determine  whether  such  claims  might  be made  against
insurance or reinsurance  contracts in which the Company participates or if such
claims will be held to have merit.
         Readers are cautioned that forward-looking statements contained in this
description of the Company's  treatment of the Year 2000 issue should be read in
conjunction with the Company's  disclosures  under the heading  "Cautionary Note
Regarding Forward-Looking Statements" below.

Cautionary Note Regarding Forward-Looking Statements

         This  Quarterly  Report on Form 10-Q  contains  statements  that may be
considered to be "forward-looking  statements" within the meaning of Section 27A
of the  Securities  Act of 1933, as amended,  and Section 21E of the  Securities
Exchange Act of 1934, as amended.

                                       13

<PAGE>

         Such statements may include, without limitation, insofar as they may be
considered  to  be  forward-looking   statements,   certain  statements  in  (i)
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Results  of  Operations  - Nine  Months  Ended  September  30,  1998
Compared With Nine Months Ended September 30, 1997" and "--Results of Operations
- Three  Months  Ended  September  30, 1998  Compared  With Three  Months  Ended
September 30, 1997"  concerning (A) certain  relationships  among gross premiums
written, net premiums written and net premiums earned and (B) the development of
reserves  in  respect  of  all  or a  portion  of the  Company's  insurance  and
reinsurance  business;  (ii) "Management's  Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" concerning
the  potential  effects  of certain  events on the  Company's  indebtedness  and
portfolios of fixed income and equity  instruments,  foreign currency  exposure,
derivatives   positions   and  certain   other  types  of   instruments;   (iii)
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Year 2000 Compliance"  concerning the costs and effects of Year 2000
compliance;  (iv) such other statements  contained in this Quarterly Report that
may be considered to be  forward-looking  statements;  and (v) variations of the
foregoing statements wherever they appear in this Quarterly Report.
         All  forward-looking  statements address matters that involve risks and
uncertainties.  Accordingly,  there are or will be important  factors that could
cause  actual  results  to  differ  materially  from  those  indicated  in  such
statements.  The Company believes that these include the following non-exclusive
factors:

    i.    the impact of changing market conditions on the Company's business 
          strategy;
    ii.   the effects of increased  competition on pricing,  coverage  terms,
          retention of customers and ability to attract new customers;
    iii.  greater severity or frequency of the types of large or catastrophic
          losses which the Company's subsidiaries insure or reinsure;
    iv.   faster or more adverse  loss  development  experience  than that on
          which  the  Company's   underwriting,   reserving  and   investment
          practices are based;
    v.    changes in the Company's retrocessional arrangements;
    vi.   developments  in global  financial  markets  which could  adversely
          affect the performance of the Company's investment portfolio;
    vii.  litigation, regulatory or tax developments which could adversely
          affect the Company's business;
    viii. risks associated with the introduction of new products and services;
          and
    ix.   the impact of mergers and acquisitions.

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

                                       14

<PAGE>


PART II  OTHER INFORMATION

         Item 1.  Legal Proceedings.

         Reference  is  made to Note 3,  "Contingencies,"  of the  Notes  to the
Condensed  Consolidated  Financial Statements included in Part I, Item 1 of this
report.

         Item 6  -    Exhibits and Reports on Form 8-K

                      (a)  Exhibits

                           27 - Financial Data Schedule

                      (b)  Reports on Form 8-K

                           None

                      (c)  Signatures














                                       15


<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.


                                      CHARTWELL RE HOLDINGS CORPORATION
                                                  (Registrant)



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











Dated: November 12, 1998


                                       16