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 March 31, 1997 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 March 31, 1997             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 May 15, 1997
                                                (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 March 31, 1997
             and December  31, 1996...............................           1
        Condensed Consolidated Statements of Operations for the three
                month periods ended March 31, 1997 and 1996........          2
        Condensed Consolidated Statements of Cash Flows for the
                three month periods ended March 31, 1997 and 1996...         3
        Notes to Condensed Consolidated Financial Statements.......          4

        Item 2 -
        Management's Discussion and Analysis of Financial Condition 
                and Results of Operations..........................          5

PART II OTHER INFORMATION
        Item 6 -
        Exhibits and Reports on Form 8-K ...........................        10
        Signatures .................................................        11







                                       i




<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

                        CHARTWELL RE HOLDINGS CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except share amounts)

                                                         March 31,  December 31,
ASSETS:                                                    1997        1996
                                                        ----------  ------------
Investments:                                            (Unaudited)
  Fixed maturities:
    Held to maturity (market value 1997,
    $38,261; 1996, $36,620)..........................  $   38,622     $  36,043
    Available for sale(amortized cost 1997,$604,564;                      
     1996, $609,368).................................     590,861       606,621
  Other investments..................................      31,239        30,896
Cash and cash equivalents............................      44,329        50,343
                                                       ----------     ----------
          Total investments and cash.................     705,051       723,903
Accrued investment income............................       8,676        10,529
Premiums in process of collection....................     103,482        86,351
Reinsurance recoverable: on paid losses..............      28,277        29,767
                         on unpaid losses............     184,778       172,377
Prepaid reinsurance..................................      29,287        21,733
Goodwill.............................................      49,881        52,609
Deferred policy acquisition costs....................      20,365        17,903
Deferred income taxes................................      46,217        42,160
Deposits.............................................      18,300        18,135
Other assets.........................................      66,659        69,757
                                                       ----------      ---------
                                                      $ 1,260,973    $1,245,224
                                                      ===========    ===========
LIABILITIES:                                            
Loss and loss adjustment expenses.................... $   758,203    $  747,858
Unearned premiums....................................      96,496        81,599
Other reinsurance balances...........................      23,622        15,085
Accrued expenses and other liabilities...............      36,375        51,763
Long term debt.......................................     107,730       107,297 
                                                          -------       ------- 
           Total liabilities.........................   1,022,426     1,003,602
                                                       ----------    -----------
COMMMITMENTS AND CONTINGENCIES                                                

MINORITY INTEREST                                           9,173         9,469
                                                       ----------     ----------
COMMON 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 depreciation of investments.........     (10,032)       (1,379)
  Foreign currency translation adjustment............         564         1,291
  Retained earnings..................................      20,976        14,375
                                                       ----------      ---------
          Total common stockholder's equity..........     229,374       232,153
                                                       ----------      ---------
                                                       $1,260,973    $1,245,224
                                                       ==========    ===========
  
            See notes to condensed consolidated financial statements.

                                       1

<PAGE>

                   CHARTWELL RE HOLDINGS CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (dollars in thousands)
                              (Unaudited)
                                                           Three Month Periods
                                                             Ended March 31,
                                                          ----------------------
                                                          1997            1996
                                                        --------        --------
UNDERWRITING OPERATIONS:
Premiums earned.......................................   $61,785        $56,243
Net investment income.................................     9,831         10,393
Net realized capital gains (losses)...................       (20)           832
                                                         -------         ------
    Total revenues....................................    71,596         67,468
                                                         -------         -------
Loss and loss adjustment expenses.....................    42,035         40,942
Policy acquisition costs..............................    17,120         14,176
Other expenses........................................     3,694          4,056
                                                         -------         -------
     Total expenses...................................    62,849         59,174
                                                         -------         -------
Income before taxes and minority interest -
   underwriting operations............................     8,747          8,294
                                                          ------         ------

SERVICE OPERATIONS:
Service and other revenue.............................     7,534            586
Equity in net earnings of investees...................     1,146            886
Net investment income.................................       248              2
                                                         -------         -------
     Total revenues...................................     8,928          1,474
                                                         -------         -------
Amortization of goodwill..............................       517             -
Other expenses........................................     4,878            313
                                                         -------         -------
     Total expenses...................................     5,395            313 
                                                         -------         ------ 
Income before taxes and minority interest -
   service operations.................................     3,533          1,161
                                                         -------         -------
CORPORATE:
Net investment income.................................        94            240
Net realized capital gains............................        -              89
General and administrative expenses...................       390               
Interest expense......................................     2,154          2,270
Amortization expense..................................       164             77
                                                          -------        -------
Loss before taxes and minority interest - corporate...    (2,614)        (2,018)
                                                          -------       --------
Consolidated income before taxes and minority interest.    9,666          7,437
Income tax expense....................................     2,799          2,144
                                                          -------       --------
Net income before minority interest...................     6,867          5,293
                                                         
Minority interest.....................................       189            -
                                                          -------       --------
Net Income............................................   $ 6,678        $ 5,293
                                                         ========       ========



            See notes to condensed consolidated financial statements.

                                       2
<PAGE>


                   CHARTWELL RE HOLDINGS CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)
                                                         Three Month Periods
                                                           Ended March 31,
                                                     ---------------------------
                                                      1997                 1996
                                                     ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net premiums collected......................   $ 41,854      $   39,083
        Net losses & loss adjustment expenses.......    (44,091)        (42,995)
        Overhead expenses...........................    (13,386)         (4,301)
        Service and other revenue...................      6,060           1,472
        Net income taxes paid.......................       (612)            (86)
        Interest received on investments............     11,654           9,342
        Interest paid...............................     (3,336)         (3,844)
        Other, net..................................     (4,694)          1,273
                                                       ---------       ---------
             Net cash used in operating activities.     (6,551)            (56)
                                                       ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
       Cost of investments acquired.................   (263,060)       (242,840)
       Proceeds from investment matured or repaid...      7,876           7,163
       Proceeds from investments sold...............    257,300         118,256
                                                       ---------       ---------
             Net cash provided by (used in)
             investing activities...................      2,116        (117,421)
                                                        -------        -------- 
CASH FLOWS FROM FINANCING ACTIVITIES:
     Capital contribution from Parent..............          -           20,000
     Issuance of long-term debt.....................      1,486               -
     Repayment of intercompany loan.................     (2,498)              -
     Other, net.....................................          -            (250)
                                                       ---------        --------
             Net cash provided by (used in) financing
             activities.............................     (1,012)         19,750
                                                       ---------        --------
                 Effect of exchange rate on cash....       (567)             30
                                                       ---------        --------
Net decrease in cash and cash equivalents...........     (6,014)        (97,697)
Cash and cash equivalents at beginning of year......     50,343         152,507
                                                       ---------        --------
Cash and cash equivalents at end of year............ $   44,329       $  54,810
                                                       =========      ==========
RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES:
    Net income...................................... $    6,678       $   5,293
    Adjustments to reconcile net income to net cash
      used in operating activities:
          Net realized capital (gains) losses.......         20            (921)
          Minority interest.........................        189              -
          Deferred policy acquisition costs.........     (2,462)            863
          Unpaid loss and loss adjustment expenses..     10,345          (1,378)
          Unearned premiums.........................     14,897          (5,108)
          Other reinsurance balances................        981             275
          Reinsurance recoverable...................    (10,911)           (657)
          Net change in receivables and payables....    (26,253)          3,951
          Other, net................................        (35)         (2,374)
                                                       ---------       ---------
                  Net cash used in operating
                    activities...................... $   (6,551)      $     (56)
                                                     ===========      ==========

            See notes to condensed consolidated financial statements.

                                       3

<PAGE>

                        CHARTWELL RE HOLDINGS CORPORATION
              Notes to Condensed Consolidated Financial Statements
                                 March 31, 1997
                                   (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

         The accompanying  unaudited  interim Condensed  Consolidated  Financial
Statements of Chartwell Re Holdings  Corporation  ("Chartwell" 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 1996  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- PRO FORMA DATA

         On November 19, 1996,  the Company's  parent,  Chartwell Re Corporation
("Chartwell Re"), acquired (the  "Acquisition")100%  of the outstanding stock of
Archer  Group  Holdings  plc  ("Archer   Holdings")  through  its  newly  formed
subsidiary,  Chartwell Holdings Limited.  The Acquisition has been accounted for
under the purchase method of accounting.

         The following pro forma consolidated  income statement  information for
the Company for the three months ended March 31, 1996 is presented as though the
Acquisition and the redemption of 35% of the Company's outstanding 10.25% Senior
Notes (the "Senior Notes") due 2004 had occurred on January 1, 1996.

                                     Three Months Ended     Three Months Ended
                                       March 31, 1997         March 31, 1996
                                           Actual               Pro forma   
                                      ----------------      ------------------- 
                                             (Dollars in thousands)
                                      ----------------      -------------------
        Total revenues                   $80,618                 $76,309
        Net income                       $ 6,678                 $ 6,094


                                       4
<PAGE>


ITEM 2 - Management's Discussion and Analysis


                        CHARTWELL RE HOLDINGS CORPORATION
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations
                                 March 31, 1997
                                   (Unaudited)

Overview
         Chartwell Re Holdings  Corporation  ("Chartwell" or the "Company") is a
holding  company which conducts  business  through its four principal  operating
subsidiaries,  Chartwell  Reinsurance  Company  ("Chartwell  Reinsurance"),  The
Insurance  Corporation  of New  York  ("INSCORP"),  Chartwell  Advisers  Limited
("Chartwell Advisers") and its recently acquired Lloyd's managing agency, Archer
Managing Agents Limited ("Archer"). Chartwell Reinsurance was founded in 1979 as
a  wholly-owned  subsidiary  of  Northwestern  National Life  Insurance  Company
("NWNL").  Chartwell was formed in 1995 to act as an intermediate  level holding
company for its parent,  Chartwell Re  Corporation  ("Chartwell  Re"), a company
whose common stock is traded on the New York Stock Exchange.
         Chartwell   Reinsurance    underwrites   treaty   reinsurance   through
reinsurance brokers for casualty and, to a lesser extent, property risks as well
as for marine and aviation risks. INSCORP writes property and casualty insurance
for  specialty  program  administrators.  Archer is one of the largest  managing
agencies in the  Lloyd's  marketplace  with  approximately  380  million  pounds
sterling  of  underwriting  capacity  for the 1997  Year of  Account.  Chartwell
Advisers  acts as the exclusive  advisor for  syndicate  selection to New London
Capital plc, a  non-affiliated  publicly  traded company formed to underwrite at
Lloyd's.
         Chartwell's  other  subsidiaries  include  Dakota  Specialty  Insurance
Company ("Dakota Specialty") and Drayton Company Limited.  Dakota Specialty is a
newly formed  subsidiary of Chartwell  whose  objective is to generate a book of
surplus lines  insurance.  Drayton Company Limited is not currently  writing new
business, and Chartwell is managing the resolution of Drayton's remaining claims
and assets in a controlled winding-up.
         As of March 31, 1997, Chartwell had total assets of almost $1.3 billion
and stockholders' equity of $229.4 million.  Chartwell  Reinsurance is rated "A"
(Excellent) by A.M. Best Company, Inc., an independent rating entity serving the
insurance  industry,  and both  INSCORP  and  Dakota  Specialty  are rated  "A-"
(Excellent) by A.M. Best. In addition,  Chartwell  Reinsurance  and INSCORP have
each been  assigned an A- claims paying  ability  rating by Standard and Poor's,
and the Company's  10 1/4% Senior Notes (the "Senior Notes") are rated BBB- by
Standard & Poor's and Ba1 by Moody's, respectively.

Results of  Operations - Three Months Ended March 31, 1997  Compared  With Three
Months Ended March 31, 1996:

         Revenues:  Total  revenues  for the three  months  ended March 31, 1997
increased 16% to $80.6  million,  compared to $69.3  million for the  comparable
period in 1996. The accompanying table summarizes gross and net premiums written
and total revenues for the periods indicated:

                                          Three months ended March 31
                                     ------------------------------------------
                                            1997                  1996
                                     ----------------      ------------------  
                                                  (in thousands)
Gross premiums written                  $96,676                  $68,564
                                        =======                  =======
Net premiums written                    $69,912                  $49,718
                                        =======                  =======
Premiums earned                         $61,785                  $56,243
Net investment income                    10,173                   10,635
Net realized capital gains (losses)         (20)                     921
Service and other revenue                 7,534                      586
Equity in net earnings of investees       1,146                      886
                                        -------                  -------
Total Revenue                           $80,618                  $69,271
                                        =======                  =======



                                       5

<PAGE>
Underwriting Operations
         Gross Premiums  Written;  Net Premiums  Written;  Net Premiums  Earned.
Gross  premiums  written  for the first  quarter  1997 were  $96.7  million,  an
increase of 41% compared to the same period in 1996. These increases reflect the
addition of a number of new programs in the Specialty  Accounts  client segment,
principally  in the  workers  compensation  line  of  business,  as  well as the
continued growth of the Controlled Source Insurance Accounts segment. Controlled
Source Insurance  Accounts grew as a result of the expansion of current programs
in response to market  opportunities.  The  distribution  of the Company's gross
premiums written among its underwriting client segments was as follows:

                                             Three Months Ended
                                          ----------------------
                                                 March 31,
                                            1997           1996
                                          ---------     ---------
                                               (in thousands)
          Reinsurance:   
              Specialty                     $47,302       $17,085
                                            -------       -------
              Global 
                 Domestic                     4,201         5,038
                 International                6,950         3,473
                                             11,151         8,511
                                             ------        ------
              Regional                        4,593         7,162
                                             ------        ------
              Marine & Aviation              10,988        11,164
                                             ------        ------
          Total Reinsurance                  74,034        43,922

              Controlled Source Insurance    22,642        17,177
              Run-Off (1)                         -         7,465
                                            --------     -------- 
                    TOTAL                   $96,676       $68,564
                                            =======       =======

         (1) The  run-off  is  reinsurance  business  previously  written by The
Reinsurance  Corporation of New York and not renewed into Chartwell  Reinsurance
Company.

         Specialty Accounts gross premiums written for the first three months of
1997 increased 177% over the prior year primarily due to a number of new workers
compensation  programs.  Global Accounts continues to focus on the international
marketplace and in particular on U. K. business.  Gross premiums  written in the
Regional  Accounts  client  segment  decreased 36% for the first three months of
1997 as compared with the same period last year primarily due to the non-renewal
of a specific  reinsurance  contract  because the ceding  company  retained  the
business after obtaining additional surplus.  Marine and Aviation gross premiums
written  were  essentially  flat for the three  months  ended  March 31, 1997 as
compared with 1996 reflecting the increasing competitive market pressures in the
marine  market in  particular.  Gross  premiums  through  March 31,  1997 in the
Controlled Source Insurance Accounts client segment increased 32% reflecting the
continued growth of existing programs as well as the premiums from a new program
added at the end of 1996.

         Net  premiums  written for the three month  period ended March 31, 1997
increased 41% to $69.9 million  compared to $49.7 million for the same period in
1996. 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 three month  period ended March 31, 1997 were $61.8  million,  an
increase of $5.5 million or 9.9% compared to the same period in 1996.

         Loss and Loss Adjustment  Expenses.  The Company's  principal  expense,
loss and loss adjustment  expenses  ("LAE") related to the settlement of claims,
was $42.0  million  for the three month  period  ended  March 31,  1997,  a 2.7%
increase  compared  to $40.9  million  for the  comparable  period in 1996.  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 68.0% for the three month period ended March 31,
1997 from 72.8%  recorded for the same period in 1996.  The  improvement  of 4.8
percentage  points in the loss and LAE ratio for the three  month  period  ended
March 31,  1997 was a result of the  positive  contributions  of the new workers
compensation  programs as well as the benefits of new  reinsurance  programs and
the enhancement of existing reinsurance programs at attractive terms.


                                       6
<PAGE>
         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 $17.1  million for the three month period ended March 31, 1997  compared to
$14.2 million for the same period in 1996. Policy acquisition costs expressed as
a percentage of net earned premiums (the acquisition expense ratio) increased to
27.7% from 25.2% in 1996.  The increase is due to a modestly  higher  commission
structure  for  proportional  business in general  and the workers  compensation
programs in particular.

         Other  Expenses.  Other expenses  related to  underwriting  operations,
which include  underwriting and administrative  expenses,  were $3.7 million for
the three month  period  ended March 31, 1997  compared to $4.1  million for the
same period in 1996.  Other  expenses  expressed as a  percentage  of net earned
premiums  decreased  to 6.0% for the three  month  period  ended  March 31, 1997
compared to 7.2% for the same period in 1996.

         Net Underwriting  Results.  The Company  incurred an underwriting  loss
(net  premiums  earned  minus  losses,  LAE and  underwriting  expenses) of $1.1
million  for the three  month  period  ended  March 31,  1997 as  compared to an
underwriting  loss of $2.9  million  for the same period in 1996.  The  combined
ratio for the three month  period  ended March 31, 1997  computed in  accordance
with GAAP was 101.7%  compared to 105.2% for the same  period in 1996.  Although
the loss ratio  component  improved  to 68.0% for the three month  period  ended
March 31,  1997 from 72.8%  recorded  for the same  period in 1996,  the expense
ratio  increased  to 33.7% for the three month  period ended March 31, 1997 from
the 32.4% recorded for the same period in 1996, for the reasons noted above.

Service Operations
         Revenue from service operations increased to $8.9 million for the three
month period  ended March 31, 1997  compared to $1.6 million for the same period
in 1996. The  improvement is due principally to the revenues from Archer as well
as increases in advisory  fee  revenues,  equity in the net earnings of investee
companies and development of new fee-based revenue sources during the quarter.

Corporate Operations
         Interest and Amortization. Interest and amortization expenses were $2.3
million for the three month periods ended March 31, 1997 and 1996.  Interest and
amortization  on the Senior  Notes was $1.3  million for the three month  period
ended March 31, 1997 and $2.0  million for the  comparable  period in 1996.  The
1997 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 three month
period  ended  March  31,  1997 also  included  $0.4  million  of  interest  and
amortization  expense  on a $20.0  million  bank  facility  and $0.6  million of
interest and amortization related to the acquisition of Archer.

Consolidated
         Net  Investment   Income  and  Net  Realized  Capital  Gains  (Losses).
Consolidated  after-tax  net  investment  income,   exclusive  of  realized  and
unrealized  capital gains and losses, for the three month period ended March 31,
1997 was $7.3 million, compared to $7.1 million for the same period in 1996. The
carrying value of the Company's  invested assets  decreased to $705.1 million at
March 31, 1997 from $723.9  million at December  31, 1996  primarily  due to the
decline in market  value of fixed  income  securities.  The  average  annual tax
equivalent  yield on invested  assets before  investment  expenses  increased to
6.34% for the first three  months of 1997  compared to 6.14% for the same period
in 1996.

         The Company  realized net capital losses of $20,000 for the first three
months of 1997 compared to net capital gains of $0.9 million for the same period
in 1996.  The 1996 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.

         Income  Before  Income Taxes and Minority  Interest.  Net income before
income taxes and minority interest increased to $9.7 million for the three month
period  ended  March 31, 1997  compared  to $7.4  million for the same period in
1996. The increase resulted primarily from the increase in earned premiums,  the
favorable  results  in both  loss  and  loss  adjustment  expense  and in  other
expenses, and from the increases in service and other revenue.


                                       7

<PAGE>
         Income Tax  Expense.  The  provision  for Federal  income taxes for the
three month period ended March 31, 1997 increased to $2.8 million  compared with
$2.1 million for the same period in 1996.  The  effective tax rate was 29.0% and
28.8% for the three month periods  ended March 31, 1997 and 1996,  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.

         Net Income.  The Company  realized a net profit of $6.7 million for the
three  month  period  ended March 31,  1997  compared  with a net profit of $5.3
million for the comparable 1996 period because of the factors discussed above.

Liquidity and Capital Resources
         As a holding company, Chartwell's assets consist primarily of the stock
of its direct and indirect subsidiaries, Chartwell Reinsurance, INSCORP, Archer,
and Chartwell  Advisers.  Chartwell's 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 stockholders.
         At March 31, 1997, the carrying value of total  investments,  including
cash and cash  equivalents,  decreased  by $18.9  million,  or 2.6%,  to  $705.1
million compared to $723.9 million at December 31, 1996. The primary reasons for
the decrease  were (i) negative cash flow from  operations of $6.6 million,  and
(ii) the  decline  in the  market  value of the  investment  portfolio  of $13.3
million pre-tax offset by (iii) $1.0 million of miscellaneous sources of cash.
         At March 31, 1997, 95.6% of Chartwell's  total  investments  (including
cash and cash equivalents) consisted of fixed income securities,  of which 95.2%
were  rated "A" or better  (or "A-1" for  commercial  paper) by  Moody's.  While
uncertainties  exist regarding interest rates and inflation,  Chartwell attempts
to minimize such risks and  exposures by balancing  the duration of  reinsurance
liabilities with the duration of assets in its investment portfolio. The current
market  value of  Chartwell's  fixed  maturity  investments  is not  necessarily
indicative of their future valuation. Chartwell 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 March 31,
1997 was comprised  primarily of U.S. Treasury and government  agency,  mortgage
pass-through securities, and corporate and municipal bonds.
         Statutory policyholders' surplus of Chartwell Reinsurance Company 
increased to $240.5 million at March 31, 1997 from $238.3 million at
December 31, 1996.
         In connection with the November 1996 acquisition of Archer, the Company
entered into new credit  facilities  with First Union National  Bank,  N.A. (the
"First Union Credit Facility").  The new credit facilities provide term loans of
approximately $50 million (a portion of which is denominated in pounds sterling)
and a $25.0 million revolving credit facility  (subsequently  increased to $35.0
million).
         At March 31, 1997, $45.2 million was outstanding  under the First Union
Credit  Facility.  In  addition,  at March 31,  1997,  $9.2  million was used to
guarantee the loan notes and $20.3 million was used to secure letters of credit.

         Chartwell is largely  dependent  upon  receipt of  dividends  and other
statutorily  permissible payments from its subsidiaries to meet its obligations,
including  the  obligation to pay interest and principal on the Senior Notes and
under  the new  credit  facilities.  Further,  dividend  payments  by  Chartwell
Reinsurance  and INSCORP  are subject to limits  under the laws of the States of
Minnesota and New York,  respectively.  Under the  applicable  provisions of the
insurance holding company laws of the State of Minnesota,  Chartwell Reinsurance
may,  upon five days notice to the  Commissioner  following the  declaration  of
dividends to stockholders, and upon at least ten days notice to the Commissioner
prior to dividend payments, pay dividends to the Company without the approval of
the  Commissioner,  unless such  dividends,  together with other  dividends paid


                                       8

<PAGE>

within the preceding  twelve months,  exceed the greater of (i) 10% of Chartwell
Reinsurance's policyholders' surplus as of the end of the prior calendar year or
(ii) Chartwell  Reinsurance's  statutory net income,  excluding realized capital
gains,  for the prior  calendar  year.  Any  dividend  in  excess of the  amount
determined  pursuant  to the  foregoing  formula  would be  characterized  as an
"extraordinary  dividend"  requiring the prior approval of the Commissioner.  In
any case,  the maximum  amount of  dividends  Chartwell  Reinsurance  may pay is
limited to its earned  surplus,  also known as unassigned  funds. As of December
31, 1996, Chartwell Reinsurance reported unassigned funds in the amount of $54.5
million.  Up to $23.8 million is available  under the foregoing  formula for the
payment of dividends by Chartwell  Reinsurance  without  regulatory  approval in
1997. Chartwell  Reinsurance paid Chartwell no dividends in the first quarter of
1997.  Under New York law, which is applicable to INSCORP,  the maximum ordinary
dividend  payable  in any  twelve  month  period  without  the  approval  of the
Superintendent may not exceed the lesser of (a) 10% of policyholders  surplus as
shown on the  company's  last  annual  statement  or any more  recent  quarterly
statement or (b) the  company's  adjusted net  investment  income.  Adjusted net
investment  income is defined  as net  investment  income for the twelve  months
preceding  the  declaration  of the  dividend  plus the  excess,  if any, of net
investment  income  over  dividends  declared or  distributed  during the period
commencing  thirty-six  months prior to the  declaration or  distribution of the
current  dividend and ending twelve months prior thereto.  In any case, New York
law permits the payment of an ordinary  dividend by an insurer or reinsurer only
out of earned  surplus.  Moreover,  notwithstanding  the receipt of any dividend
from INSCORP,  Chartwell  Reinsurance may make dividend  payments to the Company
only to the extent permitted under the Minnesota provisions described above.
         In  addition  to the  foregoing  limitation,  the  New  York  Insurance
Department,  as is its practice in any change of control situation, has required
Chartwell  to  commit to  preclude  the  acquired  New  York domiciled  insurer,
INSCORP,  from  paying any  dividends  for two years after the change of control
without prior regulatory approval. This two year period ends in December 1997.
         The maximum dividend permitted by law is not indicative of an insurer's
actual  ability to pay  dividends,  which may be  constrained  by  business  and
regulatory  considerations,  such as the impact of dividends  on surplus,  which
could  affect an  insurer's  ratings  or  competitive  position,  the  amount of
premiums  that  can  be  written  and  the  ability  to  pay  future  dividends.
Furthermore,  beyond  the  limits  described  in the  preceding  paragraph,  the
Commissioner  and  Superintendent  have  discretion  to  limit  the  payment  of
dividends  by  insurance   companies   domiciled  in  Minnesota  and  New  York,
respectively.

                                      9

<PAGE>


CHARTWELL RE HOLDINGS CORPORATION 

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

                           None.

                      (c) Signatures






                                       10







<PAGE>




CHARTWELL RE HOLDINGS CORPORATION 


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:  May 15, 1997



                                               
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