TRENWICK GROUP INC. AND LASALLE RE HOLDINGS LIMITED TO MERGE
Stamford, Connecticut and Hamilton, Bermuda, December 19, 1999 . . .
Trenwick Group Inc. ("Trenwick") (NYSE: TWK) and LaSalle Re Holdings Limited
("LaSalle Re") (NYSE: LSH) announced today that they have signed a definitive
agreement for Trenwick and LaSalle Re to merge, with shareholders of both
companies receiving shares in a new Bermuda holding company to be named Trenwick
Group Ltd. James F. Billett, Jr. will continue as Chairman, President and Chief
Executive Officer of the new Trenwick, and Guy D. Hengesbaugh, President and
Chief Executive Officer of LaSalle Re, will continue in those roles at LaSalle
Re, which will become a subsidiary of the new Trenwick. The Board of Directors
of the new Trenwick will consist of the twelve current Trenwick directors, and
four directors from the present LaSalle Re Board.
Under the terms of the merger agreement, shareholders of Trenwick and LaSalle Re
will each receive shares in the newly formed Trenwick on a one-for-one basis.
The transaction is expected to be tax-free to shareholders of both companies.
James F. Billett, Jr., Trenwick's Chairman, President and Chief Executive
Officer, said, "This strategic merger creates a significant new Bermuda-based
global insurance and reinsurance underwriting organization with a total
capitalization of over $1.2 billion. This transaction, which is the most recent
step in Trenwick's strategic evolution, is exciting for us since it creates a
company with larger scale and stronger competitive capabilities in a
consolidating global insurance/reinsurance market, adds higher margin business
to Trenwick's existing mix, creates a better platform to enhance shareholder
returns, and expands the management depth of Trenwick by adding Guy Hengesbaugh
and his team. The combined enterprise will have a strong presence in the three
most significant insurance markets in the world: the United States, London and
Bermuda."
"This merger represents a tremendous step forward in offering LaSalle Re clients
top-notch financial security while giving LaSalle Re shareholders the
opportunity to realize greater value," said Guy D. Hengesbaugh, President and
Chief Executive Officer of LaSalle Re.
On a combined basis, the new Trenwick would have had assets in excess of
$3.5 billion, shareholders' equity of over $950 million and total capitalization
of approximately $1.2 billion as of September 30, 1999. Based on current
projections, combined 1999 gross written premiums for all of the new Trenwick
companies are expected to approach $1.0 billion.
The companies believe that the transaction provides a cost-effective means of
augmenting capital and adding structural platforms for further expansion. The
addition of LaSalle Re's high margin specialist property catastrophe reinsurance
business continues Trenwick's strategy of entering new markets and product lines
that began with Trenwick's acquisition of Trenwick International (formerly
Sorema U.K.), completed in February 1998, and Trenwick's recent acquisition of
Chartwell Re Corporation, completed in October 1999. The addition of LaSalle Re
will provide the new Trenwick with a significant level of financial flexibility
and the opportunity to develop new business products. Trenwick and LaSalle Re
expect that consolidating the two companies will generate significant financial
benefits and will be accretive to Trenwick's and LaSalle Re's shareholders.
CNA Financial Corporation and Aon Corporation, founding and significant
shareholders of LaSalle Re, have each agreed to vote in favor of the merger.
Bernard L. Hengesbaugh, Chairman and Chief Executive Officer of CNA Insurance,
stated, "CNA wholeheartedly endorses the transaction, which is highly beneficial
for LaSalle Re's shareholders and clients. This transaction further evidences
CNA's commitment to providing creative solutions, which are best met in a global
platform."
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Michael D. O'Halleran, President and Chief Operating Officer of Aon, stated,
"Aon is very pleased to support the merger of LaSalle Re with Trenwick. We have
worked with Trenwick and its CEO, Jim Billett, for many years, and recognize the
outstanding opportunity this transaction provides for the combined companies and
their shareholders and clients."
The transaction is subject to the approval of the respective companies'
shareholders, regulatory approvals and other customary closing conditions. The
transaction is expected to be completed early in the second quarter of 2000. The
merger agreement provides for the payment of termination fees under certain
circumstances, and Trenwick and LaSalle Re have also entered into customary
"cross" stock option agreements.
Trenwick Group Inc. is a holding company with four principal operating
subsidiaries: Trenwick America Re, which provides treaty reinsurance to insurers
of property and casualty risks in the United States; Trenwick International,
which underwrites treaty and facultative reinsurance as well as specialty
insurance on a worldwide basis; Chartwell Managing Agents Limited, Trenwick's
managing agency at Lloyd's; and Canterbury Financial Group Inc., which
underwrites U.S. property and casualty insurance through specialty program
administrators. All of Trenwick's principal insurance and reinsurance
subsidiaries are rated A (Excellent) by A.M. Best Company and are assigned a
financial strength rating of A+ by Standard & Poor's.
LaSalle Re is a property and casualty reinsurer writing worldwide specialist
products with an emphasis on catastrophe coverage. LaSalle Re is rated A
(Excellent) by A.M. Best Company and currently holds an A- financial strength
rating from Standard & Poor's.
Donaldson, Lufkin & Jenrette Securities Corporation acted as financial advisor
to Trenwick; Lazard Freres & Co. LLC, Salomon Smith Barney Inc. and Aon Capital
Markets, Inc. acted as financial advisors to LaSalle Re.
* * *
This press release contains forward looking statements of management's beliefs,
estimates, projections and assumptions for the financial condition, results of
operations, business and prospects of Trenwick after the transaction. These
forward looking statements involve certain risks and uncertainties, including
those detailed from time to time in Trenwick's and LaSalle Re's reports and
filings with the Securities and Exchange Commission. Additional factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among others, that the completion of the
transaction may be delayed or not occur, that difficulties related to the
integration of the businesses of Trenwick and LaSalle Re are greater than
expected or that expectations for growth may not be realizable.
December 19, 1999
Contacts: Alan L. Hunte, Executive Vice President, and
Chief Financial Officer
Trenwick Group Inc. (NYSE: TWK)
(203) 353-5500
Diane Newman, Investor Relations Manager
LaSalle Re Holdings Limited (NYSE: LSH )
(441) 292-3339
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