Bermuda-based reinsurance company said its chief executive quit and that it would take a $7 million charge in the third quarter for investments in a German health care association.

ESG's stock price fell 22.3 percent to a low of $10, down $2.88, in Monday morning trading on the electronic Nasdaq stock exchange. By mid-morning, the stock recovered slightly to $10.38, down $2.50 from Friday's close of $12.88.

The company, which was set up in late 1997 by Hamburg-based life reinsurer European Specialty Group, said on Sunday its chief executive, Wolfgang Wand, resigned his post due to "medical and other personal reasons''.

New York investor John Head III, who in 1997 provided much of the new company's capital and became its chairman, has assumed the additional role of chief executive. Investment bank Donaldson Lufkin & Jenrette on Monday downgraded its rating on ESG shares to "market perform'' from "buy.''