Terra Nova Insurance (UK) Holdings plc, the wholly owned subsidiary of Terra Nova (Bermuda) Holdings Ltd., has completed a refinancing initiative that involved a $100-million offering.

The offering of $100 million principal amount of senior notes due 2008, bearing interest at a rate of seven percent per annum, was guaranteed by the parent company.

Terra Nova said the issue was not being offered or sold in the US, absent registration or an applicable exemption from registration requirements.

The net sale of proceeds of $98.9 million were used to purchase all of the issuer's outstanding 10.75 percent senior notes due 2005.

Terra Nova chairman John J. Dwyer said, "The completion of this refinancing is expected to result in a second quarter non-recurring, non-operating loss of $11.7 million, or 45 cents per share.

"The reduced interest costs and fee amortisation are expected to save $2.4 million and add nine cents per share to operating earnings on an annualised basis.

"We are very pleased with the recently announced two level upgrade to Baa1 by Moody's Investor Services, which contributed to the very attractive lower interest rates we were able to achieve and reflects the capital market's recognition of our stronger balance sheet.'' The consideration paid for each $1,000 principal amount of 10.75 percent notes tendered was $1,171.89, including a consent payment of five dollars and accrued interest of $40.91 and was based on the present value of the tendered notes, determined by using the earliest date such notes were subject to redemption and a yield equal to a fixed spread of 25 basis points over the yield of 5.875 percent US treasury notes due June 30, 2000, as calculated at 2.00 pm, May 12, 1998.