OLDWICK, New Jersey (BUSINESS WIRE) -- A.M. Best Co. on Friday downgraded the financial strength rating of LaSalle Re Limited (LaSalle), Bermuda, to B++ (Very Good) from A- (Excellent) and has placed both its financial strength and "bb" preferred stock ratings under review with negative implications.

Best said The rating actions followed a recent announcement by LaSalle's parent, Trenwick Group Ltd. (Trenwick), that it has voluntarily placed LaSalle's operations into run-off. Effective April 1, 2002, LaSalle entered into a 100 percent quota share reinsurance agreement with Endurance Specialty Ltd. relating to LaSalle's in-force premiums. Additionally, Endurance has acquired renewal rights to LaSalle's property catastrophe reinsurance contracts.

LaSalle's compensation includes a ceding commission and profit sharing agreement relating to the 2002 accident year business transferred to Endurance. Under this reinsurance structure, LaSalle retains all outstanding policyholder liabilities relating to premiums earned prior to the effective date of the reinsurance agreement. A.M. Best expects that the excess capital created at LaSalle as a result of this transaction will be utilized to pay down bank debt at Trenwick and to support its continuing core businesses.

Although LaSalle's anticipated runoff margin appears adequate to meet its current policyholder obligations, the under review status of the ratings reflect some uncertainty with respect to its current reserve position. LaSalle's ratings will remain under review pending A.M. Best's review of its current reserve position and a stress scenario analysis related to the group's capital and liquidity margin subsequent to this strategic shift from a going concern to a run-off operation.

Additionally, A.M Best has maintained its negative outlook on the A- (Excellent) financial strength rating of Trenwick Group as A.M. Best continues to work closely with the group's management to assess its current capital structure and prospective earnings capacity.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.

For more information, visit A.M. Best's Web site at www.ambest.com.