Bermuda-based reinsurer LaSalle Re Holdings yesterday revealed it would merge with Trenwick Group.

The alliance will form a new Bermuda holding company which will be named Trenwick Group Ltd., which will be worth an estimated $1.2 billion.

LaSalle Re will now become a subsidiary of the new company.

Trenwick's chairman, president and CEO James Billett, Jr. stated: "This strategic merger creates a significant new Bermuda-based global insurance and reinsurance underwriting organisation with a total capitalisation of over $1.2 billion.

"The combined enterprise will have a strong presence in the three most significant insurance markets in the world: the United States, London and Bermuda,'' he added.

Under the terms of the merger agreement, shareholders of Trenwick and LaSalle Re will receive shares in the newly formed company on a one-for-one basis. The transaction is expected to be tax-free.

The new Trenwick will have combined basis assets in excess of $3.5 billion and shareholders' equity of more than $950 million.

Based on current projections, combined 1999 gross written premiums for all of the new Trenwick companies are expected to approach $1.0 billion.

LaSalle Re and Trenwick opted for the merger because they expect the transaction to provide a cost-effective means of augmenting capital and adding structural platforms for further expansion.

Mr. Billett added: "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 and 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 (LaSalle Re president and CEO) Guy Hengesbaugh and his team.'' Mr. Hengesbaugh was enthusiastic about the merger, stating: "This merger represents a tremendous step forward in offering LaSalle Re clients top-notch financial security while giving LaSalle Re shareholders the opportunity to realise greater value.'' The addition of LaSalle Re is expected to provide the new Trenwick with a significant level of financial flexibility and the opportunity to develop new business products.

And the combination will also provide Trenwick with a well-established infrastructure in Bermuda and added offshore capabilities.

LaSalle Re announces merger LaSalle Re, which is a property and casualty reinsurer writing worldwide specialist products with an emphasis on catastrophe coverage, has an excellent rating by A.M. Best Company.

And Standard and Poor's expects to affirm its single A-plus counterparty credit and insurer financial strength ratings on Trenwick America Reinsurance Corp., Trenwick International Ltd., Chartwell Reinsurance Co., Insurance Corp.

of NY, and Dakota Specialty Insurance Co. following news of the merger.

CBA Financial Corporation and Aon Corporation, founding and significant shareholders of LaSalle Re, both voted in favour of the merger.

Aon president and CEO Michael D. O'Halleran stated: "Aon is very pleased to support the merger of LaSalle Re with Trenwick. We have worked with Trenwick and its CEO, Jim Billet, for many years, and recognise the outstanding opportunity this transaction provides for the combined companies and their shareholders and clients.'' The transaction is expected to be completed in the second quarter of 2000.