<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _______________ to _______________.
Commission file number 0-14737
TRENWICK GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1152790
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Metro Center
One Station Place
Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 353-5500
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
Class Outstanding at October 31, 1996
Common Stock, $.10 par value 6,706,717
<PAGE> 2
TRENWICK GROUP INC.
INDEX
Page
PART I. Financial Information Number
------
Consolidated Balance Sheet
September 30, 1996 and December 31, 1995 3
Consolidated Statement of Income
Three and Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statement of Changes in Stockholders' Equity
Three and Nine Months Ended September 30, 1996 and 1995 5
Consolidated Statement of Cash Flows
Nine Months Ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis
of Financial Condition and Results of Operations 9-12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE> 3
TRENWICK GROUP INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1996 1995
---- ----
(dollars in thousands)
<S> <C> <C>
Assets
Fixed maturity investments available for sale at
fair value (amortized cost: $672,520 and $609,751) $ 681,417 $ 633,525
Equity securities available for sale at
fair value (cost: $14,578 and $10,507) 18,377 13,419
Cash and cash equivalents 9,486 6,760
--------- ---------
Total investments and cash 709,280 653,704
Accrued investment income 10,247 10,198
Receivables from ceding insurers 61,507 48,979
Reinsurance recoverable balances, net 76,519 68,449
Deferred policy acquisition costs 22,228 16,725
Net deferred income taxes 19,202 13,585
Other assets 3,137 9,290
--------- ---------
Total assets $ 902,120 $ 820,930
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Unpaid claims and claims expenses $ 456,805 $ 411,874
Unearned premium income 74,304 56,050
Convertible debentures 103,500 103,500
Other liabilities 12,949 8,730
--------- ---------
Total liabilities 647,558 580,154
--------- ---------
Stockholders' equity:
Preferred stock, $.10 par value,
1,000,000 shares authorized; none outstanding
Common stock, $.10 par value, 15,000,000 shares
authorized; 6,706,717 and 6,590,411 shares outstanding 671 659
Additional paid-in capital 93,982 89,920
Retained earnings 152,775 133,949
Net unrealized appreciation of investments,
net of income taxes 8,252 17,346
Deferred compensation under stock award plan (1,118) (1,098)
--------- ---------
Total stockholders' equity 254,562 240,776
--------- ---------
Total liabilities and stockholders' equity $ 902,120 $ 820,930
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
(in thousands except per share data)
<S> <C> <C> <C> <C>
Revenues:
Net premiums earned $ 55,008 $ 43,200 $156,075 $131,362
Net investment income 10,332 9,354 30,386 27,091
Net realized investment gains (losses) (21) 131 18 281
-------- -------- -------- --------
Total revenues 65,319 52,685 186,479 158,734
-------- -------- -------- --------
Expenses:
Claims and claims expenses incurred 33,428 25,854 95,402 85,447
Policy acquisition costs 15,711 11,957 42,669 31,852
Underwriting expenses 3,426 3,219 10,797 9,023
Interest expense 1,626 1,622 4,875 4,873
-------- -------- -------- --------
Total expenses 54,191 42,652 153,743 131,195
-------- -------- -------- --------
Income before income taxes 11,128 10,033 32,736 27,539
Income taxes 2,608 2,077 7,707 5,739
-------- -------- -------- --------
Net income $ 8,520 $ 7,956 $ 25,029 $ 21,800
======== ======== ======== ========
PRIMARY EARNINGS PER SHARE $ 1.24 $ 1.18 $ 3.66 $ 3.26
======== ======== ======== ========
Weighted average shares outstanding 6,860 6,739 6,832 6,691
======== ======== ======== ========
FULLY DILUTED EARNINGS PER SHARE
(assuming conversion of dilutive
convertible debentures) $ 1.06 $ 1.01 $ 3.14 $ 2.80
======== ======== ======== ========
Weighted average shares outstanding 8,994 8,941 8,971 8,921
======== ======== ======== ========
Dividend per common share $ .31 $ .28 $ .93 $ .84
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C>
Stockholders' equity, beginning of period $ 245,468 $ 218,750 $ 240,776 $ 188,213
Common stock, $.10 par value, and additional paid-in-capital:
Exercise of employer stock options
(1,000, 13,000, 128,852 and 35,500 shares) 40 257 3,636 504
Income tax benefit resulting from
excess compensation expenses allowable
for income tax purposes -- 93 1,053 175
Restricted common stock awarded
(3,584, 10,020 and 21,304 shares) 174 -- 507 933
Restricted common stock awards cancelled
(2,100 shares) -- -- (91) --
Common stock purchased and retired
(179, 20,466 and 3,056 shares) (8) -- (1,031) (134)
Retained earnings:
Net income 8,520 7,956 25,029 21,800
Cash dividends (2,079) (1,818) (6,203) (5,442)
Net unrealized appreciation (depreciation) of
investments available for sale:
Change in unrealized appreciation (depreciation) 3,838 1,411 (13,990) 32,041
Change in applicable deferred income taxes (1,344) (494) 4,896 (11,214)
Deferred compensation under stock award plan:
Restricted common stock awarded (174) -- (507) (933)
Restricted common stock awards cancelled -- -- 91 --
Compensation expense recognized 127 160 396 372
--------- --------- --------- ---------
Stockholders' equity, end of period $ 254,562 $ 226,315 $ 254,562 $ 226,315
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
TRENWICK GROUP INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1996 1995
---- ----
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Premiums collected $ 130,374 $ 112,853
Ceded premiums paid (5,102) (6,337)
Claims and claims expenses paid (73,219) (67,037)
Claims and claims expenses recovered 3,683 6,251
Underwriting expenses paid (10,027) (8,304)
--------- ---------
Cash provided by underwriting activities: 45,709 37,426
Net investment income received 31,527 29,216
Interest and other expenses paid (3,085) (3,131)
Income taxes paid (5,585) (8,026)
--------- ---------
Cash provided by operating activities 68,566 55,485
--------- ---------
Cash flows for investing activities:
Purchases of fixed maturity investments (120,522) (126,863)
Sales of fixed maturity investments 12,934 40,171
Maturities of fixed maturity investments 43,682 37,932
Purchases of equity securities (158) (150)
Sales of equity securities 2,375 --
Additions to premises and equipment (553) (418)
--------- ---------
Cash used for investing activities (62,242) (49,328)
--------- ---------
Cash flows for financing activities:
Issuance of common stock 3,636 504
Repurchase of common stock (1,031) (134)
Dividends paid (6,203) (5,442)
--------- ---------
Cash used for financing activities (3,598) (5,072)
--------- ---------
Increase in cash and cash equivalents 2,726 1,085
Cash and cash equivalents, beginning of period 6,760 9,784
--------- ---------
Cash and cash equivalents, end of period $ 9,486 $ 10,869
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
. TRENWICK GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation:
The interim consolidated financial statements include those of Trenwick
Group Inc. and its subsidiaries and have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent
with prior periods. Certain items in the financial statements have been
reclassified to conform with the 1996 presentation.
Management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The interim consolidated financial statements are unaudited; however, in
the opinion of management, the interim consolidated financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods.
These interim statements should be read in conjunction with the 1995
audited financial statements and related notes.
2. Reinsurance:
Trenwick purchases reinsurance to reduce its exposure to catastrophe
losses and the frequency of large losses in all lines of business.
Trenwick, however, remains liable in the event that its retrocessionaires
do not meet their contractual obligations. The effects of reinsurance on
premiums written, premiums earned and claims and claims expenses incurred
is as follows (in thousands):
Premiums Written
---------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
Assumed $ 60,574 $ 54,988 $ 190,108 $ 162,920
Ceded (5,462) (4,533) (15,842) (12,542)
--------- --------- --------- ---------
Net $ 55,112 $ 50,455 $ 174,266 $ 150,378
========= ========= ========= =========
7
<PAGE> 8
Premiums Earned
---------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
.
Assumed $ 60,427 $ 47,936 $ 171,854 $ 144,131
Ceded (5,419) (4,736) (15,779) (12,769)
--------- --------- --------- ---------
Net $ 55,008 $ 43,200 $ 156,075 $ 131,362
========= ========= ========= =========
Claims and Claims Expenses Incurred
---------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
Assumed $ 41,381 $ 31,421 $ 117,308 $ 102,067
Ceded (7,953) (5,567) (21,906) (16,620)
--------- --------- --------- ---------
Net $ 33,428 $ 25,854 $ 95,402 $ 85,447
========= ========= ========= =========
3. Stock Awards and Benefit Plans:
For the nine months ended September 30, 1996, Trenwick awarded key
employees an aggregate of 10,020 shares of common stock under the terms of
the 1989 Stock Plan, valued at an average of $50.60 per share
(approximately $507,000). Trenwick is recognizing compensation expense
determined by the value of the shares, amortized over a five to seven year
vesting period. During the nine month period, 20,466 shares were
repurchased at an average of $50.38 per share (approximately $1,031,000)
in connection with the satisfaction of withholding taxes payable upon the
vesting of shares previously awarded under the plan.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Trenwick Group Inc. ("Trenwick") is a holding company whose principal
subsidiary, Trenwick America Reinsurance Corporation ("Trenwick America Re")
reinsures property and casualty risks written by U.S. insurance companies.
Substantially all of Trenwick America Re's business is produced by reinsurance
brokers. Trenwick America Re divides its business into three categories: treaty,
specialty and facultative. In addition, under a strategic reinsurance agreement
with PXRE Reinsurance Company ("PXRE Re"), Trenwick America Re assumes
approximately 15% of PXRE Re's property business.
OPERATING RESULTS
Trenwick Group Inc. reported an increase in its third quarter consolidated net
income of 7% to $8.5 million or $1.24 per share compared to $8.0 million or
$1.18 per share in the third quarter of 1995. Consolidated net income was $25.0
million or $3.66 per share for the nine months ended September 30, 1996 compared
to $21.8 million or $3.26 per share for the nine months ended September 30,
1995. Fully diluted earnings per share were $1.06 and $3.14 in the third quarter
and for the nine months ended September 30, 1996, respectively, compared to
$1.01 and $2.80 for the same periods in 1995.
Operating income (net income excluding after-tax realized investment gains and
losses) was as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------------
1996 1995 %Change 1996 1995 %Change
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Operating income $8,534 $7,871 8% $25,017 $21,617 16%
Operating income
per share:
Primary $1.24 $1.17 6% $3.66 $3.23 13%
Fully diluted $1.07 $1.00 7% $3.14 $2.78 13%
</TABLE>
Realized after-tax investment losses in the third quarter of 1996 were $(14,000)
or approximately $(.01) per share compared to after-tax realized gains of
$85,000 or approximately $.01 per share for the quarter ended September 30,
1995. For the nine months ended September 30, 1996, realized after-tax
investment gains were $12,000 compared to $183,000 or approximately $.03 per
share for the nine months ended September 30, 1995.
9
<PAGE> 10
PREMIUMS
Trenwick's net premiums written increased 9% to $55.1 million in the third
quarter of 1996 compared to $50.5 million in the same period in 1995. Net
premiums written for the nine months ended September 30, 1996 increased 16% to
$174.3 million compared to the same period in 1995. The distribution of the
Company's net premiums written by type was as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------- --------------------------------------
1996 1995 %Change 1996 1995 %Change
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
CASUALTY
Treaty $ 31,523 $ 25,164 25% $109,659 $ 79,768 37%
Specialty 13,369 14,681 (9) 34,718 39,752 (13)
Facultative 2,074 1,332 56 5,020 4,471 12
----- ----- -- ----- ----- --
46,966 41,177 14 149,397 123,991 20
PROPERTY 8,146 9,278 (12) 24,869 26,387 (6)
----- ----- --- ------ ------ --
Total $ 55,112 $ 50,455 9% $174,266 $150,378 16%
======== ======== = ======== ======== ==
</TABLE>
Trenwick's premium growth in the third quarter and for the nine months ended
September 30, 1996 continued to result from an increase in new casualty treaty
business. This business was developed primarily by the senior underwriting
executives hired in 1995 through existing and new relationships with various
reinsurance brokers. Competitive market conditions in the primary insurance
industry have caused ceding companies to reduce their reinsurance buying. These
conditions have primarily had an impact on the Company's casualty specialty
business, reducing the overall rate of growth in the quarter. In addition, the
Company declined to renew certain accounts which did not meet its pricing
standards. Property business also decreased as a result of continued price
deterioration in the quarter.
New casualty business increased 36% and 53% in the quarter and for the nine
months ended September 30, 1996 over the same periods in 1995 and represented
approximately 36% and 31% of total premium writings during the periods.
Continuing casualty business increased 7% and 10% in the quarter and for the
nine months ended September 30, 1996 over the same periods in 1995. Continuing
casualty business represented 50% and 55% of the total premium writings during
the periods. The Company's property business represented approximately 14% of
total premium writings for the quarter and for the nine months ended September
30, 1996.
Prior to the close of the quarter, Trenwick reported that Trenwick America Re
entered into a broad based strategic reinsurance relationship with UNUM
Corporation, through its wholly-owned subsidiary Duncanson & Holt Group ("D&H").
D&H is the largest underwriting manager of accident and health reinsurance in
North America. Through this agreement, effective October 1, Trenwick America Re
is participating in domestic pools and reinsurance facilities managed by D&H.
Trenwick America Re has also agreed that D&H may issue reinsurance contracts in
its name in certain situations where D&H's property and casualty clients prefer
a property and casualty reinsurer. Trenwick America Re will assume approximately
$15 million in annualized
10
<PAGE> 11
reinsurance premium as a result of participating in the domestic pools and
reinsurance facilities managed by D&H, in addition to receiving fronting fees on
business issued in its name.
UNDERWRITING EXPERIENCE
The combined ratio is one means of measuring the profitability of a property and
casualty company. The combined ratio reflects underwriting experience, but does
not reflect income from investments or provisions for income taxes. A combined
ratio below 100% indicates profitable underwriting, and a combined ratio
exceeding 100% indicates unprofitable underwriting. Although a reinsurer may
have unprofitable underwriting results, the reinsurer may still be profitable
because of investment income earned on the accumulated invested assets.
The following table sets forth Trenwick's combined ratios and the components
thereof calculated on a GAAP basis for the period indicated, together with
Trenwick America Re's combined ratio calculated on a statutory basis:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Claims and claims expense ratio 60.8% 59.8% 61.1% 65.0%
---- ---- ---- ----
Expense ratio:
Policy acquisition expense ratio 28.6 27.7 27.3 24.2
Underwriting expense ratio 6.2 7.5 6.9 6.9
---- ---- ---- ----
Total expense ratio 34.8% 35.2% 34.2% 31.1%
---- ---- ---- ----
Combined ratio (GAAP basis) 95.6% 95.0% 95.3% 96.1%
---- ---- ---- ----
Trenwick America Re
statutory combined ratio 95.4% 93.3% 94.8% 95.6%
---- ---- ---- ----
</TABLE>
As indicated, Trenwick's claims and claims expense ratio improved in the third
quarter and for the nine months ended September 30, 1996 compared to the same
periods in 1995. The claims and claims expense ratio for the nine months ended
September 30, 1996 includes favorable development of approximately $3.4 million
from business written in prior years.
11
<PAGE> 12
INVESTMENT INCOME
Net investment income of $10.3 million in the third quarter of 1996 increased
10% compared to $9.4 million for the same period in 1995. Net investment income
of $30.4 million for the nine months ended September 30, 1996 increased 12%
compared to $27.1 million for the nine months ended September 30, 1995. Pre-tax
yields on invested assets, excluding equity securities, averaged 6.4% in both
1996 and 1995. The increase in investment income is due primarily to the
continued growth in the Company's invested asset base along with an increase in
operating cash flow.
After-tax net investment income in the third quarter of 1996 and for the nine
months ended September 30, 1996 was $8.0 million and $23.7 million,
respectively, compared to $7.3 million and $21.3 million for the comparative
periods in 1995. The effective tax rate on net investment income for the nine
months ended September 30 was approximately 22.1% in 1996 and 21.3% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, Trenwick's consolidated investments and cash totaled
$709.3 million, as compared to $653.7 million at December 31, 1995. The fair
value of the Company's fixed maturity portfolio exceeded amortized cost of
$672.5 million and $609.8 million by $8.9 million and $23.7 million at September
30, 1996 and December 31, 1995, respectively. At September 30, 1996 and at
December 31, 1995, the fair value of the Company's equity securities exceeded
cost of $14.6 million and $10.5 million by $3.8 million and $2.9 million,
respectively.
As of September 30, 1996, Trenwick's consolidated stockholders' equity totaled
$254.6 million or $37.96 per share, as compared to $240.8 million or $36.54 per
share at December 31, 1995. This increase resulted from earnings in the period
reduced by a decrease in the market value of the Company's fixed maturity and
equity investments. Since December 31, 1995, the unrealized appreciation of the
Company's fixed maturity and equity investments declined $9.1 million, net of
tax, or $1.36 per share, primarily as a result of the increase in interest
rates.
Statutory surplus of Trenwick America Re was $278.6 million as of September 30,
1996, compared to $257.6 million as of December 31, 1995.
Cash flow from operations of $68.6 million for the nine months ended September
30, 1996 increased approximately 24% compared to cash flow from operations of
$55.5 million for the nine months ended September 30, 1995. The increase in cash
flow from operations reflected an overall increase in premium writings.
Trenwick declared a third quarter dividend of $.31 per share in 1996, compared
to $.28 in the third quarter of 1995.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11.0 Computation of Earnings Per Share
27.0 Financial Data Schedule
b) Reports on Form 8-K
None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRENWICK GROUP INC.
-----------------------------
(Registrant)
Date: November 13, 1996 JAMES F. BILLETT, JR.
------------------ -----------------------------
James F. Billett, Jr.
Chairman, President and
Chief Executive Officer
Date: November 13, 1996 ALAN L. HUNTE
----------------- -----------------------------
Alan L. Hunte
Vice President, Chief Financial
Officer and Treasurer
14
<PAGE> 1
TRENWICK GROUP INC.
Exhibit 11.0 -- COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 6,705 6,489 6,658 6,470
Weighted average shares of common stock
equivalents associated with
stock options, net 155 250 174 221
------- ------- ------- -------
Total 6,860 6,739 6,832 6,691
======= ======= ======= =======
Net income $ 8,520 $ 7,956 $25,029 $21,800
======= ======= ======= =======
PER SHARE AMOUNT $ 1.24 $ 1.18 $ 3.66 $ 3.26
======= ======= ======= =======
FULLY DILUTED
Average shares outstanding 6,705 6,489 6,658 6,470
Weighted average shares of common stock
equivalents associated with
stock options, net 155 318 179 317
Assumed conversion of 6% convertible
debentures 2,134 2,134 2,134 2,134
------- ------- ------- -------
Total 8,994 8,941 8,971 8,921
======= ======= ======= =======
Net income $ 8,520 $ 7,956 $25,029 $21,800
Add 6% convertible conversion debenture interest
net of federal income tax effect 1,058 1,054 3,170 3,161
------- ------- ------- -------
Total $ 9,578 $ 9,010 $28,199 $24,961
======= ======= ======= =======
PER SHARE AMOUNT $ 1.06 $ 1.01 $ 3.14 $ 2.80
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-Q FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 FOR TRENWICK GROUP INC.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 681,417
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 18,377
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 699,794
<CASH> 9,486
<RECOVER-REINSURE> 76,519<F1>
<DEFERRED-ACQUISITION> 22,228
<TOTAL-ASSETS> 902,120
<POLICY-LOSSES> 456,805
<UNEARNED-PREMIUMS> 74,304
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 103,500
0
0
<COMMON> 671
<OTHER-SE> 253,891
<TOTAL-LIABILITY-AND-EQUITY> 902,120
156,075
<INVESTMENT-INCOME> 30,386
<INVESTMENT-GAINS> 18
<OTHER-INCOME> 0
<BENEFITS> 95,402
<UNDERWRITING-AMORTIZATION> 42,669
<UNDERWRITING-OTHER> 15,672
<INCOME-PRETAX> 32,736
<INCOME-TAX> 7,707
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,029
<EPS-PRIMARY> 3.66
<EPS-DILUTED> 3.14
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>REPRESENTS NET REINSURANCE RECOVERABLE BALANCES AFTER OFFSET OF FUNDS HELD AND
REINSURANCE BALANCES PAYABLE.
</FN>
</TABLE>
