HAMILTON, Bermuda--Trenwick Group Ltd., continuing to grapple with financial woes, announced it will cease writing U.S. specialty insurance business and warned that its potential inability to renegotiate a credit facility may leave it unable to continue as a going concern.

Bermuda-based Trenwick announced Wednesday that its Canterbury Financial Group Inc. unit will stop writing specialty program business. The program business accounted for $65.8 million, or 10.8%, of Trenwick's six-month 2002 revenues of $611.5 million, according to the insurer's Securities and Exchange Commission filings.

W. Marston Becker, Trenwick's acting chairman and chief executive officer, called the underwriting cessation "unfortunate," but he said "the reduction in premium volume...will significantly reduce Trenwick's operating leverage and permit it to focus its financial resources on those segments of its business that we believe have the greatest potential for profit."

The announcement followed Trenwick's disclosure of the potential impact of A.M. Best Co.'s recent rating downgrade of several Trenwick units to B+ from A-. The downgrade triggered a default under a $230 million letter of credit facility that Trenwick used to capitalize its Lloyd's of London underwriting operations and that required a minimum A- Best rating.

Creditors may waive the default or demand that Trenwick secure its outstanding LOCs with cash, though "at this time Trenwick does not have sufficient available liquidity to provide the necessary cash collateral," the filing says.

Trenwick said it is negotiating with lenders to waive the default and renew its LOC facility, which is set to expire Nov. 22.

If creditors do not waive the default, do not renew the LOC facility for the 2003 Lloyd's underwriting year or demand cash collateral for outstanding LOCs, "there is substantial doubt as to Trenwick's ability to continue underwriting at Lloyd's or continue as a going concern," the company reported. "Trenwick and/or one or more of its subsidiaries may be forced to seek protection from creditors through proceedings commenced in Bermuda and other jurisdictions."