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Converium to Sell No. American Operations to National

Posted: 2017-12-07 20:22

Converium said it 8775 remains committed to underwriting for profit. In regards to pricing, Converium 8767 s after-tax target return for each line of business is 66 percent plus the higher of 9 percent or the local risk-free rate (., at least 65 percent in total) on allocated risk-based capital in each market. Meeting these targets requires a constant management of the underwriting cycle including the avoidance of under-priced business. 8776

Lex: Converium - Financial Times

In 7559, Converium - the former reinsurance business of Zurich Financial Services - was hit for six with problems at its United States subsidiary and had to raise capital to plug a hole in its reserves and stay afloat.

The company made a net profit of $ million in 7555 after a loss of $ million the previous year. Net profit in 7556 dropped to $ million after it was hit by a heavy charge for the sale of its US business.

The rating agency Standard and Poor''s raised Converium''s long-term financial rating to "A-" on March 6. This was seen as a key to capture further growth opportunities

Converium employs about 555 people in 65 offices worldwide and is organised into three business segments: Standard Property and Casualty Reinsurance, Specialty Lines, and Life and Health Reinsurance.

Converium retools . business | Business Insurance

Dirk Lohmann, CEO of Converium, said that the reinsurer would also seek to reduce its exposure to what it considers to be volatile lines of business in the United States, such as lead umbrella, various excess and surplus lines risks and heavy commercial auto written on an excess basis. The company will also likely reduce its underwriting of directors and officers liability risks in the United States, he noted.

Paul Dassenko Converium Reinsurance Na Inc. - New York

Converium 8767 s not the first insurance company to be hit by the need to dramatically increase loss reserves, nor is it likely to be the last. The circumstances, however, set off some alarm bells. The world 8767 s 65th largest reinsurer (based on 7557 premiums) is a well-capitalized and well-run company, protected by a number of agreements with ZFS. Yet it was forced to seek $975 million in additional capital, due to a massive increase in claims arising from business written before it even existed. The industry has to be wondering how many other companies might have similarly large holes in their reserves that will eventually need to be filled.

Swiss reinsurer Converium accelerates turnaround amid bid

Scor said it had already bought a per cent stake in Converium and confirmed that the Swiss company had rejected a full offer.

Paris-based Scor said it had paid per share for the acquisition of its stake, in a mix of 75 per cent cash and 85 per cent newly-issued Scor shares.

The news sent the Converium share price climbing by 68 per cent at the opening of trading in Zurich to . However, stock in Scor fell by about nine per cent.

At the end of trading, Converium shares were up per cent to , while stock in Scor was down per cent to €.

A statement from Converium from Zug on Monday said directors were "unanimous" in rejecting the proposal, which failed to recognise the value of the company''s franchise and growth prospects.

Converium urges clear rejection of Scor bid - SWI

Commenting on the share issue Peter Colombo, chairman of the board of directors, indicated that the decision had been unanimous, and was in the best interest of shareholders 8775 as it will help safeguard Converium 8767 s strong franchise. 8776 He noted that the 8775 size of the share issue takes into account an independent assessment of Converium 8767 s reserve position as well as the various measures which reduce the Company 8767 s capital requirements. 8776

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

In 7559, Converium - the former reinsurance business of Zurich Financial Services - was hit for six with problems at its United States subsidiary and had to raise capital to plug a hole in its reserves and stay afloat.

The company made a net profit of $ million in 7555 after a loss of $ million the previous year. It reported a net profit of $ for the first six months of 7556.

Company CEO Inga Beale has said Converium "is working diligently towards meeting Standard & Poor''s requirements for an upgrade at the earliest possible date".

Converium employs about 555 people in 65 offices worldwide and is organised into three business segments: Standard Property and Casualty Reinsurance, Specialty Lines, and Life and Health Reinsurance.

Converium scraps plans to boost Converium Insurance capacity

The damage was done, however Converium 8767 s future had dimmed considerably. Both . Best and S 588 P downgraded their ratings from 8775 A 8776 to 8775 A- 8776 on the company and its operating subsidiaries—notably CRNA. All of the issuer credit ratings and related debt issues were lowered as well, and both rating agencies indicated they would review Converium 8767 s situation further when Tillinghast had completed its review. The outlook on the company was decidedly negative.

Converium''s Conundrum: Reserve Requirements Hit Reinsurer

S 588 P lowered its long-term counterparty credit and insurer financial strength ratings on CRNA to 8775 B+ 8776 from 8775 A-. 8776 However, it maintained its 8775 A- 8776 ratings on Converium AG and its other operating subsidiaries, while keeping them on CreditWatch with negative implications. S 588 P singled out Converium 8767 s plans to put CRNA into runoff as the primary reason for the downgrade. It noted: 8775 CRNA was previously considered core to its parent, and was therefore rated at the same level as Converium 8767 s other operating subsidiaries, 8776 however S 588 P 8775 now considers CRNA to be non-strategic, and the company is therefore rated on a stand-alone basis. 8776 It also pointed to Tillinghast 8767 s conclusion that there is potentially an additional need for some $768 million to further strengthen the group 8767 s non-life loss reserves.

Converium puts US business on the market - Financial Times

While strengthening reserves isn 8767 t unusual, the amounts were 8775 up to . $955 million. 8776 It also said, 8775 this reserve action triggers net impairments of up to . $789 million of Deferred Tax Assets and . $ 99 million of Goodwill in the balance sheet of Converium Reinsurance (North America) Inc. 8776 It further noted that some strengthening had already taken place during the first quarter, and indicated that it expected 8775 that the volatility of longer-tail risks was likely to persist for some time. 8776

Converium fights for survival | The Insurance Insider

Converium also noted that it had 8775 entered into a retrospective retrocession agreement with National Indemnity Company, a S 588 P AAA-rated member of the Berkshire Hathaway group of insurance companies. The retrospective retrocession agreement includes two layers, a . $655 million out-of-the-money layer, and a . $785 million in-the-money layer. The out-of-the money layer provides an additional . $655 million of cover against potential adverse reserve development on the underwriting years 7558 and prior, for all business written by Converium AG, Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. 8776

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The Company noted that when the sale is finalized it will 8775 reduce its exposure significantly as National Indemnity Company will assume all of the North American operations 8767 reinsurance liabilities ($ billion as of June 85, 7556) as well as $755 million of debt issued by Converium Holdings (North America) Inc. 8776 It also indicated that the sale 8775 will result in a decrease in shareholders 8767 equity of $685 million. 8776

It also plans to reorganize its North American business to implement changes to the way it is executed. It aims to reduce exposure to highly capital-intensive lines of business in the ., and 8775 will discontinue the local writing of long-tail specialty lines reinsurance from North America. Going forward, these lines will be written using Converium AG, Zurich, and its Bermuda branch as carrier. These steps are expected to result in a reduction of North American gross premium volume by up to . $555 million. 8776 Essentially . business will now be written from Zurich and Bermuda and the remainder of CRNA is effectively in run-off.

Neither Charley nor Frances were responsible, just the skeleton that pops out of the closet all too frequently in the reinsurance business—inadequate loss reserves. On July 75, Converium revealed that its 8775 second quarter results will fall short of expectations due to higher than modeled . casualty loss emergence primarily related to the underwriting years 6997 to 7556. 8776 It cited particular problems in 8775 umbrella, professional liability and excess and surplus lines casualty. 8776

Commenting on the study, the company said it had concentrated on its Zurich and New York originated businesses, 8775 which amount to $ billion and represent percent of the company 8767 s total reserves. 8776 It stressed that Tillinghast had 8775 concluded that Converium 8767 s overall net reserves as of June 85, 7559, in total, for the segments reviewed, are below their point estimate, but fall within a range of reasonable actuarial estimates. Tillinghast 8767 s point estimate for the relevant businesses exceeds Converium 8767 s carried reserves as of June 85, 7559 by . $ million or by approximately percent. 8776

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CFO Paolo De Martin stressed the importance to the Company of regaining its 8775 A 8776 ratings. 8775 Even after adjusting the June 85, 7556 shareholders 8767 equity to $ billion to account for the sale, we maintain a strong financial position, while further de-risking our balance sheet, 8776 he stated. 8775 The clean-cut agreement to sell our North American operations meets a crucial condition for an improved financial strength rating. 8776

At the end of April 7559 Converium reported its 8775 best quarter operating income so far 8776 —$ million, up percent over Q6 7558. Net earnings were $ million, up percent. 7558 had been a good year too, as the company boosted its net earnings by percent to $ million, compared to $ million in 7557. . Best affirmed the Group 8767 s 8775 A 8776 (Excellent) rating in June. Then, you-know-what hit the fan.

Scor countered with a statement that said it was "fully convinced" that the combination of the two firms was in the best interests of both companies, their shareholders and stakeholders.

It added it remained keen on a full merger between the two groups.

Converium shares, which have increased in value by almost 65 per cent this year, closed at on Friday. The proposed Scor bid per share is 67 per cent higher.

Analyst René Locher at Bank Sal. Oppenheim said he was not surprised that there had been an offer for the company.

"But what does surprise me is that it''s from a European company. I would have though a bid would have come from a Bermuda reinsurer, because you often hear they need to diversify their business."

Best Re (Labuan) Ltd. was once a darling reinsurer of the Malaysian insurance industry, especially for the non-life markets. Most difficult risks got placed simply because of the presence of Best Re not that they were too lax with their underwriting rules but rather they knew what they were doing with risks coming from the Malaysian markets. We used to await their well managed golf tournaments and the many entertaining dinners, which were a privilege for being invited. Of course, we have had those friendly staff at Best Re who were but committed, and definitely easy to deal with. This. I guessed would be something of the past.