Moody's said that its rating action was taken following today's earnings announcement and as a result of the increased likelihood that Converium will take longer than expected to return to sustainable profitability. The rating agency pointed out that lackluster 2005 renewals, a high expense ratio, ongoing restructuring costs, and deteriorating prospects for the next renewals season as a result of weak operating performance are increasing negative pressure on the ratings.
Moody's further stated that the Baa1 IFSR is predicated on the Group breaking even in 2005. To the extent additional evidence emerges later in the year that this expectation is unlikely to be met, Moody's will contemplate taking downward rating action at that time.
Converium AG, based in Zurich, Switzerland, is the main operating company of Converium Holding AG, Zug, Switzerland. Converium Holding AG reported consolidated Gross Premiums Written of $3,840.9 million in 2004 and Shareholders' Equity of $1,580.8 million as of 31 March 2005.
A negative outlook was assigned to the following ratings:
Converium AG -- insurance financial strength rating of Baa1
Converium Rueckversicherung (Deutschland) AG - insurance financial strength rating of Baa1
$200 million 8.25% guaranteed subordinated notes due December 2032 (callable in 2007) issued by Converium Finance S.A., a wholly-owned subsidiary of Converium Holding AG -- subordinated debt rating of Ba1
London
Simon Harris
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
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London
Timour Boudkeev
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.