AM Best has affirmed the A (excellent) insurer financial strength rating for Converium AG and its core subsidiaries, with a stable outlook.
An insurer credit rating of ‘a’ was assigned to Converium Rueckversicherung Deutschland, Converium Reinsurance North America, Converium Insurance North America, and Converium Insurance UK.
In addition an issuer credit rating of ‘bbb’ was assigned to Converium Finance SA, while the issuer credit rating for Converium Holdings North America was downgraded to ‘bbb-‘ from ‘bbb’.
AM Best said the ratings reflected expected improvement in Converium’s consolidated earnings for 2004.
The ratings agency said this was expected to result from growth in net earned premiums of approximately 8%, a modest improvement in the company’s investment return and a higher level of funds available for investment derived from Converium’s growing portfolio of long-tail specialty business.
The company’s non-life combined ratio is expected to be broadly similar to the 2003 level of 96.8%, said AM Best, and the company’s life and health segment is expected to be profitable after taking into account additional reinsurance protection for the company’s volatile book of Guaranteed Minimum Death Benefit (GMDB) business.
AM Best said it expects Converium to maintain its risk-adjusted capital at the current level.
An offsetting factor in the rating was uncertainty relating to reserving levels for Converium’s US casualty business written between 1997 and 2001.
However, AM Best said continues to believe that in 2004, any deterioration is likely to be outweighed by favourable performance from business written during the calendar year.
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