AM Best has downgraded the financial strength ratings of Converium AG and its subsidiaries, following the group's profit warning on its second quarter results.
The rating was downgraded from A (excellent) to A- (excellent). At the same time AM Best also downgraded all insurer credit rating and related debt issues and placed all ratings under review with negative implications.
Converium issued a profit warning after experiencing further adverse reserve development.
AM Best said it had been factoring further adverse reserve developments into its ratings for some time, but it said the reserving action announced by Converium will cause its second quarter results to fall below expectations.
AM Best said it is currently assessing the full impact of this reserve strengthening and discussing with management any plans for raising new capital. The ratings agency said it aimed to resolve the under review situation as soon as possible.
In addition, AM Best said it was reviewing the core status of Converium Reinsurance (North America) Inc and Converium Insurance (North America) Inc.
The financial strength rating has been downgraded to A- (excellent) from A (excellent) and the issuer credit rating has been downgraded to “a-” from “a” for the following companies:
· Converium AG
· Converium Rueckversicherung (Deutschland) AG
· Converium Reinsurance (North America) Inc.
· Converium Insurance (North America) Inc.
· Converium Insurance (UK) Ltd
The issuer credit rating has been downgraded to “bbb-” from “bbb” for Converium Finance S.A.
The issuer credit rating has been downgraded to “bb+” from “bbb-” for Converium Holdings (North America) Inc.
The following debt rating has been downgraded to “bbb” from “bbb+”:
Converium Finance S.A.—
-- $200m 8.25% guaranteed subordinated notes, due December 2032 (guaranteed by Converium Holding AG and Converium AG)
The following debt rating has been downgraded to “bb+” from “bbb-”:
Converium Holdings (North America) Inc.—
-- $200m 7.125% unsubordinated senior notes, due October 2023 (originally issued by Zurich Reinsurance Centre Holdings, Inc and assumed by Converium Holdings (North America) Inc).
