Swiss reinsurer Converium has said it would consider an adjustment to its reserve position during the third quarter of 2004 to increase its carried reserves.
In a move to boost its reserving position, Converium has acquired a stop-loss retrospective retrocessional cover from National Indemnity, a member of the Berkshire Hathaway group.the results of the external review of its reserves, and the resulting measures it has taken.
The decision follws an independent review, conducted by Tillinghast, which said that Converium's net reserves were within a reasonable range of actuarial estimates.
The stop-loss arrangement provides cover against potential adverse reserve developments for the 2003 and prior underwriting years for all business written by Converium AG, Converium Reinsurance (North America) Inc, and Converuim Insurance (North America).
Following the review, Converium's operations in North America will be restructured.
Converium Reinsurance (North America) Inc. will be placed into orderly run off. The underwriting of North American Specialty Lines long-tail risks will be transferred to Zurich.
Converium Insurance (North America) will become the ongoing carrier in North America under a revised business plan. The capital base of this company will be enhanced, it said.
In addition, the company said it would recommend to shareholders that the company raised an additional $420m through a share issue, underwritten by a bank syndicate.
It said the restructuring of its asset portfolio and the commutation of prior years' business has reduced its capital requirement by more than $100m.
