Converium has said it is to restate its profits as a result of its ongoing extensive internal review of certain reinsurance transactions.
The company said it would correct the accounting treatment of certain transactions, primarily ceded reinsurance, replacing reinsurance accounting by deposit accounting.
Based on the findings of the review to date, Converium has estimated that the cumulative impact of the restatement should not reduce unaudited shareholders' equity of $1.65bn reported for 30 June 2005.
Converium said it will delay the release of its financial results for the third quarter of 2005, which were originally scheduled for 8 November. It anticipates that these will be released together with the full set of restated results by mid-December.
The effects of the proposed adjustments on Converium's operations for particular prior periods will be reflected in the restated results. Until the restated accounts are released, the company said previously published financial statements should no longer be relied on.
According to Converium, for the fourth consecutive quarter its aggregate prior year loss reserve levels have remained stable.
The company has estimated net losses from hurricanes Katrina, Rita, Dennis and Emily of approximately $50m.
Converium said the figure was modest compared to industry losses and reflected its reduced exposure in North America, following the decision taken in September 2004 to place Converium Reinsurance North America (CRNA) into run-off.
It added that the company's net impact from the August floods in Continental Europe was approximately $24m.
Converium commuted net liabilities of CRNA of close to $250m, with a positive contribution to net income of approximately $39m. The company said it had also made significant progress in reducing administrative expenses, which came down to around $40m, compared with $50m in the second quarter of 2005.
Converium reiterated its two major financial targets for 2005 – to achieve total gross premiums written of $2bn and to commute or otherwise settle CRNA net liabilities of approximately $500m.
