ZFS Floats Converium, Two Top Exec’s to Leave

Zurich Financial Services priced the shares of the initial public offering of Converium, its recently spun-off reinsurance operations, in the mid range of the expected price at Sw.Frs. 82, about $ 50. ADS shares traded on the NYSE, which represent half of one share, were priced at $24.59. ZFS earlier announced that its recently appointed COO, Constantine Iordanou, had accepted a position outside the company, and that long-time CFO Guenther Gose had announced plans to retire by mid 2002.

The global offering of 35 million shares, which will probably be increased by 5 million shares to cover over-allotments, will raise nearly $2 billion. ZFS will net around $1.1 billion after expenses and the deduction of its capital contribution to Converium. As part of the spin-off of Converium ZFS has retained most of the long-tail liability related to asbestos claims, and has capped Converium’s exposure to the Sept.11 attacks at $289 million.

The departure of Iordanou and Gose was seen by analysts as a sign that ZFS’ strategic focus is still far from clear, despite assurances from its Chairmen and CEO Rolf Hüppi that its recent financial restructuring – spinning off Converium and selling its asset management unit, Zurich Scudder Investments to Deutsche Bank (See IJ Website Dec. 5) – had put the company back on track after a series of profit warnings and disappointing earnings.

Hüppi himself has been under pressure for some time to give up his dual role as Chairman and CEO, but has so far insisted that it remains in ZFS’ best interest that he continue in these positions.