Converium 2003 Net up 73% at $185 Million

February 17, 2004

Swiss-based reinsurer Converium boosted its net earnings by 73.3 percent last year to $185.1 million, compared to $106.8 million in 2002.

Gross premiums written were up 19.5 percent to $4.2239 billion from $3.5358 billion in 2002, while the company’s combined ratio fell from 103.7 to 97.9.

CEO Dirk Lohmann commented: “The substantial improvement in the full year 2003 operating income, absent the influence of tax and capital market fluctuations (e.g. impairment charges), is clear evidence of the good performance of our core activities which reflects our stringent underwriting discipline and the current favorable market environment. In addition to the positive financial results for 2003, the cash flows generated through the continuing growth in longer-tail lines and lower paid loss ratios increased total invested assets plus cash and cash equivalents by US$ 1.3 billion to US$ 7.8 billion. Although our non-life combined ratio has improved by 5.8 percentage points to 97.9% it is not fully reflective of the expected profit to be generated by the underwriting activities of the 2003 calendar year because a substantial part of the expected longer-tail business’ profitability should emerge as investment income in future periods. This is why the growth in operating cash flows is such an important performance metric.”

He added that the company had achieved the good results through “strict underwriting discipline and cycle management” along with “the appointment of the Chief Risk Officer and the Chief Technical Officer to the Global Executive Committee. He indicated that “the 2004 renewals so far reflect Converium’s prudent underwriting. We did not relax our pricing targets or underwriting standards. This resulted in a moderate rate of growth in gross premiums written but should, absent any extraordinary shock losses, have a positive influence on the development of Converium’s operating performance.”

CFO Martin Kauer noted the increased value of the company and its “favorable total return on investments of 5.7 percent,” which “contributed to an increase in book value per share of 20.3 percent” to $ 52.38 per share. “Overall, our capital adequacy remains strong and total claims supporting capital is now at US$ 2.5 billion,” he continued. “The increase in shareholders’ equity by almost US$ 350 million to US$ 2.1 billion means that Converium’s scope for further issuance of non-dilutive hybrid debt instruments is enhanced. Our listing on both the NYSE and the SWX Swiss Exchange gives Converium the desired financial flexibility to access all major capital markets should the need arise.”

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