Independent Actuary Draft Report Favors Winterthur in Dispute with XL

November 25, 2005

Credit Suisse Group announced that the Independent Actuary designated in the Sale and Purchase Agreement (SPA) between XL Insurance (Bermuda) Limited and Winterthur Swiss Insurance Company regarding the sale of Winterthur International in 2001 has released a Draft Report regarding the estimate of the “Seasoned Net Reserves Amount.”

Credit Suisse said the independent actuary’s draft conclusion of reserve liability “is closer to the estimate submitted by Winterthur. That amount, already provided for in the Winterthur accounts, is expected to become the relevant Seasoned Net Reserves Amount payable to XL.”

The bulletin also noted: “In a related determination regarding the seasoning of premiums received by XL, the Independent Actuary has also arrived at a draft conclusion closer to Winterthur’s estimate which, when issued in a Final Report, will result in a USD 9 Mio payment to Winterthur from XL. The Independent Actuary has reserved the right to adjust the relevant calculations in the Draft Reports for ‘manifest errors’ which might be discovered in the calculations before the Final Reports are issued on December 5, a common step in actuarial work.

“No new data can be introduced in this period, and actuarial and other judgments will not be revisited. The Independent Actuary’s team has worked with the two parties on these issues for seven months, and the Draft Reports comprehensively address all issues raised by XL and Winterthur. Once the Final Reports are released by the Independent Actuary, the so-called Seasoning Process can be considered completed.”

The announcement also indicated that “Winterthur participated with XL, in accordance with the terms of the SPA, in a review of any adverse development of loss and unearned premium reserves during a three-year post-completion seasoning period. This period expired on June 30, 2004. The provisions recorded by Winterthur on September 30, 2005, for this sale-related contingency, net of pre-payments to and risks retained by XL, amounted to $541 million ($550 million minus $9 million) plus interest accrued between June 30, 2004 and September 2005. The final payment to XL will include further interest up to settlement date and a $6 million increase agreed by the parties in the fourth quarter 2005.”

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