Swiss reinsurer Converium announced that it has completed the first stages of an internal investigation into its accounts, “launched against the backdrop of ongoing investigations by regulators and governmental authorities into non-traditional insurance and reinsurance products.” (See IJ Website Nov. 4).
Following the review the company has released its delayed third quarter earnings report, which details a $6.9 million loss. For the nine months ended September 30, 2005, Converium reported net income of $34.5 million.
The accounting review, which the company indicated is being “overseen by the Audit Committee with the assistance of independent outside counsel,” will continue, as the investigation goes over balance sheet figures as far back as March 31, 2003. Converium said it “expects to report in full on the effects of the restatement on its previously reported financial information in the near future.”
The restated results, although falling short of analysts’ expectations, did have at least one positive aspect. Converium said that, “following the restatement of accounts, shareholders’ equity as of June 30, 2005 increases by $ 69.3 million to $ 1.7175 billion.”
Converium acknowledged the receipt of “subpoenas and informal inquiries from certain governmental authorities with respect to non-traditional insurance and reinsurance products.” The bulletin said the “Company is in the process of sharing the results of its internal review with relevant authorities and will continue to respond to all regulatory inquiries, as appropriate.” This could result in further restatements of its financial results.
Peter C. Colombo, Chairman of the Board of Directors and the Audit Committee, commented: “The Audit Committee believes that Converium’s internal review was comprehensive and thorough. Based on the review, we now feel comfortable publishing important data such as our most recent equity position and relevant details pertaining to the third quarter of 2005. As anticipated, the restatement had a positive impact on Converium’s June 30, 2005 shareholders’ equity.
“Based on our rigorous internal review, we do not have any reason to believe that there are any other transactions that require restatement. Of course, we cannot exclude the possibility that further action will be necessary as the governmental inquires will continue and we intend to cooperate with the regulators,” he added.
The full report and accompanying financial figures may be obtained on the company’s Website at: http://www.converium.com.
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