S&P Keeps Converium’s Ratings on CreditWatch/Positive

December 18, 2006

Standard & Poor’s Ratings Services noted that its “BBB+” long-term counterparty credit and its insurer financial strength ratings on Converium AG, and “BBB+” long-term insurer financial strength ratings on guaranteed operating entities Converium R├╝ckversicherung (Deutschland) AG and Converium Insurance (U.K.) Ltd., “remain on CreditWatch with positive implications, where they were placed on Oct. 17, 2006.”

S&P said the “CreditWatch update follows the Dec.14 announcement of the closing of National Indemnity Co.’s acquisition of the Converium group’s North American operations [See IJ web site Dec. 14], including Converium Holdings (North America) Inc. (‘BBB/Stable/–‘) and Converium Reinsurance (North America) Inc. (‘R/’).”

S&P did indicate that it “views the transaction favorably.” It described the sale as “clean-cut” in that it was concluded “without guarantees and seasoning agreements,” to a reputable buyer whose new ownership does not disadvantage policy- or debt holders of its former North American operations.

“As a result, the group has successfully removed one of the two obstacles to a possible upgrade,” S&P continued. “The remaining hurdle is the successful conclusion of regulatory investigations.” However S&P restated its “belief that there is now a higher probability that the group will in the short term successfully settle with regulators in respect of transactions subject to regulatory inquiries at a cost that is not material.”

“When the achievement of such a settlement becomes certain, we will raise our counterparty credit and insurer financial strength ratings on Converium AG and its guaranteed operating entities to ‘A-‘ and remove the ratings from CreditWatch,” stated S&P credit analyst Marcus Rivaldi.

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