Almost concurrently with the announcement of SCOR’s greatly improved 2006 results (See above article), Swiss-based Converium issued a bulletin, which indicated the presentation “included information which could lead Converium’s shareholders to false conclusions. Some of Converium’s financial targets presented in the SCOR communication were factually incorrect or incomplete.”
SCOR acquired 32.9 percent of Converium’s share capital earlier this year (See IJ web site Feb. 19). It said at the time that a “combination of Converium and SCOR is a unique strategic opportunity to create a Top 5 global multi-line reinsurer in this time of market consolidation.” Converium’s management has consistently opposed SCOR’s takeover, insisting that the offer undervalues the Company (See IJ web site March 21).
Converium’s CFO Paolo De Martin stated: “We urge our shareholders to carefully review SCOR’s analysis concerning Converium. Our return on equity target is 14 percent over the cycle, for the full year and beyond 2009, and not just for 2009, as erroneously stated by SCOR.
“We target a long term S&P capital adequacy ratio of 140 percent, which is well above the minimum security level required for an A- rating. This target already includes the anticipated $ 300 million of funds to be returned to shareholders in 2007. In addition, Converium intends to achieve a dividend payout-ratio of 25 percent-35 percent, and not 0 percent-35 percent as suggested by SCOR.”
He also reiterated Converium’s warning that SCOR’s bid is a hostile one and “has the potential to destroy substantial value.”
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