Swiss reinsurer Converium reported strong growth of 35 percent in its April 1 open market treaty renewals along with improved profitability.
The Company said it “wrote and bound non-life contracts of $142 million, an increase of 35 percent. New and restructured business amounts to $52 million, while increases due to share or price increases resulted in a growth of $8 million. Business of $23 million was not renewed as it did not meet Converium’s profitability standards.”
The good performance bolsters the position taken by Converium’s management that the offer for the Company by France’s SCOR Group is too low, as it undervalues what the Company is actually worth (See IJ web site April 17, 16).
Converium’s bulletin notes that the increases reflect its “success in regaining business and establishing new client relationships following the recent ratings upgrade by Standard & Poor’s to ‘A-‘ (‘strong’).” Converium was formed when Zurich Financial Services spun off its reinsurance operations in September 2001. The Company lost its “A” rating in 2004, following the discovery of inadequate loss reserves. Go to: https://www.insurancejournal.com/magazines/west/2004/09/20/features/46622.htm for further information.
The April 1 renewals “primarily included business written in Asia-Pacific,” said the bulletin. “Compared with last year the profitability of the renewed business has slightly improved even though overall market conditions have continued to soften. As anticipated, Converium has clearly benefited from access to more attractive business as a result of the ratings upgrade.”
CEO commented: “I am very pleased with the April 1 renewals. The great results demonstrate that we deliver on our promises: Converium has taken a powerful first step towards restoring its market position and improving profitability following the ratings upgrade. We believe that the renewals are an unequivocal indication of our clients’ desire to maintain and rebuild strong business relationships with Converium as a stand-alone entity. We are very encouraged by our clients’ support.”
In concluding the report, Converium reaffirmed its “expectation of writing gross premiums for the 2007 calendar year of $2.2 billion, including Life & Health business.” The Company also reaffirmed its “commitment to adhere to strict underwriting standards in order to achieve its core target of growing the book of business at an improved profitability.”
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