Converium today reports on its financial results for the second quarter 2004.

Tuesday, 27. July 2004 07:00

Second quarter 2004 highlights

* Operating loss[1]: US$ -300.4 million
* Impact from reserve strengthening: US$ -384.7 million
* Net loss: US$ -660.0 million
* Gross premiums written: US$ 1,027.6 million
* Non-life combined ratio: 140.5%
* Impact from reserve strengthening: 43.3%
* Non-life combined ratio 97.2%
pre-adjustment:
* Total investment income yield: 4.4%
* Shareholders' equity: US$ 1,349.2 million
* Cash flows: US$ 213.9 million


First half 2004 highlights

* Operating loss1: US$ -223.2 million
* Impact from reserve strengthening: US$ -427.7 million
* Net loss: US$ -594.3 million
* Gross premiums written: US$ 2,411.2 million
* Non-life combined ratio: 118.3%
* Impact from reserve strengthening: 24.1%
* Non-life combined ratio 94.2%
pre-adjustment:
* Total investment income yield: 4.3%
* Shareholders' equity: US$ 1,349.2 million
* Cash flows: US$ 442.5 million


As announced on July 20, 2004, Converium experienced continuing
higher than modeled US casualty loss emergence, primarily related to
the underwriting years 1997 to 2001. Against this backdrop,
Converium initiated a detailed internal review of its US casualty
book in the second quarter of 2004. This review is based on an
integrated approach combining underwriting, claims management,
actuarial pricing, and reserving perspectives. The results to date
have prompted Converium to bolster reserves for US general liability
and specialty liability lines of business - in particular umbrella,
professional liability, and excess & surplus lines[2] - by US$ 384.7
million. As part of this review and to assist with its assessment,
Converium has commissioned a leading firm of consulting actuaries to
conduct an external actuarial study of the Company's reserves held in
respect of the Zurich and New York businesses. The study will be
completed before the end of August.

These reserve actions triggered net impairments of US$ 269.8 million
of deferred tax assets and US$ 94.0 million of goodwill; both
impairments affect the balance sheet of Converium Reinsurance (North
America) Inc.

The reserve strengthening, the impairments of intangible balance
sheet positions, and additional changes in Converium's equity
resulted in a reduction of US$ 409.4 million of Converium's total
tangible equity since year-end 2003.


+-------------------------------------------------------------------+
| Total tangible | June 30, 2004 | December 31, |
| equity[3] | (unaudited) |-----------------------------|
| In US$ million | | 2003 | 2002 | 2001 |
|---------------------+---------------+---------+---------+---------|
| Total equity | 1,349.2 | 2,083.3 | 1,738.0 | 1,570.8 |
| Net deferred income | +50.4 | -186.8 | -257.9 | -193.9 |
| taxes | -49.2 | -140.2 | -117.6 | -112.0 |
| Goodwill | -27.6 | -24.1 | - | - |
| Other intangible | | | | |
| assets | | | | |
|---------------------+---------------+---------+---------+---------|
| Total tangible | 1,322.8 | 1,732.2 | 1,362.5 | 1,264.9 |
| equity | -409.4 | +369.7 | +97.6 | n.m. |
| - change | | | | |
+-------------------------------------------------------------------+


Converium is fully committed to maintaining a strong capitalization
that enables us to continue to execute our post-IPO strategy. In
order to achieve this objective, Converium is currently exploring all
options. The spectrum includes measures to de-leverage and de-risk
Converium's balance sheet resulting in reduced capital requirements
and transactions that would strengthen the capital base.

More specifically, Converium is taking the following actions in order
to reduce capital consumption:

* Converium will decrease investments in equity securities
and re-classify certain OECD government bonds from
available-for-sale to held-to-maturity. These measures are
expected to reduce capital requirements for investment risks by up
to US$ 125 million.

* Converium is currently working on retrospective and
prospective reinsurance solutions to mitigate premium and reserving
risks. These solutions are aimed at reducing capital requirements
by US$ 50 million to US$ 100 million.

Additionally, Converium is considering methods to bolster its capital
base, including the raising of additional capital. Based on the
information currently available Converium expects to increase its
capital base by US$ 250 million to US$ 400 million in order to
maintain a strong capitalization. Converium will specify the full set
of capital management measures once the external actuarial reserve
study is completed.

At the operating level, Converium will take the following immediate
steps to protect and enhance the underlying profitability of its
operations:

* Converium intends to establish a run-off unit focusing on
business written in underwriting years 2001 and prior and will
pursue an active commutation strategy.

* In the United States, Converium will substantially reduce
its exposure to lines of business which are capital-intensive due
to their high volatility. This would include so-called national
account writers of lead umbrella and excess & surplus lines, as
well as heavy commercial auto written on an excess basis. In
addition, Converium anticipates that it will significantly reduce
its writings of directors' & officers' liability due to its concern
of a weakening in market and policy conditions.

Converium's resolute steps to deal with its legacy issues should not
detract from the fact that recent underwriting years continue to show
a sound profitability. Excluding reserve developments, Converium
reported a non-life combined ratio of 97.2% for the second quarter of
2004, an improvement of 2.6 percentage points compared to the same
period of the prior year, and 94.2% for the first half of 2004, an
improvement of 4.1 percentage points compared to the same period of
2003.

The Chairman of the Board of Directors, Peter Colombo, said: "The
Board of Directors is in regular communication with management to
discuss the proposed actions to address the current situation. It is
the Board's view that the course of action proposed by the CEO and
the Global Executive Committee is in the best interest of our
shareholders."


+-------------------------------------------------------------------+
| Financial | Three months | Six months ended | Year |
| highlights: | ended | June 30 | ended |
| Income | June 30 | | Dec. 31 |
| statement | | | |
|-----------------+------------------+--------------------+---------|
| In US$ million, | | | | | |
| unless noted | 2004 | 2003 | 2004 | 2003 | 2003 |
|-----------------+----------+-------+----------+---------+---------|
| Gross premiums | 1,027.6 | 948.7 | 2,411.2 | 2,212.5 | 4,223.9 |
| written | +8.3% | | +9.0% | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Net premiums | 948.8 | 899.3 | 2,247.4 | 2,083.9 | 3,827.0 |
| written | +5.5% | | +7.8% | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Net premiums | 1,009.9 | 912.5 | 2,002.9 | 1,796.8 | 3,676.5 |
| earned | +10.7% | | +11.5% | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life loss | 114.2% | 74.0% | 93.1% | 73.5% | 71.5% |
| ratio[4] | +40.2pts | | +19.6pts | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life loss | 43.3% | -0.4% | 24.1% | 0.4% | 0.9% |
| ratio4: impact | +43.7pts | | +23.7pts | | |
| of prior years' | | | | | |
| developments | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life loss | 70.9% | 74.4% | 69.0% | 73.1% | 72.4% |
| ratio4 | -3.5pts | | -4.1pts | | |
| excluding prior | | | | | |
| years' | | | | | |
| developments | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life | 21.6% | 20.7% | 21.4% | 21.2% | 22.0% |
| underwriting | +0.9pts | | +0.2pts | | |
| expense | | | | | |
| ratio[5] | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life | 4.7% | 4.7% | 3.8% | 4.0% | 4.4% |
| administration | - | | -0.2pts | | |
| expense | | | | | |
| ratio[6] | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life | 140.5% | 99.4% | 118.3% | 98.7% | 97.9% |
| combined | +41.1pts | | +19.6pts | | |
| ratio[7] | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Non-life | 97.2% | 99.8% | 94.2% | 98.3% | 98.8% |
| combined ratio7 | | | | | |
| excluding prior | -2.6pts | | -4.1pts | | |
| years' | | | | | |
| developments | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Life & Health | 3.6 | 10.0 | 8.5 | 1.5 | -8.0 |
| technical | -64.0% | | +466.7% | | |
| result[8] | | | | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Total | 88.4 | 82.6 | 169.5 | 130.5 | 251.4 |
| investment | +7.0% | | +29.9% | | |
| results[9] | | | | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Total | 4.4% | 4.8% | 4.3% | 3.8% | 3.5% |
| investment | -0.4pts | | +0.5pts | | |
| income | | | | | |
| yield[10] | | | | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Operating | -300.4 | 61.9 | -223.2 | 88.3 | 206.0 |
| (loss) | n.m. | | n.m. | | |
| income[11] | | | | | |
| - change (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Net (loss) | -660.0 | 59.1 | -594.3 | 84.6 | 185.1 |
| income | n.m. | | n.m. | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| (Loss) earnings | -16.57 | 1.48 | -14.92 | 2.12 | 4.65 |
| per share (US$) | n.m. | | n.m. | | |
| - growth (%) | | | | | |
|-----------------+----------+-------+----------+---------+---------|
| Return on | n.m. | 13.6% | n.m. | 9.7% | 12.9% |
| equity[12] | n.m. | | n.m. | | |
| - change in | | | | | |
| percentage | | | | | |
| points | | | | | |
+-------------------------------------------------------------------+



+-------------------------------------------------------------------+
| Financial highlights: Balance | June 30, | March 31, | Dec. 31, |
| sheet | 2004 | 2004 | 2003 |
| In US$ million, unless noted | | | |
|---------------------------------+----------+-----------+----------|
| Total invested assets plus cash | 7,926.4 | 8,002.6 | 7,809.5 |
| - growth (%) | n.m. | +2.5% | |
|---------------------------------+----------+-----------+----------|
| Claims supporting capital[13] | 1,739.9 | 2,573.7 | 2,473.9 |
| - growth (%) | -32.4% | +4.0% | |
|---------------------------------+----------+-----------+----------|
| Shareholders' equity | 1,349.2 | 2,183.0 | 2,083.3 |
| - growth (%) | -38.2% | +4.8% | |
|---------------------------------+----------+-----------+----------|
| Book value per share (US$) | 33.90 | 54.80 | 52.38 |
| - growth (%) | -38.1% | +4.6% | |
|---------------------------------+----------+-----------+----------|
| Book value per share (CHF) | 42.45 | 69.42 | 65.21 |
| - growth (%) | -38.9% | +6.5% | |
+-------------------------------------------------------------------+


Converium is determined to put an end to the US casualty reserving
saga
Sound performance of recent underwriting years continues
Investment results in line with benchmarks

Converium has experienced significant adverse development in its US
casualty reinsurance lines for the last several years. Since 2001,
Converium recorded a total of US$ 668.5 million of additional
provisions on certain non-life business (2001: US$ 123.6 million;
2002: US$ 148.5 million; 2003: US$ -31.3 million; and first half of
2004: US$ 427.7 million). In 2003, the positive development of US$
31.3 million consisted of positive development on property lines (US$
113.5 million) and aviation and space (US$ 102.2 million), offset by
an adverse development on workers' compensation and professional
liability and other specialty liability lines (US$ 120.3 million) and
the motor and general third party liability lines (US$ 64.1
million). The reserve releases in 2003 were primarily from the 2002
underwriting year, while the US business written in 1997 to 2001
mainly saw continued strengthening.

On April 29, 2004, Converium announced that first quarter reported
losses from prior years' US casualty business had exceeded expected
loss emergence. In that release, Converium also stated the
expectation that the volatility of longer-tail risks is likely to
persist for some time. In the first quarter of 2004, the continuing
reserve volatility of old underwriting years resulted in net
strengthening of prior years' loss reserves of US$ 43.0 million,
consisting of US$ 10.1 million (primarily from the Western European
motor book) in the Standard Property & Casualty Reinsurance segment
and US$ 32.9 million in the Specialty Lines segment (particularly on
US business in the professional liability and other special liability
lines). This adverse loss reporting trend has continued and
accelerated in the second quarter of 2004. In response to the loss
development observed in the first and second quarters of 2004,
Converium has initiated additional reviews of its US casualty
business from an integrated underwriting, claims and actuarial
perspective in order to examine the adequacy of prior years'
provisions. The Chief Executive Officer and Chief Technical Officer
have conducted underwriting reviews on treaty accounts and lines of
business with material loss experience, supported by claims audits
and actuarial reserve reviews which Converium conducts in its
ordinary course of business. When deriving its estimates of ultimate
losses and its selection of loss development patterns as of June 30,
2004, Converium has reflected the accelerated claims development in
the more recent periods.

In the second quarter of 2004, based upon Converium's ongoing
analysis to date, Converium recorded strengthening of prior years'
loss reserves of US$ 384.7 million, consisting of US$ 96.0 million in
the Standard Property & Casualty Reinsurance segment and US$ 288.7
million in the Specialty Lines segment. In the Standard Property &
Casualty Reinsurance segment, the reserve strengthening primarily
occurred with respect to general third party liability lines (US$
99.3 million) in the United States. In the Specialty Lines segment,
the reserve strengthening arose primarily from the professional
liability and other special liability lines, in particular umbrella,
professional liability, and excess & surplus lines of business (US$
265.2 million) in the United States, related to accident years 1997
through 2001.


+-------------------------------------------------------------------+
| North American | Ultimate | Ultimate | Paid | IBNR |
| Business - | premium | loss | losses in | in % of |
| Underwriting years | | ratio | % of | case |
| 1997 to 2001, | | | ultimate | reserves |
| reserve positions as | | | losses | |
| of June 30, 2004 | | | | |
| | | | | |
| In US$ million, | | | | |
| unless noted | | | | |
|----------------------+----------+----------+-----------+----------|
| General Third Party | 420.7 | 113.3% | 46.9% | 342.6% |
| Liability | | | | |
|----------------------+----------+----------+-----------+----------|
| Umbrella | 280.7 | 140.0% | 43.6% | 276.8% |
|----------------------+----------+----------+-----------+----------|
| Professional | 734.1 | 111.1% | 40.1% | 253.2% |
| Liability | | | | |
|----------------------+----------+----------+-----------+----------|
| Excess & Surplus | 402.6 | 139.2% | 57.4% | 121.0% |
| Lines | | | | |
+-------------------------------------------------------------------+

Converium commissioned a leading firm of consulting actuaries to
conduct a reserve review that will be completed before the end of
August. Any adjustment to Converium's estimate of its loss reserve
position and potential loss exposure that is indicated by this work
will be recorded in the third quarter of 2004.

Based upon the information currently available, Converium does not
expect further material strengthening of its loss reserve position.

Converium's investment results were in line with the respective
benchmarks. In the second quarter of 2004, rising interest rates led
to a change in net unrealized gains on investments (pre-tax) of minus
US$ 139.2 million. The fact that approximately 30% of Converium's
fixed-maturities portfolios (including the Funds Withheld Asset) are
not interest-rate-sensitive should mitigate the adverse impact on
total equity of a possible future rise in interest rates.

Converium's consolidated income tax expense for the three and six
months ended June 30, 2004 reflected an additional expense of US$
269.8 million net, related to the establishment of a full valuation
allowance against the net deferred income tax balances carried at
Converium Reinsurance (North America) Inc., the legal entity where
the majority of the reserve strengthening occurred. As of June 30,
2004, Converium had total net operating losses carried forwards of
US$ 959.1 million available to offset future taxable income of
certain branches and subsidiaries. The majority of these net
operating losses carried forwards relate to Converium Reinsurance
(North America) Inc. and will expire in the years 2020 through 2024.

Cash flows decreased by 22.7% to US$ 442.5 million, due to the
slowing down of new business growth as a result of an active cycle
management. This decrease also reflects increased claims payment
activity.

Based on stable exchange rates, gross premiums written increased by
3.8%, net premiums written increased by 2.6% and net premiums earned
increased by 6.3%.

Business Development

The following are comments on the development of Converium's three
main business segments and the Corporate Center. Reference is made
to the tables attached to this press release.

Standard Property & Casualty Reinsurance represented 33% of total net
premiums written in the second quarter of 2004. Converium's Standard
Property & Casualty Reinsurance segment reported a segment loss of
US$ 51.5 million for the three months ended June 30, 2004 as compared
to a segment income for the same period in 2003 of US$ 60.7 million.

In the second quarter of 2004 gross premiums written decreased by
15.7% to US$ 352.9 million, net premiums written decreased by 21.0%
to US$ 316.9 million and net premiums earned increased by 3.9% to US$
416.8 million.


+-------------------------------------------------------------------+
| Standard Property | Three months ended | Six months | Year |
| & Casualty | June 30 | ended | ended |
| Reinsurance - | | June 30 | Dec. 31 |
| Main lines of | | | |
| business | | | |
| Gross premiums |--------------------+----------------+---------|
| written in US$ | 2004 | 2003 | 2004 | 2003 | 2003 |
| million, | | | | | |
| unless noted | | | | | |
|-------------------+----------+---------+--------+-------+---------|
| Property | 158.9 | 200.7 | 437.9 | 480.5 | 859.2 |
| - growth (%) | -20.8% | | -8.9% | | |
|-------------------+----------+---------+--------+-------+---------|
| Motor | 101.6 | 86.3 | 381.7 | 295.0 | 512.1 |
| - growth (%) | +17.7% | | +29.4% | | |
|-------------------+----------+---------+--------+-------+---------|
| General Third | 72.4 | 83.6 | 177.6 | 168.2 | 292.9 |
| Party Liability | -13.4% | | +5.6% | | |
| - growth (%) | | | | | |
+-------------------------------------------------------------------+


Converium's distribution platform enables us to achieve a book of
business that is geographically diversified, broadly spread by line
of business, and balanced by speed of settlement. Converium
continues to apply strict underwriting discipline and cycle
management in order to achieve adequate returns on risk-based
capital.

The decrease of the property line was primarily driven by the
softening of property rates and a consequent non-renewal of several
large contracts in North America and the reduced premium writings
from Asia and Latin America. The strong growth in the motor line
reflects Converium's strong market position in Western Europe. The
premium development in the general third party liability line is the
result of growth in Western Europe that was offset by reduced
writings in the United States during the second quarter.

Overall, the results of Converium's catastrophe business were well
within the model-based expectations.

During the second quarter of 2004, US$ 96.0 million of reserve
strengthening were recorded. This reserve strengthening was driven
by the general third party liability line in the United States (US$
99.3 million).

The Standard Property & Casualty Reinsurance segment's non-life
combined ratio7 was 122.2% for the second quarter of 2004 (compared
to 93.1% for the second quarter of 2003) including the reserve
strengthening.

Based on stable exchange rates, gross premiums written increased by
1.0%, net premiums written decreased by 1.6%, and net premiums earned
increased by 2.7%.

Specialty Lines represented 57% of total net premiums written in the
second quarter of 2004. For the second quarter of 2004 Converium's
Specialty Lines segment reported a segment loss of US$ 224.3 million
compared to a segment income of US$ 21.0 million for the same period
of the previous year.

In the second quarter of 2004, gross premiums written increased by
25.6% to US$ 566.7 million, net premiums written increased by 31.5%
to US$ 537.3 million and net premiums earned increased by 13.6% to
US$ 471.6 million.


+-------------------------------------------------------------------+
| Specialty Lines - | Three months ended | Six months | Year |
| Main lines of | June 30 | ended | ended |
| business | | June 30 | Dec. 31 |
| | | | |
| Gross premiums | | | |
| written in US$ |--------------------+----------------+---------|
| million, | 2004 | 2003 | 2004 | 2003 | 2003 |
| unless noted | | | | | |
|-------------------+----------+---------+--------+-------+---------|
| Professional | 160.9 | 120.4 | 320.9 | 246.9 | 541.2 |
| Liability and | +33.6% | | +30.0% | | |
| Other Special | | | | | |
| Liability | | | | | |
| - growth (%) | | | | | |
|-------------------+----------+---------+--------+-------+---------|
| Aviation & Space | 114.5 | 82.8 | 228.8 | 206.8 | 485.3 |
| - growth (%) | +38.3% | | +10.6% | | |
|-------------------+----------+---------+--------+-------+---------|
| Workers' | 92.0 | 88.8 | 147.4 | 211.6 | 309.0 |
| Compensation | +3.6% | | -30.3% | | |
| - growth (%) | | | | | |
|-------------------+----------+---------+--------+-------+---------|
| Credit & Surety | 87.4 | 59.7 | 135.5 | 116.7 | 261.3 |
| - growth (%) | +46.4% | | +16.1% | | |
+-------------------------------------------------------------------+


The Specialty Lines' book of business is driven by Converium's
particular position in those segments of the global reinsurance
market place where entry barriers are defined by specific
underwriting skills and market expertise. Converium is committed to
applying strict underwriting discipline and cycle management in order
to achieve adequate returns on risk-based capital allocated to the
Specialty Lines segment.

The strong growth in the professional liability and other special
liability lines resulted from reduced writings in the United States
that were offset by a strong growth of new business written in
Western Europe. In the aviation and space line of business, the
growth in premium mirrored the increase in Converium's share in the
pools managed by Global Aerospace Underwriting Managers Limited and a
switch in the structure of inuring protections for the pool from
proportional to excess of loss reinsurance. The credit & surety line
grew as a result of new business written and increased shares on
existing business.

During the second quarter of 2004, US$ 288.7 million of reserve
strengthening were recorded. The Specialty Lines segment's non-life
combined ratio7 was 157.2% for the second quarter of 2004 (compared
to 105.5% for the second quarter of 2003) including the reserve
strengthening, and 96.0% excluding the reserve strengthening,
reflecting the strong underlying profitability of this segment's most
recent underwriting years.

Based on stable exchange rates, gross premiums written increased by
4.4%, net premiums written increased by 5.1% and net premiums earned
increased by 7.4%.

Life & Health Reinsurance represented 10% of total net premiums
written in the second quarter of 2004. For the second quarter 2004
Converium's Life & Health Reinsurance segment reported a segment
income of US$ 1.0 million, a decrease of US$ 10.7 million (2Q2003:
US$ 11.7 million) compared to the same period of 2003.

In the second quarter 2004, gross premiums written increased by 36.5%
to US$ 108.0 million, net premiums written increased by 5.5% to US$
94.6 million, and net premiums earned increased by 26.3% to US$ 121.5
million.


+-------------------------------------------------------------------+
| Life & Health | Three months ended | Six months | Year |
| Reinsurance - | June 30 | ended | ended |
| Main lines of | | June 30 | Dec. 31 |
| business | | | |
| Gross premiums | | | |
| written in US$ |--------------------+----------------+---------|
| million, unless | 2004 | 2003 | 2004 | 2003 | 2003 |
| noted | | | | | |
|-------------------+-----------+--------+--------+-------+---------|
| Life & Disability | 59.7 | 34.2 | 141.5 | 106.3 | 198.9 |
| - growth (%) | +74.6% | | +33.1% | | |
|-------------------+-----------+--------+--------+-------+---------|
| Accident & Health | 48.2 | 44.9 | 123.1 | 116.5 | 207.6 |
| - growth (%) | +7.3% | | +5.7% | | |
+-------------------------------------------------------------------+


The strong growth in the life & disability line was driven by the
expansion of existing financing reinsurance transactions in
Continental Europe and increased shares of current business.

The Life & Health Reinsurance segment's technical result8 for the
second quarter of 2004 was US$ 3.6 million, a decrease of US$ 6.4
million compared to the prior year. This decrease was primarily
attributable to an increase in underwriting acquisition costs in 2004
as compared to 2003 due to the revision of profit commission accruals
for North American accident and health business. In addition, there
were increases in commissions related to premium growth in financing
reinsurance transactions in Continental Europe.

Based on stable exchange rates, gross premiums written increased by
13.9%, net premiums written increased by 9.9%, and net premiums
earned increased by 16.6%.

The Corporate Center carries certain administration expenses such as
the costs of the Board of Directors, the Global Executive Committee,
and other global functions. In the second quarter of 2004 other
operating and administration expenses were US$ 7.3 million
(unchanged).
* * * * * * *

The company has made it a policy not to provide any quarterly or
annual earnings guidance and it will not update any past outlook for
full year earnings. It will however provide investors with
perspectives on its value drivers, its strategic initiatives and
those factors critical to understanding its business and operating
environment.


Enquiries:


Michael Schiendorfer Zuzana Drozd
Media Relations Manager Head of Investor Relations

michael.schiendorfer@converium.com zuzana.drozd@converium.com

Phone: +41 (0) 1 639 96 57 Phone: +41 (0) 1 639 91
Fax: +41 (0) 1 639 76 57 20
Fax: +41 (0) 1 639
71 20




About Converium

Converium is an independent leading global multi-line reinsurer known
for its innovation, professionalism and service. Today Converium
ranks among the top ten professional reinsurers and employs
approximately 850 people in 23 offices around the globe. Converium
is organized into three business segments: Standard Property &
Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance.
Converium's net losses for the September 11, 2001 terrorist attacks
in the United States are capped at US$ 289.2 million by its former
parent, Zurich Financial Services. Converium has minimal A&E
exposures. Converium has an "A -" rating (negative outlook) from
both Standard & Poor's and A.M. Best Company.

Important Disclaimer

This document contains forward-looking statements as defined in the
U.S. Private Securities Litigation Reform Act of 1995. It contains
forward-looking statements and information relating to the Company's
financial condition, results of operations, business, strategy and
plans, based on currently available information. These statements
are often, but not always, made through the use of words or phrases
such as 'expects', 'should continue', 'believes', 'anticipates',
'estimates' and 'intends'. The specific forward-looking statements
cover, among other matters, the reinsurance market, the outcome of
insurance regulatory reviews, the Company's operating results, the
rating environment and the prospect for improving results, the amount
of capital required and impact of its capital improvement measures
and its reserve position. Such statements are inherently subject to
certain risks and uncertainties. Actual future results and trends
could differ materially from those set forth in such statements due
to various factors. Such factors include general economic
conditions, including in particular economic conditions; the
frequency, severity and development of insured loss events arising
out of catastrophes, as well as man-made disasters; the outcome of
our reserve review, our ability to raise capital and the success of
our capital improvement measures, the ability to exclude and to
reinsure the risk of loss from terrorism; fluctuations in interest
rates; returns on and fluctuations in the value of fixed income
investments, equity investments and properties; fluctuations in
foreign currency exchange rates; rating agency actions; changes in
laws and regulations and general competitive factors, and other risks
and uncertainties, including those detailed in the Company's filings
with the U.S. Securities and Exchange Commission and the SWX Swiss
Exchange. The Company does not assume any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Please note that the company has made it a policy not to provide any
quarterly or annual earnings guidance and it will not update any past
outlook for full year earnings. It will however provide investors
with perspective on its value drivers, its strategic initiatives and
those factors critical to understanding its business and operating
environment.
This document does not constitute, or form a part of, an offer, or
solicitation of an offer, or invitation to subscribe for or purchase
any securities of the Company. Any securities to be offered as part
of a capital raising will not be registered under the US securities
laws and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the US securities laws.



www.converium.com



+-------------------------------------------------------------------+
|Consolidated |Three months ended| Six months |Year ended|
|statements of | June 30 | ended | Dec. 31 |
|income (Unaudited) | | June 30 |(audited) |
| | | | |
| |------------------+-----------------+----------|
|In US$ million, | 2004 | 2003 | 2004 | 2003 | 2003 |
|unless noted | | | | | |
|-------------------------------------------------------------------|
|Revenues |
|-------------------------------------------------------------------|
|Gross premiums | 1,027.6| 948.7| 2,411.2| 2,212.5| 4,223.9|
|written | +8.3%| | +9.0%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Less ceded premiums| -78.8| -49.4| -163.8| -128.6| -396.9|
|written | +59.5%| | +27.4%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Net premiums | 948.8| 899.3| 2,247.4| 2,083.9| 3,827.0|
|written | +5.5%| | +7.8%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Net change in | 61.1| 13.2| -244.5| -287.1| -150.5|
|unearned premiums | +362.9%| | -14.8%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Net premiums earned| 1,009.9| 912.5| 2,002.9| 1,796.8| 3,676.5|
|- change (%) | +10.7%| | +11.5%| | |
|-------------------+----------+-------+--------+--------+----------|
|Net investment | 75.9| 66.8| 147.8| 123.0| 233.0|
|income | +13.6%| | +20.2%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Net realized | 12.5| 15.8| 21.7| 7.5| 18.4|
|capital gains | -20.9%| | +189.3%| | |
|(losses) | | | | | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Other income (loss)| 3.0| -| 2.9| -4.4| 2.7|
|- change (%) | n.m.| | n.m.| | |
|-------------------+----------+-------+--------+--------+----------|
|Total revenues | 1,101.3| 995.1| 2,175.3| 1,922.9| 3,930.6|
|- change (%) | +10.7%| | +13.1%| | |
|-------------------------------------------------------------------|
|Benefits, losses and expenses |
|-------------------------------------------------------------------|
|Losses, loss | -1,103.8| -677.1|-1,824.7|-1,332.7| -2,674.2|
|adjustment expenses| | | | | |
|and life benefits | +63.0%| | +36.9%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Underwriting | -223.3| -183.9| -431.2| -380.5| -803.2|
|acquisition costs | +21.4%| | +13.3%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Other operating and| | -48.0| -104.3| -96.9| -197.8|
|administration | -53.3| | +7.6%| | |
|expenses | +11.0%| | | | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Interest expense | -8.8| -8.4| -16.6| -17.0| -31.0|
|- change (%) | +4.8%| | -2.4%| | |
|-------------------+----------+-------+--------+--------+----------|
|Impairment of | -94.0| -| -94.0| -| -|
|goodwill | n.m.| | n.m.| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Total benefits, | -1,483.2| -917.4|-2,470.8|-1,827.1| -3,706.2|
|losses and expenses| +61.7%| | +35.2%| | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|(Loss) income | -381.9| 77.7| -295.5| 95.8| 224.4|
|before taxes | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Income tax expense | -278.1| -18.6| -298.8| -11.2| -39.3|
|- change (%) | n.m.| | n.m.| | |
|-------------------+----------+-------+--------+--------+----------|
|Net (loss) income | -660.0| 59.1| -594.3| 84.6| 185.1|
|-------------------+----------+-------+--------+--------+----------|
|Basic (loss) | | 1.48| -14.92| 2.12| 4.65|
|earnings per share | -16.57| | n.m.| | |
|(US$) | n.m.| | | | |
|- change (%) | | | | | |
|-------------------+----------+-------+--------+--------+----------|
|Pre-tax operating | -300.4| 61.9| -223.2| 88.3| 206.0|
|(loss) income | | | | | |
+-------------------------------------------------------------------+





Consolidated balance sheets June 30, March 31, Dec. 31,
In US$ million, unless noted 2004 2004 2003
(unaudited) (unaudited)
Invested assets
Held-to-maturity securities:
Fixed maturities 585.6 536.4 500.4
Available-for-sale securities:
Fixed maturities 4,734.4 4,614.9 4,428.2
Equity securities 862.4 854.8 840.2
Other investments 203.1 155.6 173.5
Short-term investments 90.2 67.0 55.8
Total investments 6,475.7 6,228.7 5,998.1
Funds Withheld Asset 1,370.5 1,459.4 1,530.6
Total invested assets 7,846.2 7,688.1 7,528.7
Other assets
Cash and cash equivalents 80.2 314.5 280.8
Premiums receivables:
Current 222.0 146.2 182.8
Accrued 2,136.2 2,186.9 1,825.5
Reinsurance assets:
Underwriting reserves 1,593.3 1,715.5 1,718.6
Insurance balances receivable, net 215.7 222.0 224.0
Funds held by reinsureds 1,560.5 1,708.4 1,374.0
Deferred policy acquisition costs 419.4 419.3 380.1
Deferred income taxes 82.9 337.4 345.1
Other assets 454.1 586.3 495.0
Total assets 14,610.5 15,324.6 14,354.6
Liabilities
Losses and loss adjustment expenses, 8,520.8 8,169.6 7,842.8
gross
Unearned premiums, gross 1,678.5 1,751.9 1,467.4
Future life benefits, gross 498.9 492.5 483.5
Other reinsurance liabilities 1,256.8 1,246.0 1,087.3
Funds held under reinsurance 489.0 533.9 529.8
contracts
Deferred income taxes 133.3 193.5 158.3
Accrued expenses and other 293.3 363.5 311.6
liabilities
Debt 390.7 390.7 390.6
Total liabilities 13,261.3 13,141.6 12,271.3
Equity
Common stock 253.0 253.0 253.0
Additional paid-in capital 1,331.8 1,325.0 1,326.7
Treasury stock -8.8 -10.1 -10.0
Unearned stock compensation -7.7 -5.2 -6.1
Accumulated other comprehensive
income:
Net unrealized gains on investments, 59.3 177.4 145.3
net of taxes
Cumulative translation adjustments 109.4 118.9 116.1
Total accumulated other 168.7 296.3 261.4
comprehensive income
Retained (deficit) earnings -387.8 324.0 258.3
Total equity 1,349.2 2,183.0 2,083.3
Total liabilities and equity 14,610.5 15,324.6 14,354.6

Consolidated statements of cash Three months ended Six months ended
flows June 30 June 30
(Unaudited)
In US$ million, unless noted 2004 2003 2004 2003
Net (loss) income -660.0 59.1 -594.3 84.6
Net realized capital (gains) -12.5 -15.8 -21.7 -7.5
losses on investments
Amortization of premium/discount 14.6 10.0 28.7 21.0
Depreciation and amortization 7.0 9.1 12.2 15.3
Impairment of goodwill 94.0 - 94.0 -
Total adjustments 103.1 3.3 113.2 28.8
Deferred policy acquisition -3.4 6.6 -43.9 -51.1
costs
Reinsurance assets 118.6 41.4 130.6 51.0
Funds held by reinsureds 128.4 -37.0 -204.6 -55.7
Funds Withheld Asset 79.3 45.5 157.0 68.6
Premiums receivables -53.5 -229.3 -368.2 -484.1
Unearned premiums, gross -58.9 -15.4 219.5 280.7
Losses and loss adjustment 400.3 112.7 707.8 293.7
expenses, gross
Future life benefits, gross 8.2 -36.9 21.1 30.2
Funds held under reinsurance -39.7 26.4 -41.0 26.3
contracts
Other reinsurance liabilities 21.3 307.1 186.7 229.2
Income taxes, net 238.6 25.3 259.6 21.0
Net change in all other -68.4 55.5 -101.0
operational assets and 49.4
liabilities
Total changes in operational 770.8 301.9 923.6 459.2
assets and liabilities
Cash provided by operating 213.9 364.3 442.5 572.6
activities
Purchases of fixed maturities -53.1 -20.6 -92.7 -20.6
held-to-maturity
Proceeds from sales and 893.1 1,291.2 1,629.2 2,103.4
maturities of fixed maturities
available-for-sale
Purchases of fixed maturities -1,156.5 -1,582.7 -1,994.8 -2,710.8
available-for-sale
Cash flows from investing -316.5 -312.1 -458.3 -628.0
activities (fixed maturities)
Proceeds from sales of equity 332.8 17.9 449.2 28.2
securities
Purchases of equity securities -364.4 -136.1 -520.9 -159.3
Cash flows from investing -31.6 -118.2 -71.7 -131.1
activities (equity securities)
Net (increase) decrease in -23.9 21.2 -34.4 183.8
short-term investments
Proceeds from sales of other 23.1 2.9 23.1 6.6
assets
Purchases of other assets -42.3 -7.6 -51.6 -59.7
Cash flows from investing -43.1 16.5 -62.9 130.7
activities (other)
Net cash used in investing -391.2 -413.8 -592.9 -628.4
activities
Net purchases of common shares -2.4 -2.6 -4.9 -6.8
Dividends to shareholders -47.9 -29.4 -47.9 -29.4
Net cash used in financing -50.3 -32.0 -52.8 -36.2
activities
Effect of exchange rate changes -6.7 8.3 2.6 9.9
on cash and cash equivalents
Change in cash and cash -234.3 -73.2 -200.6 -82.1
equivalents
Cash and cash equivalents as of - - 280.8 361.5
January 1
Cash and cash equivalents as of -234.3 -73.2 80.2 279.4
June 30




Three months
Segments ended Change Six months ended Change
(Unaudited) June 30, June 30,
In US$ million, 2004 2003 (%) 2004 2003 (%)
unless noted
Standard Property & Casualty Reinsurance
Gross premiums 352.9 418.4 -15.7% 1,076.1 1,000.9 +7.5%
written
Net premiums written 316.9 401.1 -21.0% 988.5 940.7 +5.1%
Net premiums earned 416.8 401.1 +3.9% 860.2 787.2 +9.3%
Non-life loss 92.1% 65.1% +27.0pts 79.6% 65.9% +13.7pts
ratio[14]
Non-life 23.6% 23.2% +0.4pts 22.2% +0.1pts
underwriting expense 22.1%
ratio[15]
Non-life 6.5% 4.8% +1.7pts 4.3% +0.3pts
administration 4.0%
expense ratio[16]
Non-life combined 122.2% 93.1% +29.1pts 106.1% 92.0% +14.1pts
ratio[17]
Total investment 34.5 33.0 +4.5% 67.2 52.2 +28.7%
results[18]
Segment (loss) -51.5 60.7 n.m. 8.9 109.8 -91.9%
income
Retention ratio[19] 89.8% 95.9% -6.1pts 91.9% 94.0% -2.1pts

Specialty Lines
Gross premiums 566.7 451.2 +25.6% 1,070.4 988.8 +8.3%
written
Net premiums written 537.3 408.5 +31.5% 1,015.6 930.9 +9.1%
Net premiums earned 471.6 415.2 +13.6% 916.9 823.5 +11.3%
Non-life loss 133.8% 82.5% +51.3pts 105.8% 80.9% +24.9pts
ratio14
Non-life
underwriting expense 19.8% 18.3% +1.5pts 20.5% 20.3% +0.2pts
ratio15
Non-life
administration 3.6% 4.7% -1.1pts 3.4% 4.0% -0.6pts
expense ratio16
Non-life combined 157.2% 105.5% +51.7pts 129.7% 105.2% +24.5pts
ratio17
Total investment 47.7 43.4 +9.9% 90.1 68.5 +31.5%
results18
Segment (loss) -224.3 21.0 n.m. -185.7 22.2 n.m.
income
Retention ratio19 94.8% 90.5% +4.3pts 94.9% 94.1% +0.8pts

Life & Health Reinsurance
Gross premiums 108.0 79.1 +36.5% 264.7 222.8 +18.8%
written
Net premiums written 94.6 89.7 +5.5% 243.3 212.3 +14.6%
Net premiums earned 121.5 96.2 +26.3% 225.8 186.1 +21.3%
Underwriting expense
ratio Life & 26.1% 15.5% +10.6pts 22.8% 21.4% +1.4pts
Health[20]
Administration
expense ratio Life & 6.4% 2.7% +3.7pts 4.4% 3.1% +1.3pts
Health[21]
Total investment 6.2 6.2 - 12.2 9.8 +24.5%
results18
Segment income 1.0 11.7 -91.5% 5.9 1.4 +321.4%
Retention ratio19 87.6% n.m. n.m. 91.9% 95.3% -3.4pts

Corporate Center
Operating and
administration -7.3 -7.3 - -16.9 -16.2 +4.3%
expenses

[1] Operating (loss) income is defined as pre-tax (loss) income
excluding pre-tax net realized capital gains or losses and impairment
of goodwill.
[2] Excess & surplus lines are defined as long-tail, high-hazard
severity coverage that standard line carriers or underwriters do not
provide. The definition differs from carrier to carrier and changes
according to market conditions and supply/demand developments.
Umbrella liability policies provide additional insurance protection
above other insurance policies. They are very long-tailed as the
protection of the underlying policies needs to be used up before
umbrella limits can be utilized.
[3] Total tangible equity is an important measure to assess
financial strength and often applied by rating agencies and financial
analysts.
[4] Non-life loss ratio is defined as losses and loss adjustment
expenses divided by net premiums earned.
[5] Non-life underwriting expense ratio is defined as underwriting
acquisition costs divided by net premiums earned.
[6] Non-life administration expense ratio is defined as other
operating and administration expenses divided by net premiums
written.
[7] Non-life combined ratio is defined as non-life loss ratio (to
premiums earned) plus non-life underwriting expense ratio (to
premiums earned) plus non-life administration expense ratio (to
premiums written).
[8] Life & Health technical result is defined as net premiums
earned minus losses, loss adjustment expenses and life benefits minus
underwriting acquisition costs plus technical interests.
[9] Total investment results are defined as net investment income
plus net realized capital gains (losses).
[10] Total investment income yield is defined as net investment
income plus net realized capital gains (losses) divided by average
total invested assets (including cash and cash equivalents), pre-tax
and annualized.
[11] Operating (loss) income is defined as pre-tax (loss) income
excluding pre-tax net realized capital gains or losses and impairment
of goodwill.
[12] Return on equity is defined as net income (after-tax) divided
by shareholders' equity at the beginning of the period, annualized.
[13] Claims supporting capital is defined as total equity plus debt.
[14] Non-life loss ratio is defined as losses and loss adjustment
expenses divided by net premiums earned.
[15] Non-life underwriting expense ratio is defined as underwriting
acquisition costs divided by net premiums earned.
[16] Non-life administration expense ratio is defined as other
operating and administration expenses divided by net
premiums written.
[17] Non-life combined ratio is defined as non-life loss ratio (to
premiums earned) plus non-life underwriting expense ratio (to
premiums earned) plus non-life administration expense ratio (to
premiums written).
[18] Total investment results are defined as net investment income
plus net realized capital gains (losses).
[19] Retention ratio is defined as net premiums written divided by
gross premiums written.
[20] Life & Health underwriting expense ratio is defined as
underwriting expenses divided by net premiums earned.
[21] Life & Health administration expense ratio is defined as other
operating and administration expenses divided by net premiums
written.
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Author:
Hugin
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