Converium Re To Runoff U.S. Operations
NU Online News Service, Sept. 10, 5:04 p.m. EDT?Converium Reinsurance, based in Zug Switzerland, said in the wake of rating firm downgrades it will put its North American operation in runoff and that the executive who managed them would resign.[@@]
Converium said Gary Prestia, a member of Converium's Global Executive Committee and chief technical officer, had submitted his resignation as president of Converium Reinsurance ( North America) Inc. (CRNA), which will be placed in runoff.
Converium said it regretted Mr. Prestia's decision to leave the company and thanked him for his valuable contribution to the company.
The firm's action followed Standard & Poor's downgrade of its ratings to BBB from A minus. S&P's action followed a prior downgrade by A.M. Best Co. to B plus plus.
Converium said changes in the company's global business plan will be communicated shortly and it is reviewing all options with its banks concerning a proposed share issue.Converium announced last week that a syndicate of banks had agreed to underwrite a proposed $420 million capital increase. A shareholders meeting to vote on the proposal will be held Sept. 28.
The company said it will not inject any additional capital into Converium Insurance (North America) as originally planned.
Proceeds from the capital-raising effort, Converium said, will be used to strengthen the capitalization of Converium AG, Zurich, and Converium R?ckversicherung AG (Deutschland), Cologne, in order to protect the company's franchise outside the U.S.
While running of its U.S. operation, Converium said it intends to continue underwriting U.S. exposure from Converium AG, Zurich, and its Bermuda Branch.
Converium said it is currently discussing fronting arrangements with third parties for the existing Global Aerospace Underwriting Managers Ltd. (GAUM) business written by CINA. Converium said it is committed to ensure an orderly runoff of the reserves that the company carries in its North American legal entities and will continue to negotiate commutations and to conduct claims and underwriting audits.
The company also said today it has appointed Terry G. Clarke as managing director of Converium Holding Ltd.[
The company said that Mr. Clarke, a British citizen, will actively support the chief executive officer, Dirk Lohmann, and his management team in running the company.
Mr. Clarke, who will continue to be a member of the Converium board of directors, will be responsible for enhancing the effectiveness of strategic and operational decision-making, the company said.
Converium Chairman Peter C. Colombo said, "Converium's current short-term challenges require a closer collaboration between the Board of Directors and the Global Executive Committee. Going forward, Mr. Clarke's role will be to provide an interface between the board and the management team. I am convinced that this move will help Converium to successfully meet the current and future challenges facing the company."
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