Reacting to official scrutiny, Swiss reinsurance company Converium Holding Ltd is delaying a report of its third-quarter results until mid-December while the company completes an internal review of various reinsurance deals, the company said.
"As widely reported, investigations of the insurance and reinsurance industry and non-traditional insurance and reinsurance products are being conducted by regulators and governmental authorities in both the United States and Europe," the company said in a statement Friday.
The transactions have drawn scrutiny because in some cases they are believed to have served as an accounting gimmick to improperly improve companies' financial statements.
"Against this backdrop, Converium has launched an extensive internal review of certain reinsurance transactions and engaged outside counsel to assist the company," the firm said.
The primary goal of the review, the company said, is to correct the accounting treatment of some of its transactions, mainly ceded reinsurance. Converium added that it has made "substantial progress" in the review, and that the results of the review should not affect shareholder equity.
Converium said that rather than releasing its third-quarter results this week as scheduled, it will instead present them along with the restated results of the review sometime in mid-December.
"The effects of the proposed adjustments on Converium's operations for particular prior periods will be reflected in the restated results," the company said. "Until the restated accounts are released, previously published financial statements should no longer be relied on."
Although the company is not releasing its third-quarter results, it did present some positive developments experienced during the quarter. Converium said that its aggregate prior-year loss reserve levels have remained stable for the fourth consecutive quarter, and that based on the information it has received, its exposure to Hurricanes Katrina, Rita, Dennis and Emily was only roughly $50 million.
The company said it was also able to reduce administrative expenses in the third quarter–to $40 million from $50 million in the second quarter of 2005–and that its investment income was approximately $70 million.
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