Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of September, 2007
CONVERIUM HOLDING AG
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(Translation of registrant's name into English)
Dammstrasse 19
CH-6301 Zug
Switzerland
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- Not Applicable
News release
Converium Holding Ltd, Zurich
Zurich, Switzerland - August 28, 2007 - Converium with strong 2007 second
quarter results reporting net income of USD 46 million, first six months net
income of USD 197 million up 58%
o Net income from continuing operations of USD 46 million in the second
quarter 2007 as a result of solid technical results with a non-life
combined ratio of 96.6%;
o First six months net income of USD 197 million, up 58% on the 2006 figure
for the same period, positively impacted by the release of the tax
valuation allowance of USD 75 million;
o Good total investment result of USD 178 million with an average total
investment income yield of 5.5% in the first half of 2007. No direct or
structured indirect fixed maturity securities exposure to the US subprime
mortgage credit market confirms prudent asset management approach;
o Shareholders' equity of USD 2,017 million as of June 30, 2007, up USD 14
million compared with March 31, 2007, demonstrates Converium's capital
strength;
o Normalized return on equity (excluding release of tax valuation allowance)
of 13.2% for the half year 2007, up 1.5 percentage points against the same
period of 2006;
o Successful July non-life treaty renewals with 34% more renewable open
market business written.
Inga Beale, Chief Executive Officer comments: "In the first half year 2007
Converium has continued to perform strongly. Adjusting for the one-off release
of the tax valuation allowance, we have achieved a return on equity of over 13%.
The extremely satisfying July renewals results and the most recent set of
figures testify to the strength and solidity of the company that is now part of
the SCOR Group."
Solid second quarter 2007 results
For the second quarter of 2007, Converium reported a net income of USD 46
million. The results were driven by a robust underlying underwriting performance
which helped to absorb the expenses relating to the SCOR transaction of USD 24
million.
Converium reported an increase in net income of USD 72 million to USD 197
million for the six months ended June 30, 2007 as compared with the same period
in 2006. These 2007 figures reflect a net tax benefit of USD 67 million mainly
due to the release of the tax valuation allowance in Switzerland amounting to
USD 75 million.
Solid technical underwriting performance and overall reserve position
Gross premiums written in the second quarter of 2007 came in at USD 490 million,
an increase of 5% compared with the second quarter of 2006, as Converium started
to benefit from strong growth in markets such as Latin America and the Middle
East. For the six months' period, there was an 8% increase in premium volume
from USD 1,115 million to USD 1,202 million.
The second quarter's non-life combined ratio was 96.6% compared with 98.8% for
the same period of 2006. For the six months ending June 30, 2007 the non-life
combined ratio came in at 100.5%, compared with 97.8% for the same period of
2006.
The combined ratio for the first half of 2007, on a normalized basis - excluding
prior year development impact of USD 16 million or 2.1% as well as impact from
natural cat losses above plan by USD 31 million or 4.3% - comes in at 98.3%,
which is below the full year target of 98.5%.
Converium continued to profit from favorable prior accident year developments.
The positive impact of prior accident years on the technical result was USD 11
million for the second quarter 2007, compared with USD 29 million for the same
period in 2006. For the first six months the respective figures are USD 16
million and USD 43 million. In the first half of 2007, unfavorable adjustments
in the motor line of business were more than offset by positive developments in
property, aviation and space, engineering and credit and surety. Overall the
total level of reserves remains supported by the independent actuarial report
conducted during the first quarter.
Increase in business volume in all lines of business
In the largest business segment, Standard Property & Casualty Reinsurance
reported gross premiums written of USD 648 million during the first six months
of 2007, up 16% compared with the same period of the prior year. Its segment
income of USD 37 million for the first half of 2007, down from USD 90 million in
2006, was adversely affected by losses from natural catastrophes Storm Kyrill in
Europe of USD 50 million and New South Wales Australian flood related losses of
USD 11 million. In addition, in 2007 the segment saw a unfavorable net impact of
prior accident years' development on technical result of USD 35 million, mainly
driven by the negative impact in prior year loss reserves in the motor line of
business of USD 41 million, partially offset by a positive development in prior
year loss reserves in the property line of business of USD 21 million. These
developments are reflected in the segment's combined ratio in the first half
year of 107.7%, up 18.6% against the last year period.
In Specialty Lines, for the second quarter 2007, gross premiums written slightly
increased by 3% despite a drop of 33% in aviation & space where business did not
meet Converium profitability targets. The segment reported positive prior
accident years' developments on the technical result of USD 51 million for the
first half 2007, mainly in the aviation & space, engineering and credit & surety
lines of business. In the first six months of 2007, a combined ratio of 93.0%
was recorded, compared with 106.1% in the same period of the prior year.
The Life & Health Reinsurance segment posted a technical result of USD 20
million in the first half of 2007, as compared with USD 14 million a year
earlier (USD 11 million vs. USD 8 million on quarterly comparison). All major
markets contributed to the positive development. Gross premiums written grew to
USD 79 million in the quarter or USD 211 million in the first six months of
2007, an increase of 22% compared with the first half of 2006, largely driven by
increasing business within the European Markets.
Solid total investment result
In the second quarter of 2007, Converium reported a total investment result of
USD 86 million, compared with USD 63 million for the same period of 2006. For
the six months ending June 30, 2007 the respective figures are USD 178 million
and USD 123 million. In the second quarter of 2007 total investment income yield
was 5.3%, compared with 4.3% in the same period of 2006. For the six months
ended June 30, 2007 the respective yields are 5.5% and 4.1%.
As of June 30, 2007, Converium had no direct or structured indirect fixed
maturity securities exposure to the US subprime mortgage credit market.
Further improvement of capital strength
As of June 30, 2007, Converium had total shareholders' equity of USD 2,017.2
million (USD 13.78 per share) compared with USD 1,846.0 million (USD 12.63 per
share) as of December 31, 2006, an increase of USD 171.2 million (USD 1.15 per
share).
Extraordinary transaction costs
In the wake of Converium's acquisition by SCOR, the Company recorded
non-recurring transaction costs in the second quarter of 2007 of USD 24 million,
or USD 31 million for the first six months respectively, primarily related to
legal, consulting and investment banking fees.
Successful July non-life renewals
In the latest July 1 renewals Converium achieved an excellent growth of 34% or
USD 21 million, bringing total renewed open market business to USD 85 million.
This increase in premium was mainly recorded in the property line of business
where Converium managed to regain previously lost business and to generate new
business, particularly in Australia, the Middle East and Latin America. Overall,
the Company was successful in capturing the momentum following the restoration
of its A- financial strength rating by Standard & Poor's on February 28, 2007.
As of August 8, 2007, SCOR, as a shareholder, formally controls the company.
Enquiries
Beat W. Werder Marco Circelli
Head of Public Relations Head of Investor Relations
beat.werder@converium.com marco.circelli@converium.com
Phone: +41 44 639 90 22 Phone: +41 44 639 91 31
Fax: +41 44 639 70 22 Fax: +41 44 639 71 31
Dr. Kai-Uwe Schanz Inken Ehrich
Chief Communication & Corporate Development Investor Relations Specialist
Officer
kai-uwe.schanz@converium.com inken.ehrich@converium.com
Phone: +41 44 639 90 35 Phone: +41 44 639 90 94
Fax: +41 44 639 70 35 Fax: +41 44 639 70 94
About Converium
Converium is an international multi-line reinsurer known for its innovation,
professionalism and service. Today Converium employs about 500 people in 15
offices around the globe and is organized into three business segments: Standard
Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance.
Converium has an "A-" ("strong") financial strength rating (outlook stable) from
Standard & Poor's and a "A-" ("excellent") financial strength rating (outlook
stable) from A.M. Best Company.
Important Disclaimers
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 `seek to', `expects', `aims' `should continue',
`believes', `anticipates', `estimates' and `intends'. The specific
forward-looking statements cover, among other matters, the Company's strategy
and management objectives, our growth prospects and our ability to ensure a
smooth transition of our business with that of SCOR. 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 whether we are able to secure an upgrade
of our financial strength ratings; our ability to refinance our outstanding
indebtedness and increase our use of hybrid capital; uncertainties of
assumptions used in our reserving process; risk associated with implementing our
business strategies and our capital improvement measures; cyclicality of the
reinsurance industry; the occurrence of natural and man-made catastrophic events
with a frequency or severity exceeding our estimates; acts of terrorism and acts
of war; changes in economic conditions, including interest and currency rate
conditions that could affect our investment portfolio; actions of competitors,
including industry consolidation and development of competing financial
products; a decrease in the level of demand for our reinsurance or increased
competition in our industries or markets; our ability to expand into emerging
markets; our ability to enter into strategic investment partnerships; a loss of
our key employees or executive officers without suitable replacements being
recruited within a suitable period of time; our ability to address material
weaknesses we have identified in our internal control environment; political
risks in the countries in which we operate or in which we reinsure risks; the
passage of additional legislation or the promulgation of new regulation in a
jurisdiction in which we or our clients operate or where our subsidiaries are
organized; the effect on us and the insurance industry as a result of the
investigations being carried out by the US Securities and Exchange Commission,
New York's Attorney General and other governmental authorities; our ability to
regain past customers following any rating upgrades and the resolution of the
investigations being carried out by the US Securities and Exchange Commission,
New York's Attorney General and other governmental authorities; changes in our
investment results due to the changed composition of our invested assets or
changes in our investment policy; failure of our retrocessional reinsurers to
honor their obligations or changes in the credit worthiness of our reinsurers;
our failure to prevail in any current or future arbitration or litigation; and
extraordinary events affecting our clients, such as bankruptcies and
liquidations, and other risks and uncertainties, including those detailed in the
Company's filings with the U.S. Securities and Exchange Commission (including,
but not limited to, our Annual Report on Form 20-F filed 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.
Key financial metrics (USD, unless noted)
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Financial highlights: Three months ended Six months ended
June 30 June 30
2007 2006 2007 2006
In USD million, unless noted (unaudited) (unaudited) (unaudited) (unaudited)
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Gross premiums written 489.8 467.5 1,201.6 1,114.5
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Net premiums written 396.2 406.8 1,075.3 1,050.7
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Net premiums earned 459.9 468.5 919.9 892.6
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Non-life loss ratio(1) 63.9% 64.6% 69.7% 66.9%
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Non-life acquisition costs ratio(2) 26.6% 28.4% 25.3% 25.5%
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Non-life administration expense ratio(3) 6.1% 5.8% 5.5% 5.4%
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Non-life combined ratio(4) 96.6% 98.8% 100.5% 97.8%
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Life & Health technical result(5) 11.3 7.6 19.5 13.8
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Total investment results(6) 85.5 63.4 177.6 122.7
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Total investment income yield(7) 5.3% 4.3% 5.5% 4.1%
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Total investment return (pre-tax)(8) 61.1 27.5 143.4 95.9
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Average total invested assets (including cash and cash 6,472.2 5,939.2 6,459.8 5,958.4
equivalents)
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Income from continuing operations 45.6 46.8 196.5 96.7
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Income from discontinued operations - 15.7 - 27.4
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Net income 45.6 62.5 196.5 124.1
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Basic earnings per share from continuing operations (USD) 0.31 0.32 1.34 0.66
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Basic earnings per share from discontinued operations (USD) - 0.11 - 0.19
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Diluted earnings per share from continuing operations (USD) 0.31 0.31 1.33 0.65
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Diluted earnings per share from discontinued operations (USD) - 0.11 - 0.18
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Return on shareholders' equity from continuing operations(9) 11.2% 10.9% 13.2% 11.7%
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(1) Non-life loss ratio is defined as losses and loss expenses divided by net
premiums earned.
(2) Non-life acquisition costs ratio is defined as acquisition costs divided by
net premiums earned
(3) Non-life administration expense ratio is defined as other operating and
administration expenses divided by net premiums earned.
(4) Non-life combined ratio is defined as the non-life loss ratio plus the
non-life acquisition costs ratio plus the non-life administration expense
ratio.
(5) Life & Health technical result is defined as net premiums earned minus
losses, loss expenses and life benefits minus acquisition costs plus other
technical income, mainly interest on deposits.
(6) Total investment results are defined as net investment income plus net
realized capital gains (losses).
(7) Total investment income yield is defined as net investment income plus net
realized capital gains (losses) divided by average total invested assets
from continuing operations (including cash and cash equivalents), pre-tax
and annualized.
(8) Total investment return is defined as net investment income plus net
realized capital gains (losses) plus change in net unrealized capital gains
(losses).
(9) Return on shareholders' equity is defined as net income or loss (after-tax)
divided by shareholders' equity at the beginning of the period, annualized.
For 2007 the calculation excludes the release of tax valuation allowance of
USD 74.7 million.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONVERIUM HOLDING AG
By: /s/ Inga Beale
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Name: Inga Beale
Title: CEO
By: /s/ Christian Felderer
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Name: Christian Felderer
Title: General Legal Counsel
Date: September 4, 2007