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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 August, 2006
CONVERIUM HOLDING AG
------------------------------------------
(Translation of registrant's name into English)
Baarerstrasse 8
CH-6300 Zug
Switzerland
-------------------------------------------------------
(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
------- -------
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
------- -------
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- Not Applicable
Converium Holding Ltd, Zug
Zug, Switzerland - August 8, 2006 - Converium reports a strong financial
performance in the second quarter of 2006.
In the second quarter of 2006 Converium produced net income of USD 62.5
million. The quarterly highlights included:
o Shareholders' equity of USD 1,796.1 million as of June 30, 2006, up
USD 142.7 million or 8.6% compared with December 31, 2005;
o Return on shareholders' equity of 14.6%, up from 11.4% in the second
quarter of 2005;
o A solid underwriting performance, with a non-life combined ratio of
99.8% and segment income of ongoing operations of USD 69.0 million;
o Favorable prior accident years' developments, for the fifth
consecutive quarter, resulting in a net positive impact on the
technical result of USD 19.4 million;
o The successful and faster than expected progression of the North
American run-off and commutation strategy, leading to a total
reduction of net reserves in the Run-Off segment of USD 185.6 million
to USD 1,012.2 million, and a benefit to the technical result from
commutations of USD 30.7 million;
o Net investment income of USD 84.7 million or an average annualized net
investment income yield of 4.7%; o Strong July 1 non-life treaty
renewals, with renewed business growing by 41.3%.
Inga Beale, Chief Executive Officer, commented: "I am very pleased with another
quarter of strong financial performance by Converium. The results reflect the
profitable execution of our North American run-off and commutation strategy,
favorable prior-year developments and a solid underlying underwriting
performance."
Inga Beale added: "Converium continues to regain strength and stability, as
recognized by Standard & Poor's in their recent assignment of a positive outlook
on our ratings. This is a major step forward for us and augurs well for the
future. We will continue to work diligently towards meeting Standard & Poor's
requirements for an upgrade at the earliest possible date."
1
Key metrics (USD, unless noted)
Three months Six months
ended ended
June 30, 2006 June 30, 2006
o Gross premiums written 474.7 million 1,130.0 million
o Income before taxes 71.4 million 139.9 million
o Pre-tax operating income(1) 84.0 million 156.7 million
o Ongoing total segment income(2) 69.0 million 140.1 million
o Net income 62.5 million 124.1 million
o Ongoing non-life combined ratio(3) 99.8% 97.0%
o Average annualized net investment income yield (pre-tax) 4.7% 4.4%
o Shareholders' equity 1,796.1 million
o Return on shareholders' equity (annualized) 14.6% 15.0%
o Basic earnings per share 0.43 0.85
o Diluted earnings per share 0.42 0.84
o Weighted average shares outstanding, basic (number of shares) 146.3 million
o Weighted average shares outstanding, diluted (number of shares) 148.4 million
Overview of second quarter and first half of 2006 financial performance
Strong set of significantly improved financial results
For the second quarter of 2006, Converium reported pre-tax operating income of
USD 84.0 million and net income of USD 62.5 million, compared with USD 57.1
million and USD 46.9 million, respectively, for the same period of 2005. For the
first half of 2006, this translates into pre-tax operating income of USD 156.7
million, compared with the previous period's USD 75.9 million. Net income
increased to USD 124.1 million, from USD 41.4 million in the first half of 2005.
The table below shows the reconciliation of pre-tax operating income to income
before taxes for the three and six months ended June 30, 2006 and 2005:
Three months ended June 30 Six months ended June 30
2006 2005 2006 2005
Pre-tax operating income 84.0 57.1 156.7 75.9
Net realized capital (losses) gains -12.6 -1.0 -17.0 -1.7
Amortization of intangible assets - -6.8 - -13.8
Restructuring costs - -3.5 0.2 -13.6
Income before taxes 71.4 45.8 139.9 46.8
Net income 62.5 46.9 124.1 41.4
--------------
(1) Pre-tax operating income is defined as income before taxes excluding
pre-tax net realized capital gains (losses), amortization of intangible
assets and restructuring costs.
(2) Ongoing total segment income is defined as net premiums earned plus total
investment results minus losses, loss expenses and life benefits,
acquisition costs and other operating and administration expenses,
excluding Corporate Center.
(3) Ongoing non-life combined ratio is defined as ongoing non-life loss ratio
(to net premiums earned) plus ongoing non-life acquisition costs ratio (to
net premiums earned) plus ongoing non-life administration expense ratio (to
net premiums written).
2
Stable business volume despite continuing ratings disadvantage
Gross premiums written in the second quarter of 2006 came in at USD 474.7
million, plus 25.5% compared with the second quarter of 2005. Net premiums
written increased by 28.4% to USD 414.0 million. Net premiums earned fell by
21.3% to USD 475.7 million, compared with the same period of 2005, reflecting
the completion of premium earnings from prior underwriting years.
For the first half of 2006, gross premiums written, net premiums written and net
premiums earned were USD 1,130.0 million, USD 1,066.2 million and USD 911.0
million, respectively, decreasing by 0.6%, 0.2% and 31.8%, respectively,
compared with the first half of 2005. Gross and net premiums written for the
first half of 2006 remained largely flat, demonstrating the resilience of
Converium's franchise despite the continuing disadvantage of the Company's
financial strength ratings.
Solid underwriting performance of ongoing business segments
The second quarter's ongoing non-life combined ratio was 99.8%, including an
administration expense ratio of 6.8%, compared with 102.8% and 8.9%,
respectively, for the same period of 2005. The second quarter of 2006 was
favorably impacted by a positive net impact of prior accident years on the
technical result of USD 19.4 million, partially offset by some minor
catastrophic losses totaling USD 10.5 million as well as higher than expected
loss activity in the Property line of business of USD 8.0 million. Converium's
underlying underwriting performance remained solid.
For the first half of 2006, Converium recorded an ongoing non-life combined
ratio of 97.0%, including an administration expense ratio of 4.6%, compared with
103.8% and 6.9%, respectively, for the same period of 2005. The improved
underwriting performance in 2006 reflects the absence of any major catastrophic
events as well as a positive net impact of prior accident years on the technical
result of USD 31.7 million.
Favorable prior accident years' developments
In the second quarter of 2006, Converium recorded a net positive impact of prior
accident years on the technical result of USD 19.4 million, with the Company's
ongoing operations accounting for USD 28.9 million, partially offset by a
negative development in the Run-Off segment. In the same period of 2005, the
overall net positive impact of prior accident years on the technical result was
USD 3.9 million.
For the first half of 2006, an overall net positive impact of USD 31.7 million
was recorded, with the ongoing operations accounting for USD 42.5 million,
partially offset by a net negative impact in the Run-Off segment. In the same
period of 2005, there was a net negative impact of prior accident years on the
technical result of USD 5.8 million.
Successful progression of North American run-off and commutations
Converium's North American run-off and commutation efforts continue to progress
very satisfactorily. The reduction of North American liabilities continues to be
ahead of plan. In the second quarter of 2006, the Run-Off segment's net reserves
were reduced by USD 185.6 million to USD 1,012.2 million. The commutations of
the Run-Off segment's net reserves of USD 144.1 million resulted in a benefit to
Converium's technical result of USD 30.7 million. For the first half of 2006,
this translates into an overall reduction of the Run-Off segment's net reserves
by USD 297.5 million. Total commutations were USD 189.8 million, resulting in a
benefit to the technical result of USD 43.1 million.
Operating and administration expenses under control
In the second quarter of 2006, total administration expenses were USD 47.9
million, a reduction of 5.0% compared with the same period of 2005. The progress
in reducing expenses was slowed by increasing audit fees in the context of
Converium's preparation for Sarbanes-Oxley compliance as well as late payments
relating to the restatement of prior year accounts. For the first half of 2006,
total administration expenses declined by 22.1% to USD 83.6 million, compared
with the same period of 2005. The reduction reflects the effects of the cost
management measures taken in 2005 as well as the non-recurrence of the expenses
associated with staff retention plans in 2005.
3
Satisfactory investment result
In the second quarter of 2006, Converium reported net investment income of USD
84.7 million and an average annualized net investment income yield of 4.7%,
which compares with USD 87.8 million and 4.4%, respectively, for the same period
of 2005. The decline in net investment income is a result of Converium's average
invested asset base declining by USD 896.5 million compared with the second
quarter of 2005. The increase in the annualized net investment income yield is
attributable to higher yields on bonds and short-term investments.
Taking into account the net realized capital losses, primarily from fixed-income
securities, the total investment result came in at USD 72.1 million which
compares with USD 86.8 million for the same period of 2005. Net realized capital
losses resulted primarily from the sale of fixed-income securities to fund
commutation payments. The average annualized total investment income yield came
in at 4.0%, compared with 4.3% in the same period of 2005.
In the second quarter of 2006, Converium recorded a reduction in net unrealized
capital gains and losses (pre-tax) of USD 31.7 million. This development is
largely due to increasing yields on fixed-income securities.
Strong July 1 renewals
Converium recorded a very successful July 1 renewal of non-life treaties,
achieving an increase of 41.3% to USD 109.6 million, based on the business which
was up for renewal. The July renewals represent approximately 5% of Converium's
total estimated non-life premium, and primarily included business written in
Latin America and the Caribbean, growing by 28.0%, the Middle-East, increasing
by 26.5%, and North America, expanding by 92.0%. The book of US Property
business up for renewal grew to USD 38.9 million on the back of very attractive
market conditions. Converium's exposure to a one-in-250-years event remains
unchanged, reflecting an improved geographical diversification in the US. The
Company's US property business is selectively written out of Zurich, and
represents around 4% of Converium's total estimated non-life premium income in
2006. Consistent with its underwriting strategy, the Company did not renew any
US Casualty business.
Short- to medium-term outlook
Financial guidance essentially unchanged
Converium reiterates its full-year financial guidance given in March 2006,
except for expected Corporate Center costs and run-off liabilities:
o Gross premiums written for 2006 are projected to come in at USD 1.8 -
1.9 billion.
o The priced combined ratio for the ongoing non-life operations is
anticipated at around 102.5%, including an administration expense
ratio of 5.5%, expected losses from natural catastrophes of about USD
80 million, but excluding expected Corporate Center costs of
approximately USD 45 - 50 million, up from the Company's previous
guidance of USD 40 million.
o For the full year 2006, the reduction of net liabilities in the
Run-Off segment is likely to exceed the Company's previous guidance of
USD 375 million.
o The corporate tax rate is expected to range between 7 - 12%.
o Average invested assets including cash and cash equivalents should be
in the magnitude of approximately USD 7 billion.
Seeking finality on Converium Reinsurance (North America) Inc.
Converium continues to explore a sale of CRNA with high priority. The Company
reaffirms that any sale of CRNA must achieve medium- to long-term shareholder
value.
4
Execution of clearly defined medium-term business strategy
Converium's new Board of Directors has affirmed the Company's medium-term
business strategy, based on its current, proven business model. Converium
aspires to develop into a leading mid-sized multi-line reinsurer with a distinct
geographic emphasis on Europe, Asia Pacific and the Middle East, and with a
focus on global specialty lines. In order to achieve this medium-term objective,
the Company:
o pursues a strategy of profitable organic growth, with investments in
specialty lines;
o maintains and develops multiple distribution channels, including joint
ventures;
o broadens its client base;
o expands its knowledge base;
o enhances its risk management and control culture;
o advances cost and capital efficiency; and
o aims at achieving a more balanced portfolio split between proportional
and non-proportional business.
Converium believes that, based on this strategy, it can profitably grow its
business by regaining shares with existing clients and establishing new client
relationships.
Business development per segment
Standard Property & Casualty Reinsurance reported segment income of USD 44.7
million for the second quarter and USD 88.8 million for the first half of 2006,
compared with USD 35.4 million and USD 49.7 million, respectively, for the same
periods of 2005. The segment's combined ratio improved in both the second
quarter and first half of 2006 to 92.2% and 87.5%, respectively, compared with
103.8% and 101.4% in the same periods of 2005.
The segment results in the second quarter and first half of 2006 reflect a solid
underwriting performance, a net positive impact of prior accident years on the
technical result, the absence of any major catastrophic events and a reduced
administration expense ratio resulting from the impact of cost management
measures taken in 2005. The second quarter results were partially offset by some
minor catastrophic losses totaling USD 10.5 million as well as higher than
expected loss activity in the Property line of business of USD 8.0 million.
For the second quarter of 2006, the segment recorded a net positive impact of
prior accident years on the technical result of USD 26.4 million, resulting from
a net positive development of prior accident years' loss reserves of USD 44.9
million, offset by the net effect of reductions of premiums and other expenses
of USD 18.5 million. The net positive development was partially attributable to
an update to case reserves across all lines of business. Overall, the net
positive impact on the technical result was most pronounced in the Property and
General Third Party Liability lines of business, with benefitted of USD 13.4
million and USD 7.8 million, respectively.
For the first half of 2006, the Standard Property & Casualty Reinsurance segment
experienced a net positive impact of prior accident years on the technical
result in the amount of USD 36.6 million. The General Third Party Liability and
Property lines of business accounted for the biggest positive effects, with USD
24.7 million and USD 18.1 million, respectively.
In the second quarter of 2006, gross and net premiums written increased by
117.9% and 89.3% to USD 218.1 million and USD 167.5 million, respectively. Net
premiums earned decreased by 6.4% to USD 209.8 million, compared with the same
period of 2005. The sharp increases in gross and net premiums written are
primarily a result of the low premiums in the second quarter of 2005 due to the
adjustment of premium estimates and related corrections of accrued premiums in
the Liability line of business. The decrease of net premiums earned reflects the
impact of the ratings downgrade in 2004 with significantly lower earned premiums
from prior underwriting years.
In the first half of 2006, gross premiums written increased by 4.0% to USD 558.9
million, net premiums written decreased by 1.6% to USD 513.2 million and net
premiums earned declined by 27.3% to USD 361.9 million, compared with the same
period of 2005.
5
In the first half of 2006, the reduction in net premiums written by line of
business included:
o Motor, which decreased by 38.7% to USD 101.9 million, reflecting this
year's closing of the 2003 Lloyd's underwriting year;
o Property, which declined by 4.0% to USD 258.7 million.
These decreases were largely offset by an increase in the General Third Party
Liability line of business, which increased 101.1% to USD 145.3 million,
reflecting additional Lloyd's business.
Specialty Lines reported segment income of USD 15.4 million for the second
quarter 2006 and USD 35.3 million for the first half of 2006, compared with USD
37.0 million and USD 48.4 million for the same periods of 2005, respectively.
The segment's combined ratio in the second quarter was 108.6%, compared with
102.3% in the same period of 2005. For the first half of 2006, the segment's
combined ratio improved slightly from 106.9% to 106.3%.
For the second quarter of 2006, the Specialty Lines segment recorded a net
positive impact of prior accident years on the technical result of USD 2.5
million, resulting from a net positive development of prior accident years' loss
reserves of USD 15.8 million, offset by the net effect of reductions of premiums
and other expenses of USD 13.3 million. The net positive development was
partially attributable to an update to case reserves across all lines of
business. Overall, the net positive impact of prior accident years on the
technical result was most pronounced in the Aviation & Space line of business,
recording a positive net impact of USD 10.2 million and the Professional
Liability and other Special Liability line of business with a negative net
impact of USD 17.5 million.
For the first half of 2006, the Specialty Lines segment experienced a net
positive impact of prior accident years on the technical result in the amount of
USD 5.9 million. The Aviation & Space and Professional Liability & other Special
Liability lines of business accounted for the biggest effects, with a positive
USD 16.2 million and a negative USD 21.5 million, respectively.
In the second quarter of 2006, gross and net premiums written decreased by 14.0%
and 0.3% to USD 183.3 million and USD 176.2 million, respectively. Net premiums
earned fell by 34.1% to USD 180.9 million, compared with the same period of
2005. The decrease of net premiums earned reflects the impact of the ratings
downgrade in 2004 with significantly lower earned premiums from prior
underwriting years.
In the first half of 2006, gross premiums written remained almost flat at USD
383.0 million, net premiums written increased by 7.6% to USD 370.1 million and
net premiums earned declined by 35.7% to USD 372.5 million, compared with the
same period of 2005. In the first half of 2006, the increase in net premiums
written was driven by the Aviation & Space and Professional Liability & other
Special Liability lines of business, which grew by 6.3% to USD 138.0 million and
76.1% to USD 133.7 million, respectively. These increases were offset by the
following lines of business:
o Agribusiness, which decreased by 26.4% to USD 15.6 million;
o Credit & Surety, which declined by 61.6% to USD 11.9 million;
o Engineering, which fell by 29.6% to USD 31.8 million; and
o Marine & Energy, which decreased by 21.9% to UDS 31.2 million.
6
Life & Health Reinsurance reported segment income of USD 8.9 million for the
second quarter and USD 16.0 million for the first half of 2006, compared with
USD 0.1 million and USD 6.1 million for the same periods of 2005, respectively.
The technical result(4) was USD 7.6 million for the second quarter of 2006 and
USD 13.8 million for the first half of 2006, compared with USD 1.4 million and
USD 8.1 million for the same periods in 2005, respectively. The segment's strong
performance was primarily attributable to new, and the expansion of existing
reinsurance transactions, especially within Continental Europe, as well as
updated actuarial models based on new cedent information within Converium's
German and Dutch books of business.
In the second quarter of 2006, compared with the same period of the previous
year, gross premiums written, net premiums written and net premiums earned
increased by 11.5%, 13.3% and 5.0% to USD 66.1 million, USD 63.1 million and USD
77.8 million, respectively. These increases were primarily attributable to
Converium's German book of business.
For the first half of 2006, gross premiums written and net premiums written in
the Life & Health Reinsurance segment fell slightly by 2.2% and 1.2% to USD
172.6 million and USD 167.4 million, respectively. Net premiums earned, however,
grew by 1.9% to USD 158.2 million. The stagnant premium development mainly
reflects Converium's continuing ratings disadvantage.
Run-Off reported segment income of USD 19.9 million for the second quarter and
USD 37.6 million for the first half of 2006, compared with a segment loss of USD
5.5 million and segment income of USD 10.5 million for the same periods of 2005.
The significantly improved performance of the segment primarily reflects the
favorable impact of commutations on the technical result.
In the second quarter of 2006, net reserves in the Run-Off segment decreased by
USD 185.6 million to USD 1,012.2 million. For the first half of 2006, this
translates into a reduction of net reserves of USD 297.5 million. In the second
quarter and the first half of 2006, commutations contributed USD 144.1 million
and USD 189.8 million, respectively, to the reduction of net reserves in the
segment and generated a benefit on the technical result of USD 30.7 million and
USD 43.1 million, respectively. From a statutory view, net reserves declined by
USD 165.0 million to USD 858.5 million in the second quarter of 2006, which
resulted in a reduction of USD 258.5 million in the first half of 2006.
In the second quarter of 2006, the Run-Off segment recorded a net adverse impact
of prior accident years on the technical result of USD 9.6 million, resulting
from net adverse development of prior accident years' loss reserves of USD 4.2
million and the net negative effect of reductions of related premiums and
underwriting acquisition costs of USD 5.4 million. The net adverse development
of prior years' loss reserves in the amount of USD 4.2 million primarily related
to the Professional Liability and other Special Liability line of business in
the amount of USD 22.2 million. Partially offsetting the adverse development was
a net favorable development of prior years' loss reserves of USD 10.0 million
related to the Motor line of business.
For the first half of 2006, the Run-Off segment experienced a net adverse impact
of prior accident years on the technical result in the amount of USD 10.8
million, due to net adverse development of prior years' loss reserves of USD 6.3
million and the net effect of reductions in premiums and other expenses of USD
4.5 million. The net adverse development of prior years' loss reserves amounted
to USD 6.3 million, primarily due to the adverse development of USD 22.9 million
in the Professional Liability and other Special Liability line of business.
Partially offsetting this development was a net favorable development of USD
10.8 million related to the Motor line of business.
The Corporate Center carries certain administration expenses such as costs of
the Board of Directors, the Global Executive Committee and other corporate
functions as well as other expenses not allocated to the operating segments. The
Corporate Center reported costs of USD 14.1 million for the second quarter and
USD 24.7 million for the first half of 2006, compared with USD 12.0 million and
USD 19.2 million for the same periods of 2005, respectively. The increase in the
first half of 2006 as compared with the same period of 2005 reflects higher
audit fees in the context of Converium's preparation for Sarbanes-Oxley
compliance as well as late fees related to the restatement of prior year
financial accounts.
-----------------------
(4) 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.
7
Converium has made it a policy not to provide any quarterly or annual earnings
guidance and it will not update any past outlooks for full-year earnings. It
will, however, continue to provide investors with perspectives on its value
drivers, certain financial guidance for the full year, its strategic initiatives
and those factors critical to understanding its business and operating
environment.
Enquiries
Esther Gerster Marco Circelli Mladen Tomic
Head of Public Relations Head of Investor Relations & Market Investor Relations Officer
Research
esther.gerster@converium.com marco.circelli@converium.com mladen.tomic@converium.com
Phone: +41 (0) 44 639 90 22 Phone: +41 (0) 44 639 91 31 Phone: +41 (0) 44 639 91 39
Fax: +41 (0) 44 639 70 22 Fax: +41 (0) 44 639 71 31 Fax: +41 (0) 44 639 71 39
About Converium
Converium is an independent international multi-line reinsurer known for its
innovation, professionalism and service. Today Converium employs about 600
people in 18 offices around the globe and is organized into four business
segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life &
Health Reinsurance, which are based principally on ongoing global lines of
business, as well as the Run-Off segment, which primarily comprises the business
from Converium Reinsurance (North America) Inc., excluding the US originated
aviation business portfolio. Converium has a "BBB+" financial strength rating
(outlook positive) from Standard & Poor's and a "B++" financial strength rating
(outlook stable) from 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 `seek to', `expects', `should continue', `believes',
`anticipates', `estimates' and `intends'. The specific forward-looking
statements cover, among other matters, the Company's internal review and related
restatement, the reinsurance market, the Company's operating results, certain
financial guidance, e.g. related to the tax rate of the Company, the reduction
of North American net reserves, the acquisition costs ratio and the costs of the
Corporate Center, the rating environment and the prospect for improving results
and expense reductions. 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
the impact of our ratings downgrade or a further lowering or loss of one of our
financial strength ratings; the impact of the restatement on our ratings and
client relationships; uncertainties of assumptions used in our reserving
process; risk associated with implementing our business strategies and our
capital improvement measures and the run-off of our North American business;
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; 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; 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 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.
www.converium.com
8
------------------------------------------------------ ------------------------- ------------------------ ------------
Financial highlights: Income statement Three months ended Six months ended Year ended
(Unaudited) June 30, June 30, Dec. 31,
2005
In USD million, unless noted 2006 2005 2006 2005 (audited)
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Gross premiums written 474.7 378.1 1,130.0 1,136.3 1,994.3
- change (%) +25.5% -0.6%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Net premiums written 414.0 322.4 1,066.2 1,068.8 1,815.7
- change (%) +28.4% -0.2%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Net premiums earned 475.7 604.1 911.0 1,336.5 2,383.2
- change (%) -21.3% -31.8%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Ongoing non-life loss ratio(5) 64.6% 83.5% 66.9% 75.2% 77.4%
- change in percentage points -18.9pts -8.3pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Ongoing non-life acquisition costs ratio(6) 28.4% 10.4% 25.5% 21.7% 22.9%
- change in percentage points +18.0pts +3.8pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Ongoing non-life administration expense ratio(7) 6.8% 8.9% 4.6% 6.9% 6.9%
- change in percentage points -2.1pts -2.3pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Ongoing non-life combined ratio(8) 99.8% 102.8% 97.0% 103.8% 107.2%
- change in percentage points -3.0pts -6.8pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Life & Health technical result(9) 7.6 1.4 13.8 8.1 14.2
- change (%) n.m. +70.4%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Total investment results(10) 72.1 86.8 142.3 168.3 350.4
- change (%) -16.9% -15.4%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Total investment income yield(11) 4.0% 4.3% 3.9% 4.1% 4.4%
- change in percentage points -0.3pts -0.2pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Total investment return(12) 40.3 168.7 94.9 196.0 312.1
- change (%) -76.1% -51.6%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Pre-tax operating income(13) 84.0 57.1 156.7 75.9 100.8
- change (%) +47.1% +106.5%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Net income 62.5 46.9 124.1 41.4 68.7
- change (%) +33.3% +199.8%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Basic earnings per share (USD) 0.43 0.32 0.85 0.28 0.47
- change (%) +34.4% +203.6%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Diluted earnings per share (USD) 0.42 0.32 0.84 0.28 0.46
- change (%) +31.3% +200.0%
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
Return on shareholders' equity(14) 14.6% 11.4% 15.0% 4.8% 4.0%
- change in percentage points +3.2pts +10.2pts
------------------------------------------------------ ------------ ------------ ----------- ------------ ------------
----------------------
(5) Ongoing non-life loss ratio is defined as losses and loss expenses divided
by net premiums earned.
(6) Ongoing non-life acquisition costs ratio is defined as acquisition costs
divided by net premiums earned.
(7) Ongoing non-life administration expense ratio is defined as other operating
and administration expenses divided by net premiums written.
(8) Ongoing non-life combined ratio is defined as ongoing non-life loss ratio
(to net premiums earned) plus ongoing non-life acquisition costs ratio (to
net premiums earned) plus ongoing non-life administration expense ratio (to
net premiums written).
(9) 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.
(10) Total investment results are defined as net investment income plus net
realized capital gains (losses).
(11) 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.
(12) Total investment return is defined as net investment income plus net
realized capital gains (losses) plus change in net unrealized capital gains
(losses).
(13) Pre-tax operating income is defined as income before taxes excluding
pre-tax net realized capital gains (losses), amortization of intangible
assets and restructuring costs.
(14) Return on shareholders' equity is defined as net income or loss (after-tax)
divided by shareholders' equity at the beginning of the period, annualized.
9
---------------------------------------------------------------------------------------- ------------- -------------
Financial highlights: Balance sheet June 30, Dec. 31,
2006 2005
In USD million, unless noted (unaudited) (audited)
---------------------------------------------------------------------------------------- ------------- -------------
Total invested assets plus cash and cash equivalents 7,177.3 7,281.6
- change (%) -1.4%
---------------------------------------------------------------------------------------- ------------- -------------
Claims supporting capital(15) 2,187.5 2,044.6
- change (%) +7.0%
---------------------------------------------------------------------------------------- ------------- -------------
Shareholders' equity 1,796.1 1,653.4
- change (%) +8.6%
---------------------------------------------------------------------------------------- ------------- -------------
Book value per share (USD) 12.28 11.29
- change (%) +8.8%
---------------------------------------------------------------------------------------- ------------- -------------
Book value per share (CHF) 15.04 14.88
- change (%) +6.4%
---------------------------------------------------------------------------------------- ------------- -------------
------------------------------------------------------------- --------------------------- --------------------------
Financial highlights: Investment results Three months ended Six months ended
(Unaudited) June 30, June 30,
In USD million, unless noted
-------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------- ------------- ------------- ------------ -------------
Investment income - Fixed maturities 57.1 62.1 106.9 116.0
------------------------------------------------------------- ------------- ------------- ------------ -------------
Investment income - Equity securities 2.9 2.7 3.4 3.9
------------------------------------------------------------- ------------- ------------- ------------ -------------
Investment income - Funds Withheld Asset 13.2 16.2 26.6 33.1
------------------------------------------------------------- ------------- ------------- ------------ -------------
Other investment income, net 11.5 6.8 22.4 17.0
------------------------------------------------------------- ------------- ------------- ------------ -------------
Net investment income 84.7 87.8 159.3 170.0
------------------------------------------------------------- ------------- ------------- ------------ -------------
Average annualized net investment income yield 4.7% 4.4% 4.4% 4.1%
(pre-tax)
------------------------------------------------------------- ------------- ------------- ------------ -------------
------------------------------------------------------------- ------------- ------------- ------------ -------------
Net realized capital (losses) gains -12.6 -1.0 -17.0 -1.7
------------------------------------------------------------- ------------- ------------- ------------ -------------
Total investment results 72.1 86.8 142.3 168.3
------------------------------------------------------------- ------------- ------------- ------------ -------------
Average annualized total investment income yield 4.0% 4.3% 3.9% 4.1%
(pre-tax)
------------------------------------------------------------- ------------- ------------- ------------ -------------
------------------------------------------------------------- ------------- ------------- ------------ -------------
Change in net unrealized (losses) gains (pre-tax) -31.7 81.9 -47.4 27.7
------------------------------------------------------------- ------------- ------------- ------------ -------------
Total investment return (pre-tax) 40.4 168.7 94.9 196.0
------------------------------------------------------------- ------------- ------------- ------------ -------------
Average annualized total investment return (pre-tax) 2.3% 8.4% 2.6% 4.8%
------------------------------------------------------------- ------------- ------------- ------------ -------------
Average total invested assets (including cash and cash 7,172.4 8,068.9 7,229.5 8,216.0
equivalents)
------------------------------------------------------------- ------------- ------------- ------------ -------------
------------------
(15) Claims supporting capital is defined as total shareholders' equity plus
debt.
10
-------------------------------------------------- ------------------------- -------------------------- ------------
Interim consolidated statements of income Three months ended Six months ended Year ended
(Unaudited) June 30, June 30,
In USD million, unless noted Dec. 31
--------------------------------------------------
2006 2005 2006 2005 2005
(audited)
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Revenues
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Gross premiums written 474.7 378.1 1,130.0 1,136.3 1,994.3
- change (%) +25.5% -0.6%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Less ceded premiums written -60.7 -55.7 -63.8 -67.5 -178.6
- change (%) +9.0% -5.5%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net premiums written 414.0 322.4 1,066.2 1,068.8 1,815.7
- change (%) +28.4% -0.2%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net change in unearned premiums 61.7 281.7 -155.2 267.7 567.5
- change (%) -78.1% -158.0%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net premiums earned 475.7 604.1 911.0 1,336.5 2,383.2
- change (%) -21.3% -31.8%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net investment income 84.6 87.8 159.3 170.0 324.9
- change (%) -3.6% -6.3%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net realized capital (losses) gains -12.6 -1.0 -17.0 -1.7 25.5
- change (%) n.m. n.m.
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Other income (loss) 4.5 9.1 2.4 -5.4 -13.4
- change (%) -50.5% n.m.
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Total revenues 552.2 700.0 1,055.7 1,499.4 2,720.2
- change (%) -21.1% -29.6%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Benefits, losses and expenses
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Losses, loss expenses and life benefits -285.0 -505.3 -571.6 -996.5 -1,775.9
- change (%) -43.6% -42.6%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Acquisition costs -140.0 -80.2 -245.1 -305.5 -575.6
- change (%) +74.6% -19.8%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Other operating and administration expenses -47.9 -50.4 -83.6 -107.3 -210.8
- change (%) -5.0% -22.1%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Interest expense -7.9 -8.0 -15.7 -15.9 -31.6
- change (%) -1.3% -1.3%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Amortization of intangible assets - -6.8 - -13.8 -21.5
- change (%) n.m. n.m.
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Restructuring costs - -3.5 0.2 -13.6 -20.5
- change (%) n.m. -101.5%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Total benefits, losses and expenses -480.8 -654.2 -915.8 -1,452.6 -2,635.9
- change (%) -26.5% -37.0%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Income before taxes 71.4 45.8 139.9 46.8 84.3
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Income tax (expense) benefit -8.9 1.1 -15.8 -5.4 -15.6
- change (%) n.m. +192.6%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Net income 62.5 46.9 124.1 41.4 68.7
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Basic earnings per share (USD) 0.43 0.32 0.85 0.28 0.47
- change (%) +34.4% +203.6%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
Diluted earnings per share (USD) 0.42 0.32 0.84 0.28 0.46
- change (%) +31.3% +200.0%
-------------------------------------------------- ------------ ------------ ------------- ------------ ------------
11
--------------------------------------------------------------------------------------------------------------------
Interim consolidated balance sheets June 30, Dec. 31,
2006 2005
In USD million (unaudited) (audited)
--------------------------------------------------------------------------------------------------------------------
Assets
--------------------------------------------------------------------------------------------------------------------
Invested assets
--------------------------------------------------------------------------------------------------------------------
Held-to-maturity securities:
Fixed maturities 791.8 793.6
--------------------------------------------------------------------------------------------------------------------
Available-for-sale securities:
Fixed maturities 4,041.3 4,169.8
Equity securities 353.6 362.6
--------------------------------------------------------------------------------------------------------------------
Other investments 264.1 253.1
--------------------------------------------------------------------------------------------------------------------
Short-term investments 57.2 35.1
--------------------------------------------------------------------------------------------------------------------
Total investments 5,508.0 5,614.2
--------------------------------------------------------------------------------------------------------------------
Funds Withheld Asset 986.4 1,020.1
--------------------------------------------------------------------------------------------------------------------
Total invested assets 6,494.4 6,634.3
--------------------------------------------------------------------------------------------------------------------
Other assets
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 682.9 647.3
--------------------------------------------------------------------------------------------------------------------
Premiums receivable:
Current 171.9 193.7
Accrued 827.0 865.6
--------------------------------------------------------------------------------------------------------------------
Reserves for unearned premiums, retro 35.3 37.8
--------------------------------------------------------------------------------------------------------------------
Reinsurance assets:
Underwriting reserves 732.5 805.1
Insurance and reinsurance balances receivable 57.5 37.6
--------------------------------------------------------------------------------------------------------------------
Funds held by reinsureds 1,943.3 1,817.4
--------------------------------------------------------------------------------------------------------------------
Deposit assets 185.8 183.4
--------------------------------------------------------------------------------------------------------------------
Deferred policy acquisition costs 382.6 304.3
--------------------------------------------------------------------------------------------------------------------
Deferred income taxes 3.1 1.0
--------------------------------------------------------------------------------------------------------------------
Other assets 308.9 298.4
--------------------------------------------------------------------------------------------------------------------
Total assets 11,825.2 11,825.9
--------------------------------------------------------------------------------------------------------------------
Liabilities
--------------------------------------------------------------------------------------------------------------------
Reinsurance liabilities:
Unpaid losses and loss expenses 7,279.0 7,568.9
Future life benefits, gross 476.0 405.6
Insurance and reinsurance balances payable 204.4 226.3
--------------------------------------------------------------------------------------------------------------------
Reserves for unearned premiums, gross 792.5 610.8
--------------------------------------------------------------------------------------------------------------------
Other reinsurance liabilities 102.1 127.8
--------------------------------------------------------------------------------------------------------------------
Funds held under reinsurance contracts 338.5 332.9
--------------------------------------------------------------------------------------------------------------------
Deposit liabilities 268.3 300.6
--------------------------------------------------------------------------------------------------------------------
Deferred income taxes 8.8 8.1
--------------------------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 168.1 200.3
--------------------------------------------------------------------------------------------------------------------
Debt 391.4 391.2
--------------------------------------------------------------------------------------------------------------------
Total liabilities 10,029.1 10,172.5
--------------------------------------------------------------------------------------------------------------------
Shareholders' equity
--------------------------------------------------------------------------------------------------------------------
Common stock 554.9 554.9
--------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 1,357.1 1,354.2
--------------------------------------------------------------------------------------------------------------------
Treasury stock -4.8 -1.5
--------------------------------------------------------------------------------------------------------------------
Unearned stock compensation -1.3 -3.5
--------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income:
Minimum pension liabilities, net of taxes -6.1 -4.9
Net unrealized gains on investments, net of taxes 2.8 42.7
Cumulative translation adjustments, net of taxes 166.5 96.9
--------------------------------------------------------------------------------------------------------------------
Total accumulated other comprehensive income 163.2 134.7
--------------------------------------------------------------------------------------------------------------------
Retained deficit -273.0 -385.4
--------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,796.1 1,653.4
--------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity 11,825.2 11,825.9
--------------------------------------------------------------------------------------------------------------------
12
--------------------------------------------------------------------------------------------------------------------
Interim consolidated statements of cash flows Six months ended
(Unaudited) June 30,
In USD million 2006 2005
--------------------------------------------------------------------------------------------------------------------
Net income 124.1 41.4
--------------------------------------------------------------------------------------------------------------------
Net realized and unrealized capital (gains) losses and impairment on investments 17.0 1.7
17.020.5 1.7
Amortization of premium/discount 20.5 27.4
20.5-0.2 27.4
Depreciation and amortization 5.6 22.6
5.60.8 22.6
Restructuring costs -0.2 3.1
Deferred income taxes 10.4 0.9
Net of interests / amortization on non-cash deposits 0.8 -2.2
-0.2 3.1
--------------------------------------------------------------------------------------------------------------------
Total adjustments 54.1 53.5
10.4 0.9
--------------------------------------------------------------------------------------------------------------------
Premiums receivable 102.0 163.3
0.8 -2.2
Reserves for unearned premiums, retro 4.7 9.3
Reinsurance assets 71.1 -198.4
Funds held by reinsureds -59.9 1.9
Funds Withheld Asset 79.8 80.4
Deferred policy acquisition costs -57.7 115.7
Unpaid losses and loss expenses -558.9 -165.8
Future life benefits, gross 47.7 19.2
Insurance and reinsurance balances payable -22.9 -143.5
Reserves for unearned premiums, gross 146.9 -269.1
Other reinsurance liabilities -33.7 319.9
Funds held under reinsurance contracts -12.9 23.0
Net changes in all other operational assets and liabilities -39.0 1.5
--------------------------------------------------------------------------------------------------------------------
Total changes in operational assets and liabilities -332.8 -42.6
--------------------------------------------------------------------------------------------------------------------
Cash (used in) provided by operating activities -154.6 52.3
--------------------------------------------------------------------------------------------------------------------
Proceeds from sales and maturities of fixed maturities held-to-maturity 14.0 -
Proceeds from sales and maturities of fixed maturities available-for-sale 768.1 1,859.1
-613.2 -2,280.9
Purchases of fixed maturities available-for-sale 14.0 -
--------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities (fixed maturities) 168.9 -421.8
768.1 1'859.1
--------------------------------------------------------------------------------------------------------------------
Proceeds from sales of equity securities 109.6 26.6
Purchases of equity securities -57.1 -50.6
--------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities (equity securities) 52.5 -24.0
109.6 26.6
--------------------------------------------------------------------------------------------------------------------
Net (increase) decrease in short-term investments -19.2 59.4
Proceeds from sales of other assets 0.5 9.4
Purchases of other assets -7.7 -28.9
--------------------------------------------------------------------------------------------------------------------
-26.4 39.9
Cash flows from investing activities (other) -7.7
--------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 195.0 -405.9
--------------------------------------------------------------------------------------------------------------------
Net purchase of common shares -0.4 -1.6
-11.7
Dividends to shareholders -0.4 -
-2.0
Net (decrease) increase in deposit liabilities -16.9 -
--------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities -29.0 -3.6
--------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 24.2 -42.3
--------------------------------------------------------------------------------------------------------------------
Change in cash and cash equivalents 35.6 -399.5
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents as of January 1 647.3 680.9
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents as of June 30 682.9 281.4
--------------------------------------------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------------------------------------------
Segments Three months ended Change Six months ended Change
(Unaudited) June 30, June 30,
In USD million, unless noted 2006 2005 (%) 2006 2005 (%)
----------------------------------------- --------------
Standard Property & Casualty Reinsurance
--------------------------------------------------------------------------------------------------------------------
Gross premiums written 218.1 100.1 +117.9 558.9 537.6 +4.0
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Net premiums written 167.5 88.5 +89.3 513.2 521.4 -1.6
--------------------------------------------------------------------------------------------------------------------
Net premiums earned 209.8 224.2 -6.4 361.9 498.1 -27.3
--------------------------------------------------------------------------------------------------------------------
Loss ratio(16) 54.1% 87.9% -33.8 pts 55.3% 78.7% -23.4 pts
--------------------------------------------------------------------------------------------------------------------
Acquisition costs ratio(17) 31.2% 6.2% +25.0 pts 28.0% 17.7% +10.3 pts
--------------------------------------------------------------------------------------------------------------------
Administration expense ratio(18) 6.9% 9.7% -2.8 pts 4.2% 5.0% -0.8 pts
--------------------------------------------------------------------------------------------------------------------
Combined ratio(19) 92.2% 103.8% -11.6 pts 87.5% 101.4% -13.9 pts
--------------------------------------------------------------------------------------------------------------------
Total investment results(20) 25.4 30.8 -17.5 49.7 57.8 -14.0
--------------------------------------------------------------------------------------------------------------------
Segment income 44.7 35.4 +26.3 88.8 49.7 +78.7
--------------------------------------------------------------------------------------------------------------------
Retention ratio(21) 76.8% 88.4% -11.6 pts 91.8% 97.0% -5.2 pts
--------------------------------------------------------------------------------------------------------------------
Specialty Lines
--------------------------------------------------------------------------------------------------------------------
Gross premiums written 183.3 213.1 -14.0 383.0 383.3 -0.1
--------------------------------------------------------------------------------------------------------------------
Net premiums written 176.2 176.7 -0.3 370.1 344.1 +7.6
--------------------------------------------------------------------------------------------------------------------
Net premiums earned 180.9 274.4 -34.1 372.5 579.2 -35.7
--------------------------------------------------------------------------------------------------------------------
Loss ratio(16) 76.8% 80.0% -3.2 pts 78.1% 72.2% +5.9 pts
--------------------------------------------------------------------------------------------------------------------
Acquisition costs ratio(17) 25.2% 13.8% +11.4 pts 23.0% 25.1% -2.1 pts
--------------------------------------------------------------------------------------------------------------------
Administration expense ratio(18) 6.6% 8.5% -1.9 pts 5.2% 9.6% -4.4 pts
--------------------------------------------------------------------------------------------------------------------
Combined ratio(19) 108.6% 102.3% +6.3 pts 106.3% 106.9% -0.6 pts
--------------------------------------------------------------------------------------------------------------------
Total investment results(20) 30.7 34.9 -12.0 58.7 65.9 -10.9
--------------------------------------------------------------------------------------------------------------------
Segment income (loss) 15.4 37.0 -58.4 35.3 48.4 -27.1
--------------------------------------------------------------------------------------------------------------------
Retention ratio(21) 96.1% 82.9% +13.2 pts 96.6% 89.8% +6.8 pts
--------------------------------------------------------------------------------------------------------------------
Life & Health Reinsurance
--------------------------------------------------------------------------------------------------------------------
Gross premiums written 66.1 59.3 +11.5 172.6 176.4 -2.2
--------------------------------------------------------------------------------------------------------------------
Net premiums written 63.1 55.7 +13.3 167.4 169.5 -1.2
--------------------------------------------------------------------------------------------------------------------
Net premiums earned 77.8 74.1 +5.0 158.2 155.2 +1.9
--------------------------------------------------------------------------------------------------------------------
Acquisition costs ratio(17) 30.5% 25.1% +5.4 pts 32.0% 29.6% +2.4 pts
--------------------------------------------------------------------------------------------------------------------
Administration expense ratio(18) 4.1% 8.1% -4.0 pts 2.8% 5.0% -2.2 pts
--------------------------------------------------------------------------------------------------------------------
Total investment results(20) 6.7 6.5 +3.1 12.5 12.5 -
--------------------------------------------------------------------------------------------------------------------
Segment income 8.9 0.1 n.m. 16.0 6.1 +162.3
--------------------------------------------------------------------------------------------------------------------
Technical result 7.6 1.4 n.m. 13.8 8.1 +70.4
--------------------------------------------------------------------------------------------------------------------
Retention ratio(21) 95.5% 93.9% +1.6 pts 97.0% 96.1% +0.9 pts
--------------------------------------------------------------------------------------------------------------------
---------------------
(16) Loss ratio is defined as losses and loss expenses divided by net premiums
earned.
(17) Acquisition costs ratio is defined as acquisition costs divided by net
premiums earned.
(18) Administration expense ratio is defined as other operating and
administration expenses divided by net premiums written.
(19) Combined ratio is defined as loss ratio (to net premiums earned) plus
acquisition costs ratio (to net premiums earned) plus administration
expense ratio (to net premiums written).
(20) Total investment results are defined as net investment income plus net
realized capital gains (losses).
(21) Retention ratio is defined as net premiums written divided by gross
premiums written.
14
--------------------------------------------------------------------------------------------------------------------
Segments Three months ended Change Six months ended Change
(Unaudited) June 30, June 30,
In USD million, unless noted 2006 2005 (%) 2006 2005 (%)
----------------------------------------- -------------
Run-Off
--------------------------------------------------------------------------------------------------------------------
Gross premiums written 7.2 5.6 +28.6 15.5 39.0 -60.3
--------------------------------------------------------------------------------------------------------------------
Net premiums written 7.2 1.5 n.m. 15.5 33.8 -54.1
--------------------------------------------------------------------------------------------------------------------
Net premiums earned 7.2 31.4 -77.1 18.4 104.0 -82.3
--------------------------------------------------------------------------------------------------------------------
Total investment results(20) 9.2 14.6 -37.0 21.4 32.1 -33.3
--------------------------------------------------------------------------------------------------------------------
Segment income (loss) 19.9 -5.5 n.m. 37.6 10.5 n.m.
--------------------------------------------------------------------------------------------------------------------
Corporate Center
--------------------------------------------------------------------------------------------------------------------
Other operating and administration -14.1 -12.0 +17.5 -24.7 -19.2 +28.6
expenses
--------------------------------------------------------------------------------------------------------------------
15
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
Name: Inga Beale
Title: CEO
By: /s/ Christian Felderer
Name: Christian Felderer
Title: General Legal Counsel
Date: August 10, 2006