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(g) OF THE SECURITIES EXCHANGE ACT OF 1934
THE SECURITIES EXCHANGE ACT OF 1934
THE SECURITIES EXCHANGE ACT OF 1934
(Translation of Registrant’s name into English)
Switzerland
(Jurisdiction of incorporation or organization)
Dammstrasse 19
CH-6301 Zug
Switzerland
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Name of each Exchange | ||
Title of each class | on which registered | |
American Depositary Shares (as evidenced by American Depositary Receipts), each representing one-half (1/2) of one registered share, nominal value CHF 5 per share | New York Stock Exchange | |
Registered shares, nominal value CHF 5 per share* 8.25% Guaranteed Subordinated Notes due 2032 issued by Converium Finance S.A. Subordinated Guarantee of Subordinated Notes+ | New York Stock Exchange New York Stock Exchange New York Stock Exchange |
* | Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. | |
+ | Not for trading, but only in connection with the listing of the Subordinated Notes, pursuant to the requirements of the Securities and Exchange Commission. |
None
(Title of Class)
None
(Title of Class)
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• | certain statements in “Item 4. — Information on the Company — B. Business Overview” with regard to strategy and management objectives, trends in market conditions, prices, market standing and product volumes, investment results, litigation and the effects of changes or prospective changes in regulation. | |
• | certain statements in “Item 4. — Information on the Company — B. Business Overview — Regulation” with regard to the effects of changes or prospective changes in regulation. | |
• | certain statements in “Item 5. — Operating and Financial Review and Prospects” with regard to trends in results, prices, volumes, operations, investment results, margins, overall market trends, risk management and exchange rates and with regard to our internal review and related Restatement. | |
• | certain statements in “Item 11. — Quantitative and Qualitative Disclosures About Market Risk” with regard to sensitivity analyses for invested assets. | |
• | certain statements in “Item 15. — Controls and Procedures” with regard to our actions to remediate the material weaknesses identified in our financial accounting and reporting function. |
• | the impact of our ratings downgrades or a further lowering or loss of one of our financial strength ratings; | |
• | uncertainties of assumptions used in our reserving process; | |
• | risks 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 US and international regulatory authorities including the US Securities and Exchange Commission (“SEC”) and New York’s Attorney General; | |
• | 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 |
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• | extraordinary events affecting our clients, such as bankruptcies and liquidations. |
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Year ended December 31 | ||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||
($ millions, except per share information) | ||||||||||||||||||||
Income statement data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Gross premiums written | $ | 3,978.7 | $ | 4,300.4 | $ | 3,372.4 | $ | 2,846.8 | $ | 2,547.1 | ||||||||||
Less ceded premiums written | (252.6 | ) | (377.7 | ) | (137.2 | ) | (194.1 | ) | (366.4 | ) | ||||||||||
Net premiums written | 3,726.1 | 3,922.7 | 3,235.2 | 2,652.7 | 2,180.7 | |||||||||||||||
Net change in unearned premiums | 156.1 | (154.9 | ) | (157.7 | ) | (204.2 | ) | (126.2 | ) | |||||||||||
Net premiums earned | 3,882.2 | 3,767.8 | 3,077.5 | 2,448.5 | 2,054.5 | |||||||||||||||
Net investment income | 312.7 | 234.4 | 251.8 | 234.9 | 176.0 | |||||||||||||||
Net realized capital gains (losses) | 46.5 | 18.4 | (10.3 | ) | (18.4 | ) | 83.7 | |||||||||||||
Other (loss) income | (8.2 | ) | 17.5 | 31.6 | 2.9 | 43.2 | ||||||||||||||
Total revenues | 4,233.2 | 4,038.1 | 3,350.6 | 2,667.9 | 2,357.4 | |||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||
Losses, loss expenses and life benefits | (3,342.5 | ) | (2,760.1 | ) | (2,491.1 | ) | (2,460.6 | ) | (1,885.6 | ) |
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Year ended December 31 | ||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||
($ millions, except per share information) | ||||||||||||||||||||
Total costs and expenses | (1,165.3 | ) | (1,065.5 | ) | (841.6 | ) | (687.5 | ) | (614.7 | ) | ||||||||||
Amortization of goodwill (1) | — | — | — | (7.8 | ) | (7.3 | ) | |||||||||||||
Impairment of goodwill (1) | (94.0 | ) | — | — | — | — | ||||||||||||||
Amortization of intangible assets | (9.9 | ) | (1.8 | ) | — | — | — | |||||||||||||
Restructuring costs | (2.7 | ) | — | — | (50.0 | ) | — | |||||||||||||
Total benefits, losses and expenses | (4,614.4 | ) | (3,827.4 | ) | (3,332.7 | ) | (3,205.9 | ) | (2,507.6 | ) | ||||||||||
(Loss) income before taxes | (381.2 | ) | 210.7 | 17.9 | (538.0 | ) | (150.2 | ) | ||||||||||||
Income tax (expense) benefit | (201.3 | ) | (32.8 | ) | 17.9 | 182.4 | 38.1 | |||||||||||||
Net (loss) income | $ | (582.5 | ) | $ | 177.9 | $ | 35.8 | $ | (355.6 | ) | $ | (112.1 | ) | |||||||
(Loss) earnings per share: | ||||||||||||||||||||
Average number of shares (millions) | 63.4 | 39.8 | 39.9 | 40.0 | 40.0 | |||||||||||||||
Basic (loss) earnings per share (2) | $ | (9.19 | ) | $ | 2.24 | $ | 0.45 | $ | (4.46 | ) | $ | (2.80 | ) | |||||||
Diluted (loss) earnings per share (2) | (9.19 | ) | 2.23 | 0.45 | (4.46 | ) | (2.80 | ) |
Year ended December 31 | ||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||
($ millions, except per share information) | ||||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||
Total invested assets | $ | 7,786.2 | $ | 7,502.0 | $ | 6,117.3 | $ | 4,892.1 | $ | 4,349.7 | ||||||||||
Total assets | 14,260.9 | 13,280.4 | 10,757.5 | 8,862.1 | 8,018.2 | |||||||||||||||
Reinsurance liabilities | 9,898.9 | 8,428.6 | 6,986.7 | 5,871.3 | 4,666.1 | |||||||||||||||
Debt | 391.1 | 393.1 | 392.9 | 206.1 | 196.9 | |||||||||||||||
Total liabilities | 12,526.1 | 11,352.4 | 9,162.3 | 7,361.3 | 7,011.8 | |||||||||||||||
Total shareholders’ equity | 1,734.8 | 1,928.0 | 1,595.2 | 1,500.8 | 1,006.4 | |||||||||||||||
Book value per share (3) | 11.86 | 48.47 | 39.97 | 37.52 | 25.16 |
Year ended December 31 | ||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||
($ millions, except ratios) | ||||||||||||||||||||
Other data: | ||||||||||||||||||||
Net premiums written by segment: | ||||||||||||||||||||
Standard Property & Casualty Reinsurance | $ | 1,557.9 | $ | 1,681.6 | $ | 1,335.6 | $ | 1,409.8 | $ | 1,130.8 | ||||||||||
Specialty Lines | 1,736.9 | 1,860.8 | 1,584.9 | 1,008.7 | 865.5 | |||||||||||||||
Life & Health Reinsurance | 431.3 | 380.3 | 314.7 | 234.2 | 184.4 | |||||||||||||||
Total net premiums written | $ | 3,726.1 | $ | 3,922.7 | $ | 3,235.2 | $ | 2,652.7 | $ | 2,180.7 | ||||||||||
Non-life combined ratio | 115.9 | %(4) | 97.5 | % | 106.3 | % | 128.8 | %(5) | 120.8 | % | ||||||||||
Ratio of earnings to fixed charges (6) | (7 | ) | 6.8 | 1.8 | (8 | ) | (9 | ) |
(1) | For a discussion of goodwill and Converium’s compliance with SFAS No. 142, “Goodwill and Other Intangible Assets”, see Notes 2(k) and 9 to our 2004 consolidated financial statements. | |
(2) | For the periods 2001 through 2003, the earnings per share have been restated to reflect the rights offering (the “2004 rights offering”) that occurred in October 2004 (see Note 25 to our 2004 consolidated financial statements). For the year 2000, the information is based on the 40,000,000 registered shares sold in the global offering in December 2001, as no other information is available for this time period. These 40,000,000 shares are considered outstanding for all periods prior to December 11, 2001. | |
(3) | For the year 2000, the information is based on the 40,000,000 registered shares sold in the global offering in December 2001, as no other information is available for this time period. These 40,000,000 shares are considered outstanding for all periods prior to December 11, 2001. | |
(4) | The impact on the non-life combined ratio of the 2004 reserve development was 16.4% | |
(5) | The impact on the non-life combined ratio of the September 11th terrorist attacks was 12.4%. | |
(6) | The ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges. Fixed charges consist of interest expense and the interest portion of rental expense. | |
(7) | Due to Converium’s loss in 2004 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $381.2 million to achieve coverage of 1:1. | |
(8) | Due to Converium’s loss in 2001 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $538.0 million to achieve coverage of 1:1. | |
(9) | Due to Converium’s loss in 2000 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $150.2 million to achieve coverage of 1:1. |
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• | Converium Reinsurance (North America) Inc. (“CRNA”) has been placed into run-off and will seek to commute its liabilities wherever appropriate. In addition, CRNA has hired an experienced run-off professional as its new President and CEO and has restructured its senior level staffing to function as an entity in run-off; | |
• | Converium Insurance (North America) Inc. (“CINA”) is now a limited writer, offering continuing coverage for only two discrete primary programs, one of which is mandated by state law. The plan is for CINA to maintain this status until such time as it becomes a more widely accepted carrier for its clients; | |
• | Converium has implemented a fronting arrangement to enable it to continue to participate in the Global Aerospace Underwriting Managers Limited (“GAUM”) pool. The fronting arrangement currently extends until September 30, 2005 with no contractual guarantee that it will extend beyond that date; and | |
• | We will offer reinsurance for US-originated business to select US based clients. This business will be underwritten and managed through Converium AG, Zurich. |
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• | price competition and price setting mechanisms of clients; | |
• | frequency of occurrence or severity of both natural and man-made catastrophic events; | |
• | levels of capacity and demand; | |
• | general economic conditions; and | |
• | changes in legislation, case law and prevailing concepts of liability. |
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• | 57% of our net premiums written | |
• | 43% of our net investment income | |
• | 43% of our losses, loss expenses and life benefits, and | |
• | 70% of our operating expenses |
• | Munich Reinsurance Company; | |
• | Swiss Reinsurance Company; | |
• | General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.; | |
• | Employers Reinsurance Corporation, a subsidiary of General Electric Company; | |
• | Hannover Re Group, which is majority-owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie; | |
• | Lloyd’s syndicates active in the London market; | |
• | companies active in the Bermuda market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.; | |
• | Everest Reinsurance Company; | |
• | Transatlantic Reinsurance Company; and | |
• | SCOR. |
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• | The transfer to us of the “Zurich Re” reinsurance business now conducted by Converium AG, through a series of steps including: |
o | Our reinsurance of this business through quota share retrocession agreements with two units of Zurich Financial Services, (the “Quota Share Retrocession Agreement”); |
o | The establishment of “funds withheld” balances in our favor by the applicable units of Zurich Financial Services (the “Funds Withheld Asset”), on which we will be paid investment returns by the Zurich Financial Services units; |
o | The transfer of assets including cash, marketable securities and participations by Zurich Financial Services and its subsidiaries to Converium, together with the assumption of liabilities; |
• | The acquisition of the Cologne reinsurance business through the transfer by a subsidiary of Zurich Financial Services to Converium AG of its 98.63% interest in ZRK, which was renamed Converium Rückversicherung (Deutschland) AG. Converium’s interest in Converium Rückversicherung (Deutschland) AG increased to 100% in January 2003; | |
• | The acquisition of the North American reinsurance business through the transfer by a subsidiary of Zurich Financial Services of all of the voting securities of Zurich Reinsurance (North America) Inc. to CHNA Inc., a wholly owned subsidiary of Converium AG. In conjunction with this transfer, CHNA assumed $200 million of public debt from a subsidiary of Zurich Financial Services, and Zurich Reinsurance (North America), Inc. was renamed CRNA; | |
• | The sale of 35,000,000 of our registered shares to the public by Zurich Financial Services on December 11, 2001 in our initial public offering and the subsequent sale of 5,000,000 of our registered shares to the public by Zurich Financial Services on January 9, 2002 as a result of the underwriters’ exercise of their over-allotment option, which sales resulted in the public owning 100% of our shares; and | |
• | After our initial public offering, Converium AG used cash transferred to us by Zurich Financial Services to acquire from subsidiaries of Zurich Financial Services approximately $140 million of residential and commercial rental properties located in Switzerland. |
• | The shareholders’ equity of the legal entities comprising our operating businesses; | |
• | The operating assets of the Zurich reinsurance business; and | |
• | The balance of the assets transferred to us consisted of investments and cash, of which approximately $140 million was used by |
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Converium AG to acquire residential and commercial rental properties located in Switzerland from subsidiaries of Zurich Financial Services |
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• | sustainable value growth for our shareholders; | |
• | excellent service for our customers and intermediaries; | |
• | a fulfilling work environment for our employees; and | |
• | a spirit of shared responsibility within our community. |
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• | Our lead objective is to maximize economic value. The metrics we use to measure this are net after-tax operating income and “performance excess”. “Performance excess” is the measure we use to implement economic value-based management at Converium and is the key metric for measuring expected and actual underwriting performance. “Performance excess” represents the economic value added attached to all reinsurance contracts in our portfolio and takes into account all expected benefits and costs emanating from a contract or group of contracts, including expected premiums, expected losses and all other internal and external costs including taxes and the costs of the allocated risk-based capital. Hence, “performance excess” equals the expected net present value created for shareholders, in excess of the cost of capital; | |
• | To optimize our overall risk profile, we balance and diversify our portfolio by line of business, by region and by duration; | |
• | All contracts we underwrite should be profitable in expectation; that is, a “performance excess” target of at least equal to zero. For every individual client relationship, the “performance excess” must be greater than or equal to zero in expectation, at every renewal; | |
• | We seek to grow our relationships with our target clients, but sustainable profitability is a prerequisite; and | |
• | Assumed retrocession, financial guarantees, underwriting authorities for assumed reinsurance and fronting are outside of our strategic scope. |
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Year Ended December 31, 2004 (Restated) | ||||||||||||||||||||
Segment | ||||||||||||||||||||
income | ||||||||||||||||||||
Gross premiums written | Net premiums written | (loss) | ||||||||||||||||||
$ millions | % of total | $ millions | % of total | $ millions | ||||||||||||||||
Business Segment: | ||||||||||||||||||||
Standard Property & Casualty Reinsurance | $ | 1,699.5 | 42.7 | % | $ | 1,557.9 | 41.8 | % | $ | 40.1 | ||||||||||
Specialty Lines | 1,833.2 | 46.1 | 1,736.9 | 46.6 | (252.1 | ) | ||||||||||||||
Life & Health Reinsurance | 446.0 | 11.2 | 431.3 | 11.6 | 16.9 | |||||||||||||||
Corporate Center | — | — | — | — | (38.2 | ) | ||||||||||||||
Total | $ | 3,978.7 | 100.0 | % | $ | 3,726.1 | 100.0 | % | (233.3 | ) | ||||||||||
Other loss | (8.2 | ) | ||||||||||||||||||
Interest expense | (33.1 | ) | ||||||||||||||||||
Impairment of goodwill | (94.0 | ) | ||||||||||||||||||
Amortization of intangible assets | (9.9 | ) | ||||||||||||||||||
Restructuring costs | (2.7 | ) | ||||||||||||||||||
Income tax expense | (201.3 | ) | ||||||||||||||||||
Net loss | $ | (582.5 | ) |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
Reported | Accrued | Total | Reported | Accrued | Total | Reported | Accrued | Total | ||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
($ millions) | ($ millions) | ($ millions) | ||||||||||||||||||||||||||||||||||
Gross Premiums Written | ||||||||||||||||||||||||||||||||||||
Standard Property & Casualty Reinsurance | ||||||||||||||||||||||||||||||||||||
General Third Party Liability | 391.4 | 44.9 | 436.3 | 508.6 | -104.8 | 403.8 | 193.9 | 118.2 | 312.1 | |||||||||||||||||||||||||||
Motor | 596.2 | -65.6 | 530.6 | 562.6 | -43.2 | 519.4 | 356.5 | 18.1 | 374.6 | |||||||||||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 51.6 | -17.9 | 33.7 | 37.0 | 1.0 | 38.0 | 30.6 | 4.4 | 35.0 | |||||||||||||||||||||||||||
Property | 656.3 | 42.6 | 698.9 | 893.0 | -33.8 | 859.2 | 594.1 | 80.1 | 674.2 | |||||||||||||||||||||||||||
Total Standard Property & Casualty Reinsurance | 1,695.5 | 4.0 | 1,699.5 | 2,001.2 | -180.8 | 1,820.4 | 1,175.1 | 220.8 | 1,395.9 | |||||||||||||||||||||||||||
Specialty Lines | ||||||||||||||||||||||||||||||||||||
Agribusiness | 89.7 | 30.2 | 119.9 | 41.3 | 57.2 | 98.5 | 31.8 | -9.8 | 22.0 | |||||||||||||||||||||||||||
Aviation & Space | 486.6 | -10.2 | 476.4 | 460.9 | 24.2 | 485.1 | 349.4 | 58.8 | 408.2 | |||||||||||||||||||||||||||
Credit & Surety | 126.4 | 48.0 | 174.4 | 228.0 | 16.3 | 244.3 | 167.2 | 32.0 | 199.2 | |||||||||||||||||||||||||||
Engineering | 126.1 | -7.6 | 118.5 | 138.2 | 6.7 | 144.9 | 96.7 | 24.2 | 120.9 | |||||||||||||||||||||||||||
Marine & Energy | 95.5 | -6.0 | 89.5 | 108.2 | -7.3 | 100.9 | 77.9 | 22.4 | 100.3 | |||||||||||||||||||||||||||
Professional Liability and other Special Liability | 842.1 | -210.9 | 631.2 | 690.0 | 0.7 | 690.7 | 478.0 | 90.3 | 568.3 | |||||||||||||||||||||||||||
Workers’ Compensation | 246.1 | -22.9 | 223.2 | 208.8 | 100.2 | 309.0 | 193.3 | 21.2 | 214.5 | |||||||||||||||||||||||||||
Total Specialty Lines | 2,012.5 | -179.3 | 1,833.2 | 1,875.4 | 198.0 | 2,073.4 | 1,394.3 | 239.1 | 1,633.4 | |||||||||||||||||||||||||||
Life & Health Reinsurance | ||||||||||||||||||||||||||||||||||||
Life and Disability | 342.5 | -94.6 | 247.9 | 226.4 | -27.4 | 199.0 | 211.0 | -27.9 | 183.1 | |||||||||||||||||||||||||||
Accident and Health | 206.9 | -8.8 | 198.1 | 199.4 | 8.2 | 207.6 | 132.7 | 27.3 | 160.0 |
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Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
Reported | Accrued | Total | Reported | Accrued | Total | Reported | Accrued | Total | ||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
($ millions) | ($ millions) | ($ millions) | ||||||||||||||||||||||||||||||||||
Total Life & Health Reinsurance | 549.4 | -103.4 | 446.0 | 425.8 | -19.2 | 406.6 | 343.7 | -0.6 | 343.1 | |||||||||||||||||||||||||||
Total | 4,257.3 | -278.7 | 3,978.7 | 4,302.6 | -2.0 | 4,300.4 | 2,913.1 | 459.3 | 3,372.4 | |||||||||||||||||||||||||||
Acquisition Costs | ||||||||||||||||||||||||||||||||||||
Standard Property & Casualty Reinsurance | ||||||||||||||||||||||||||||||||||||
General Third Party Liability | 81.8 | 29.0 | 110.8 | 90.6 | 2.0 | 92.6 | 43.1 | 14.9 | 58.0 | |||||||||||||||||||||||||||
Motor | 99.3 | 4.2 | 103.5 | 97.6 | -10.0 | 87.6 | 66.5 | 2.9 | 69.4 | |||||||||||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 17.6 | -0.9 | 16.7 | 6.3 | 1.0 | 7.3 | 5.9 | 1.3 | 7.2 | |||||||||||||||||||||||||||
Property | 149.4 | 31.4 | 180.8 | 198.1 | -8.1 | 190.0 | 125.4 | 20.4 | 145.8 | |||||||||||||||||||||||||||
Total Standard Property & Casualty Reinsurance | 348.1 | 63.7 | 411.8 | 392.6 | -15.1 | 377.5 | 240.8 | 39.5 | 280.3 | |||||||||||||||||||||||||||
Specialty Lines | ||||||||||||||||||||||||||||||||||||
Agribusiness | 8.7 | 3.6 | 12.3 | 4.7 | 2.8 | 7.5 | 1.6 | -0.6 | 1.0 | |||||||||||||||||||||||||||
Aviation & Space | 78.9 | 1.3 | 80.2 | 64.7 | -16.6 | 48.1 | 51.7 | 1.0 | 52.7 | |||||||||||||||||||||||||||
Credit & Surety | 49.7 | 11.2 | 60.9 | 61.7 | 0.5 | 62.2 | 49.2 | 1.1 | 50.3 | |||||||||||||||||||||||||||
Engineering | 32.2 | -2.3 | 29.9 | 34.0 | 5.8 | 39.8 | 24.2 | -2.3 | 21.9 | |||||||||||||||||||||||||||
Marine & Energy | 21.2 | -1.5 | 19.7 | 22.0 | -8.5 | 13.5 | 16.4 | 8.7 | 25.1 | |||||||||||||||||||||||||||
Professional Liability and other Special Liability | 171.2 | -30.9 | 140.3 | 166.3 | 3.4 | 169.7 | 92.5 | -0.9 | 91.6 | |||||||||||||||||||||||||||
Workers’ Compensation | 36.1 | 21.8 | 57.9 | 45.1 | -11.5 | 33.6 | 51.5 | 8.3 | 59.8 | |||||||||||||||||||||||||||
Total Specialty Lines | 398.0 | 3.2 | 401.2 | 398.7 | -24.2 | 374.5 | 287.4 | 15.1 | 302.5 | |||||||||||||||||||||||||||
Life & Health Reinsurance | ||||||||||||||||||||||||||||||||||||
Life and Disability | 92.0 | -38.3 | 53.7 | 52.6 | -16.0 | 36.6 | 30.8 | 4.0 | 34.8 | |||||||||||||||||||||||||||
Accident and Health | 49.0 | -3.3 | 45.7 | 39.9 | 3.5 | 43.4 | 24.7 | 4.4 | 29.1 | |||||||||||||||||||||||||||
Total Life & Health Reinsurance | 141.0 | -41.6 | 99.4 | 92.6 | -12.6 | 80.0 | 55.6 | 8.4 | 64.0 | |||||||||||||||||||||||||||
Total | 886.2 | 25.3 | 912.4 | 883.9 | -51.9 | 832.0 | 583.8 | 63.0 | 646.8 |
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
($ millions) | % of | ($ millions) | % of | ($ millions) | % of | |||||||||||||||||||
total | total | total | ||||||||||||||||||||||
United Kingdom* | 1,160.8 | 29.2 | 1,188.0 | 27.6 | 910.4 | 27.0 | ||||||||||||||||||
Germany | 389.6 | 9.8 | 286.9 | 6.7 | 176.1 | 5.2 | ||||||||||||||||||
France | 158.2 | 4.0 | 160.4 | 3.7 | 106.9 | 3.2 | ||||||||||||||||||
Italy | 162.2 | 4.1 | 131.2 | 3.1 | 84.0 | 2.5 | ||||||||||||||||||
Rest of Europe | 379.8 | 9.5 | 338.9 | 7.9 | 224.0 | 6.6 | ||||||||||||||||||
Far East | 238.5 | 6.0 | 266.4 | 6.2 | 191.9 | 5.7 | ||||||||||||||||||
Near and Middle East | 124.3 | 3.1 | 134.3 | 3.1 | 124.3 | 3.7 | ||||||||||||||||||
North America | 1,253.3 | 31.0 | 1,642.6 | 38.2 | 1,389.8 | 41.2 | ||||||||||||||||||
Latin America | 130.0 | 3.3 | 151.7 | 3.5 | 165.0 | 4.9 | ||||||||||||||||||
Total | $ | 3,978.7 | 100.0 | % | $ | 4,300.4 | 100.0 | % | $ | 3,372.4 | 100.0 | % |
* | Premiums from the United Kingdom include business assumed through GAUM and Lloyd’s syndicates for such lines of business as Aviation & Space as well as marine, where the exposures are worldwide in nature. Therefore, geographic location of the ceding company may not necessarily be indicative of the location of risk. |
24
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | % of | $ | % of | $ | % of | |||||||||||||||||||
millions | total | millions | total | millions | total | |||||||||||||||||||
Standard Property & Casualty Reinsurance | ||||||||||||||||||||||||
General Third Party Liability | $ | 429.7 | 11.6 | % | $ | 364.0 | 9.3 | % | $ | 301.1 | 9.3 | % | ||||||||||||
Motor | 493.5 | 13.2 | 488.8 | 12.5 | 353.5 | 10.9 | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 34.5 | 0.9 | 35.3 | 0.9 | 35.0 | 1.1 | ||||||||||||||||||
Property | 600.2 | 16.1 | 793.5 | 20.2 | 646.0 | 20.0 | ||||||||||||||||||
Total Standard Property & Casualty Reinsurance | 1,557.9 | 41.8 | 1,681.6 | 42.9 | 1,335.6 | 41.3 | ||||||||||||||||||
Specialty Lines | ||||||||||||||||||||||||
Agribusiness | 126.9 | 3.4 | 90.0 | 2.2 | 22.0 | 0.7 | ||||||||||||||||||
Aviation & Space | 404.5 | 10.9 | 341.6 | 8.7 | 365.3 | 11.3 | ||||||||||||||||||
Credit & Surety | 169.6 | 4.6 | 239.4 | 6.1 | 199.2 | 6.2 | ||||||||||||||||||
Engineering | 112.2 | 3.0 | 139.9 | 3.6 | 116.1 | 3.6 | ||||||||||||||||||
Marine & Energy | 86.2 | 2.2 | 95.3 | 2.4 | 94.3 | 2.9 | ||||||||||||||||||
Professional Liability and other Special Liability | 611.0 | 16.4 | 643.7 | 16.5 | 567.4 | 17.5 | ||||||||||||||||||
Workers’ Compensation | 226.5 | 6.1 | 310.9 | 7.9 | 220.6 | 6.8 | ||||||||||||||||||
Total Specialty Lines | 1,736.9 | 46.6 | 1,860.8 | 47.4 | 1,584.9 | 49.0 | ||||||||||||||||||
Total non-life reinsurance | 3,294.8 | 88.4 | 3,542.4 | 90.3 | 2,920.5 | 90.3 | ||||||||||||||||||
Life & Health Reinsurance | ||||||||||||||||||||||||
Life and Disability | 234.8 | 6.3 | 172.9 | 4.4 | 154.7 | 4.8 | ||||||||||||||||||
Accident and Health | 196.5 | 5.3 | 207.4 | 5.3 | 160.0 | 4.9 | ||||||||||||||||||
Total Life & Health Reinsurance | 431.3 | 11.6 | 380.3 | 9.7 | 314.7 | 9.7 | ||||||||||||||||||
Total | $ | 3,726.1 | 100.0 | % | $ | 3,922.7 | 100.0 | % | $ | 3,235.2 | 100.0 | % |
25
Table of Contents
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | % of | $ | % of | $ | % of | |||||||||||||||||||
millions | total | millions | total | millions | total | |||||||||||||||||||
Proportional | $ | 3,043.8 | 76.5 | % | $ | 2,714.5 | 63.1 | % | $ | 2,091.1 | 62.0 | % | ||||||||||||
Non-proportional | 592.4 | 14.9 | 1,125.1 | 26.2 | 891.7 | 26.4 | ||||||||||||||||||
Structured/finite | 342.5 | 8.6 | 460.8 | 10.7 | 389.6 | 11.6 | ||||||||||||||||||
Total | $ | 3,978.7 | 100.0 | % | $ | 4,300.4 | 100.0 | % | $ | 3,372.4 | 100.0 | % |
26
Table of Contents
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | % of | $ | % of | $ | % of | |||||||||||||||||||
millions | total | millions | total | millions | total | |||||||||||||||||||
Proportional | ||||||||||||||||||||||||
General Third Party Liability | $ | 410.5 | 15.6 | % | $ | 243.9 | 10.4 | % | $ | 194.5 | 11.0 | % | ||||||||||||
Motor | 400.7 | 15.2 | 380.9 | 16.2 | 251.2 | 14.2 | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 28.0 | 1.1 | 30.3 | 1.3 | 31.9 | 1.8 | ||||||||||||||||||
Property | 473.4 | 18.0 | 503.0 | 21.4 | 423.5 | 24.0 | ||||||||||||||||||
Agribusiness | 113.1 | 4.3 | 83.6 | 3.6 | 3.5 | 0.2 | ||||||||||||||||||
Aviation & Space | 446.4 | 17.0 | 417.7 | 17.8 | 310.8 | 17.6 | ||||||||||||||||||
Credit & Surety | 203.8 | 7.8 | 181.8 | 7.7 | 133.7 | 7.6 | ||||||||||||||||||
Engineering | 114.2 | 4.4 | 141.5 | 6.0 | 118.8 | 6.7 | ||||||||||||||||||
Marine & Energy | 72.6 | 2.8 | 78.5 | 3.3 | 81.5 | 4.6 | ||||||||||||||||||
Professional Liability and other Special Liability | 338.8 | 12.9 | 262.2 | 11.1 | 194.7 | 11.0 | ||||||||||||||||||
Workers’ Compensation | 22.6 | 0.9 | 29.3 | 1.2 | 22.6 | 1.3 | ||||||||||||||||||
Total Proportional | $ | 2,624.1 | 100.0 | % | $ | 2,352.7 | 100.0 | % | $ | 1,766.7 | 100.0 | % | ||||||||||||
Non-Proportional | ||||||||||||||||||||||||
General Third Party Liability | $ | 0.9 | 0.2 | % | $ | 126.7 | 11.7 | % | $ | 102.5 | 11.7 | % | ||||||||||||
Motor | 129.8 | 22.9 | 138.5 | 12.8 | 123.3 | 14.1 | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 5.7 | 1.0 | 7.7 | 0.7 | 3.1 | 0.4 | ||||||||||||||||||
Property | 214.6 | 37.9 | 354.5 | 32.8 | 248.0 | 28.4 | ||||||||||||||||||
Agribusiness | 6.8 | 1.2 | 14.9 | 1.4 | 18.5 | 2.1 | ||||||||||||||||||
Aviation & Space | 30.0 | 5.3 | 67.6 | 6.3 | 97.4 | 11.1 | ||||||||||||||||||
Credit & Surety | 17.1 | 3.0 | 40.0 | 3.7 | 35.6 | 4.1 |
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | % of | $ | % of | $ | % of | |||||||||||||||||||
millions | total | millions | total | millions | total | |||||||||||||||||||
Engineering | 4.3 | 0.7 | 3.4 | 0.3 | 2.1 | 0.2 | ||||||||||||||||||
Marine & Energy | 16.9 | 3.0 | 22.4 | 2.1 | 18.8 | 2.2 | ||||||||||||||||||
Professional Liability and other Special Liability | 128.3 | 22.7 | 278.9 | 25.8 | 213.5 | 24.5 | ||||||||||||||||||
Workers’ Compensation | 11.6 | 2.1 | 25.9 | 2.4 | 10.1 | 1.2 | ||||||||||||||||||
Total Non-Proportional | $ | 566.0 | 100.0 | % | $ | 1,080.5 | 100.0 | % | $ | 872.9 | 100.0 | % | ||||||||||||
Structured/Finite | ||||||||||||||||||||||||
General Third Party Liability | $ | 24.8 | 7.2 | % | $ | 33.2 | 7.2 | % | $ | 15.1 | 3.9 | % | ||||||||||||
Motor | — | — | — | — | 0.2 | — | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | — | — | — | — | — | — | ||||||||||||||||||
Property | 11.1 | 3.3 | 1.6 | 0.3 | 2.5 | 0.6 | ||||||||||||||||||
Agribusiness | — | — | — | — | — | — | ||||||||||||||||||
Aviation & Space | — | — | -0.2 | — | — | — | ||||||||||||||||||
Credit & Surety | -46.4 | -13.6 | 22.6 | 4.9 | 29.9 | 7.7 | ||||||||||||||||||
Engineering | — | — | — | — | — | — | ||||||||||||||||||
Marine & Energy | — | — | — | — | — | — | ||||||||||||||||||
Professional Liability and other Special Liability | 164.1 | 47.9 | 149.7 | 32.5 | 160.1 | 41.1 | ||||||||||||||||||
Workers’ Compensation | 189.0 | 55.2 | 253.8 | 55.1 | 181.8 | 46.7 | ||||||||||||||||||
Total Structured/Finite | $ | 342.6 | 100.0 | % | $ | 460.7 | 100.0 | % | $ | 389.6 | 100.0 | % | ||||||||||||
Total | ||||||||||||||||||||||||
General Third Party Liability | $ | 436.2 | 12.3 | % | $ | 403.8 | 10.4 | % | $ | 312.1 | 10.3 | % | ||||||||||||
Motor | 530.5 | 15.0 | 519.4 | 13.3 | 374.7 | 12.3 | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 33.7 | 1.0 | 38.0 | 1.0 | 35.0 | 1.2 | ||||||||||||||||||
Property | 699.1 | 19.8 | 859.1 | 22.1 | 674.0 | 22.2 | ||||||||||||||||||
Agribusiness | 119.9 | 3.4 | 98.5 | 2.5 | 22.0 | 0.7 | ||||||||||||||||||
Aviation & Space | 476.4 | 13.5 | 485.1 | 12.5 | 408.2 | 13.5 | ||||||||||||||||||
Credit & Surety | 174.5 | 4.9 | 244.4 | 6.3 | 199.2 | 6.6 | ||||||||||||||||||
Engineering | 118.5 | 3.4 | 144.9 | 3.7 | 120.9 | 4.0 | ||||||||||||||||||
Marine & Energy | 89.5 | 2.5 | 100.9 | 2.6 | 100.3 | 3.3 | ||||||||||||||||||
Professional Liability and other Special Liability | 631.2 | 17.9 | 690.8 | 17.7 | 568.3 | 18.8 | ||||||||||||||||||
Workers’ Compensation | 223.2 | 6.3 | 309.0 | 7.9 | 214.5 | 7.1 | ||||||||||||||||||
Total | $ | 3,532.7 | 100.0 | % | $ | 3,893.9 | 100.0 | % | $ | 3,029.2 | 100.0 | % |
Year Ended December 31,
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
U/W | U/W | U/W | ||||||||||||||||||||||||||||||||||
Loss | Expense | Combined | Loss | Expense | Combined | Loss | Expense | Combined | ||||||||||||||||||||||||||||
Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | ||||||||||||||||||||||||||||
% | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||
General Third Party Liability | 88.0 | % | 27.6 | % | 115.6 | % | 89.1 | % | 24.7 | % | 113.8 | % | 106.5 | % | 20.4 | % | 126.9 | % | ||||||||||||||||||
Motor | 97.8 | 19.1 | 116.9 | 86.2 | 18.0 | 104.2 | 90.7 | 19.8 | 110.5 | |||||||||||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 53.8 | 38.2 | 92.0 | 68.5 | 21.2 | 89.7 | 69.4 | 18.1 | 87.5 | |||||||||||||||||||||||||||
Property | 54.2 | 27.2 | 81.4 | 45.8 | 24.6 | 70.4 | 52.8 | 24.0 | 76.8 | |||||||||||||||||||||||||||
Agribusiness | 79.6 | 9.4 | 89.0 | 87.0 | 8.6 | 95.6 | 100.9 | 4.8 | 105.7 | |||||||||||||||||||||||||||
Aviation & Space | 53.7 | 24.5 | 78.2 | 41.6 | 15.4 | 57.0 | 70.0 | 14.5 | 84.5 |
28
Table of Contents
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
U/W | U/W | U/W | ||||||||||||||||||||||||||||||||||
Loss | Expense | Combined | Loss | Expense | Combined | Loss | Expense | Combined | ||||||||||||||||||||||||||||
Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | ||||||||||||||||||||||||||||
% | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||
Credit & Surety | 64.7 | 27.9 | 92.6 | 61.0 | 29.6 | 90.6 | 65.1 | 28.9 | 94.0 | |||||||||||||||||||||||||||
Engineering | 76.7 | 25.5 | 102.2 | 64.7 | 29.8 | 94.5 | 81.7 | 21.9 | 103.6 | |||||||||||||||||||||||||||
Marine & Energy | 87.5 | 21.4 | 108.9 | 73.5 | 14.4 | 87.9 | 86.3 | 27.7 | 114.0 | |||||||||||||||||||||||||||
Professional Liability and other Special Liability | 138.2 | 21.1 | 159.3 | 79.1 | 27.3 | 106.4 | 103.2 | 18.7 | 121.9 | |||||||||||||||||||||||||||
Workers’ Compensation | 96.2 | 23.9 | 120.1 | 114.3 | 13.0 | 127.3 | 84.9 | 24.3 | 109.2 | |||||||||||||||||||||||||||
Proportional | 75.4 | 27.4 | 102.8 | 64.5 | 25.9 | 90.4 | 79.0 | 24.4 | 103.4 | |||||||||||||||||||||||||||
Non-Proportional | 133.7 | 13.0 | 146.7 | 81.9 | 13.0 | 94.9 | 79.3 | 16.8 | 96.1 | |||||||||||||||||||||||||||
Structured/Finite | 97.8 | 15.0 | 112.8 | 79.3 | 25.7 | 105.0 | 91.0 | 14.9 | 105.9 | |||||||||||||||||||||||||||
Total | 87.4 | 23.6 | 111.0 | 71.1 | 22.2 | 93.3 | 80.6 | 21.1 | 101.7 |
(1) | The combined ratios presented in this table exclude administration expenses. |
29
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Year ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||
millions | % of total | millions | % of total | millions | % of total | |||||||||||||||||||
Standard Property & Casualty Reinsurance: | ||||||||||||||||||||||||
General Third Party Liability | $ | 429.7 | 27.6 | % | $ | 364.0 | 21.6 | % | $ | 301.1 | 22.5 | % | ||||||||||||
Motor | 493.5 | 31.7 | 488.8 | 29.1 | 353.5 | 26.5 | ||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 34.5 | 2.2 | 35.3 | 2.1 | 35.0 | 2.6 | ||||||||||||||||||
Property | 600.2 | 38.5 | 793.5 | 47.2 | 646.0 | 48.4 | ||||||||||||||||||
Total Standard Property & Casualty Reinsurance | $ | 1,557.9 | 100.0 | % | $ | 1,681.6 | 100.0 | % | $ | 1,335.6 | 100.0 | % |
Year Ended December 31,
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
U/W | U/W | U/W | ||||||||||||||||||||||||||||||||||
Loss | Expense | Combined | Loss | Expense | Combined | Loss | Expense | Combined | ||||||||||||||||||||||||||||
Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | ||||||||||||||||||||||||||||
% | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||
General Third Party Liability | 88.0 | % | 27.6 | % | 115.6 | % | 89.1 | % | 24.7 | % | 113.8 | % | 106.5 | % | 20.4 | % | 126.9 | % | ||||||||||||||||||
Motor | 97.8 | 19.1 | 116.9 | 86.2 | 18.0 | 104.2 | 90.7 | 19.8 | 110.5 | |||||||||||||||||||||||||||
Personal Accident (assumed from non-life insurers) | 53.8 | 38.2 | 92.0 | 68.5 | 21.2 | 89.7 | 69.4 | 18.1 | 87.5 | |||||||||||||||||||||||||||
Property | 54.2 | 27.2 | 81.4 | 45.8 | 24.6 | 70.4 | 52.8 | 24.0 | 76.8 | |||||||||||||||||||||||||||
Proportional | 70.7 | 28.1 | 98.8 | 57.1 | 26.8 | 83.9 | 77.2 | 26.7 | 103.9 | |||||||||||||||||||||||||||
Non-Proportional | 93.0 | 11.3 | 104.3 | 81.6 | 13.3 | 94.9 | 73.8 | 12.4 | 86.2 | |||||||||||||||||||||||||||
Structured/Finite | 156.8 | 30.1 | 186.9 | 184.3 | 40.2 | 224.5 | 22.9 | 30.5 | 53.4 | |||||||||||||||||||||||||||
Total Standard Property & Casualty Reinsurance | 76.8 | 24.9 | 101.7 | 67.8 | 22.7 | 90.5 | 75.6 | 21.9 | 97.5 |
(1) | The combined ratios presented in this table exclude administration expenses. |
30
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Year ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||
millions | % of total | millions | % of total | millions | % of total | |||||||||||||||||||
Specialty Lines: | ||||||||||||||||||||||||
Agribusiness | $ | 126.9 | 7.3 | % | $ | 90.0 | 4.8 | % | $ | 22.0 | 1.5 | % | ||||||||||||
Aviation & Space | 404.5 | 23.3 | 341.6 | 18.4 | 365.3 | 23.0 | ||||||||||||||||||
Credit & Surety | 169.6 | 9.8 | 239.4 | 12.9 | 199.2 | 12.6 | ||||||||||||||||||
Engineering | 112.2 | 6.5 | 139.9 | 7.5 | 116.1 | 7.3 | ||||||||||||||||||
Marine & Energy | 86.2 | 4.9 | 95.3 | 5.1 | 94.3 | 5.9 | ||||||||||||||||||
Professional Liability and other Special Liability | 611.0 | 35.2 | 643.7 | 34.6 | 567.4 | 35.8 | ||||||||||||||||||
Workers’ Compensation | 226.5 | 13.0 | 310.9 | 16.7 | 220.6 | 13.9 | ||||||||||||||||||
Total Specialty Lines | $ | 1,736.9 | 100.0 | % | $ | 1,860.8 | 100.0 | % | $ | 1,584.9 | 100.0 | % |
31
Table of Contents
Year Ended December 31,
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
U/W | U/W | U/W | ||||||||||||||||||||||||||||||||||
Loss | Expense | Combined | Loss | Expense | Combined | Loss | Expense | Combined | ||||||||||||||||||||||||||||
Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | Ratio | Ratio | Ratio(1) | ||||||||||||||||||||||||||||
% | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||
Agribusiness | 79.6 | % | 9.4 | % | 89.0 | % | 87.0 | % | 8.6 | % | 95.6 | % | 101.0 | % | 4.8 | % | 105.8 | % | ||||||||||||||||||
Aviation & Space | 53.7 | 24.5 | 78.2 | 41.6 | 15.4 | 57.0 | 70.0 | 14.5 | 84.5 | |||||||||||||||||||||||||||
Credit & Surety | 64.7 | 27.9 | 92.6 | 61.0 | 29.6 | 90.6 | 65.1 | 28.9 | 94.0 | |||||||||||||||||||||||||||
Engineering | 76.7 | 25.5 | 102.2 | 64.7 | 29.8 | 94.5 | 81.7 | 21.9 | 103.6 | |||||||||||||||||||||||||||
Marine & Energy | 87.5 | 21.4 | 108.9 | 73.5 | 14.4 | 87.9 | 86.3 | 27.7 | 114.0 | |||||||||||||||||||||||||||
Professional Liability and other Special Liability | 138.2 | 21.1 | 159.3 | 79.1 | 27.3 | 106.4 | 103.2 | 18.7 | 121.9 | |||||||||||||||||||||||||||
Workers’ Compensation | 96.2 | 23.9 | 120.1 | 114.3 | 13.0 | 127.3 | 84.9 | 24.3 | 109.2 | |||||||||||||||||||||||||||
Proportional | 80.6 | 26.6 | 107.2 | 72.9 | 24.8 | 97.7 | 80.8 | 22.0 | 102.8 | |||||||||||||||||||||||||||
Non-Proportional | 185.4 | 14.8 | 200.2 | 82.3 | 12.5 | 94.8 | 86.8 | 22.9 | 109.7 | |||||||||||||||||||||||||||
Structured/Finite | 92.5 | 13.7 | 106.2 | 69.0 | 24.3 | 93.3 | 93.2 | 14.4 | 107.6 | |||||||||||||||||||||||||||
Total Specialty Lines | 97.2 | 22.4 | 119.6 | 74.3 | 21.8 | 96.1 | 85.0 | 20.4 | 105.4 |
(1) | The combined ratios presented in this table exclude administration expenses. |
• | Life and Disability; and | |
• | Accident and Health. |
• | maintaining underwriting discipline and pursuing business that is attractive on a risk-adjusted basis; | |
• | pursuing growth in markets we believe offer attractive opportunities, such as Germany, Italy, France and the Middle East; | |
• | maintaining a low expense ratio; | |
• | selectively providing services in certain target markets to build loyalty and attract premiums; |
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• | providing structured/finite solutions; and | |
• | leveraging our capital markets expertise which, among other things, provides us with additional capacity to write business. |
• | demutualizations of life insurance companies; | |
• | the increasing importance of non-traditional and more sophisticated life products; | |
• | aging of the population; | |
• | privatization of benefits that used to be provided by governments; | |
• | deregulation and increased competition among primary insurance companies from new entrants, such as banks and other financial services companies; and | |
• | the increasing need for products that reduce the volatility of earnings following the increasing adoption of international accounting standards in many of the markets we serve. |
• | financial strength; | |
• | expertise, reputation, experience and qualifications of employees; | |
• | local presence; | |
• | client relationships; | |
• | products and services offered; | |
• | premium levels; and | |
• | contract terms and conditions. |
• | Munich Reinsurance Company; | |
• | Swiss Reinsurance Company; | |
• | General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.; | |
• | Employers Reinsurance Corporation, a subsidiary of General Electric Company; | |
• | Hannover Re Group, which is majority-owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie; | |
• | Lloyd’s syndicates active in the London market; | |
• | companies active in the Bermuda Market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.; | |
• | Everest Reinsurance Company; | |
• | Transatlantic Reinsurance Company; and | |
• | SCOR. |
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• | Measuring, monitoring and managing natural hazard exposures:For measuring natural hazard exposures, we use specially developed software and techniques. For example, we use third-party models developed by specialized consultants to assist with catastrophe underwriting and accumulation control. We also compare models for certain perils or regions where our models indicate higher variability. In addition, we have developed fully proprietary probability-based monitoring tools to enhance the utility of our models. | |
Our central monitoring system models loss potentials for storm and earthquake scenarios to help us measure our accumulation of risk by type of peril and geographic region. We continuously perform accumulation analyses during renewal season. We believe that this centralized review helps us monitor and manage our natural catastrophe loss potential and to take remedial action if there is a risk that our accumulations will reach levels that are not acceptable under our guidelines. In addition, our monitoring system serves as the basis for structuring our own reinsurance protection. |
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• | Assisting with optimal capacity utilization:We use return on risk based capital considerations to help us to optimize expected profits from our catastrophe portfolio and to seek to improve its performance. We do this by dynamically adjusting capacity allocation during renewal periods as business is written, thereby optimizing our worldwide capacity and exploiting our diversification potential. We also review pricing levels in several markets prior to renewal, in order to incorporate this information in our business strategy. | |
• | Supporting clients in all elements of natural hazards risk management: The expertise developed by our catastrophe risk specialists in understanding and managing catastrophe risk allows us to assist our clients in assessing their own loss potential and in designing efficient risk transfer mechanisms. Further, we utilize our expertise to influence property catastrophe exposure reporting in the industry. For example, we made a significant contribution to the enhancement of the market standard for the exchange of exposure data between primary and reinsurance companies, thereby assisting market participants to adopt common reporting and better understand their natural catastrophe exposures. We believe that the use of data standards will improve data quality, enable more accurate risk assessment and reduce costs. | |
• | Following post-disaster loss developments:Our catastrophe risk specialists produce estimates of our expected losses promptly after a catastrophe event. This rapid review helps us assess our liquidity needs and determine whether we need to take any remedial action. |
• | the lack of availability of high credit quality reinsurance protection at competitive prices for California earthquakes, US hurricanes and European windstorms; | |
• | to achieve protection at stable prices for a multi-year period; | |
• | to obtain better post-event liquidity relief compared to traditional retrocessionaires’ practices and the respective counterparty credit risks on recoveries; and | |
• | to diversify sources of risk bearing capacity from more traditional reinsurance products. |
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Traditional Reinsurance | Helix | |||||||
Catastrophic Event(1) | Gross Loss | Recovery(2) | Recovery(4) | Status | ||||
1st Catastrophic Event | $150 million to | $50 million to | N/A | Cover triggered | ||||
$250 million | $150 million | |||||||
2nd Catastrophic Event | $175 million to | $75 million to | $0 to | Cover in effect | ||||
$275 million | $150 million(3) | $100 million(4) |
(1) | A catastrophic event in a defined peril region. | |
(2) | On a worldwide basis in excess of $100 million. | |
(3) | Subject to a total recovery of $225 million over the term of the policy. | |
(4) | Recovery is based on modeled losses on a notional portfolio, not on actual losses. |
• | specific coverage for certain property, engineering, marine, aviation, satellite, motor and liability exposures; | |
• | catastrophe coverage for property business; | |
• | casualty clash coverage for potential accumulation of liability from treaties and facultative agreements covering losses arising from the same event or occurrence; and | |
• | aggregate stop-loss protections. |
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Premium ceded | ||||||||||||
(Restated) | S&P/A.M. Best | |||||||||||
Retrocessionaire | Retrocessionaire Group | $ millions | % of total | Rating | ||||||||
Lloyd’s | Lloyd’s | $ | 49.3 | 19.5 | % | A/A | ||||||
National Indemnity Company (1) | Berkshire Hathaway Insurance Group | 41.1 | 16.3 | AAA/A++ | ||||||||
QBE Insurance & Reinsurance (Europe) | QBE Insurance Group | 20.8 | 8.2 | A+/A | ||||||||
Augsburger Ruck (2) | Augsburger Ruck | 17.0 | 6.7 | A | ||||||||
Helvetia Patria Versicherungen | Helvetia | 15.1 | 6.0 | BBBpi/NR | ||||||||
Zurich Financial Services | Zurich Financial Services | 13.7 | 5.4 | A+/A | ||||||||
PartnerRe U.S. Group | PartnerRe Group | 10.7 | 4.3 | AA-/A+ | ||||||||
ICM Re S.A. | ICM Re | 9.9 | 3.9 | NR | ||||||||
GE Frankona Reinsurance Ltd. | GE Frankona | 9.0 | 3.6 | A/A | ||||||||
Interpolis Reinsurance Services Ltd. | Rabobank | 8.9 | 3.5 | NR | ||||||||
Total provided by top ten retrocessionaires, and percentage of total retrocessional reinsurance | $ | 195.5 | 77.4 | % | ||||||||
Total retrocessional reinsurance | $ | 252.6 | 100.0 | % |
(1) | National Indemnity Cover:In order to provide additional comfort as regards to our reserve position, we acquired a retroactive stop-loss retrocession cover from National Indemnity Company, a Standard & Poor’s AAA-rated member of the Berkshire Hathaway group of insurance companies. The stop-loss provides an additional $150.0 million of cover against potential adverse reserve development on the underwriting years 1987 through 2003 for Converium AG, CRNA and CINA. The cover of $150.0 million attaches at $100.0 million in excess of the ultimate third-party net non-life reserves; which are defined as non-life carried losses and allocated loss expense reserves as of June 30, 2004 plus the expected losses and allocated loss expenses emanating out of the unearned premium reserves as of June 30, 2004 of the portfolio subject to cover, carried by these legal entities for these underwriting years as of June 30, 2004 and therefore excludes inter-group reinsurance arrangements. The reinsurance charge for this retrocession is $20.0 million and has been recorded in the income statement under the caption “Other (loss) income”. There are additional consideration features associated with this layer of coverage, which may result in additional consideration of up to $60.0 million being paid in the event that the cover is fully utilized. No losses have been ceded as of December 31, 2004. | |
In addition, this contract has another layer of coverage of $235.0 million for which a consideration of $135.0 million has been paid. This layer attaches at $235.0 million below the ultimate third-party net non-life reserves on the same underwriting years. The economics of this layer of coverage are such that the reinsurance risk transfer requirements of US GAAP are not met. Accordingly, this protection is accounted for under deposit accounting rules. As a result, there is no material income statement impact for 2004 in respect of this layer of coverage. | ||
We have retained the right to commute the whole transaction on July 1, 2009, or thereafter at mutually agreeable terms. | ||
(2) | Augsburger Ruck: 50% of the retrocession cover is written by Brit, Lloyd’s Syndicate and 50% is written by Brit Insurance Ltd. both of which are rated “A”by A.M. Best and Brit, Lloyd’s Syndicate is rated “A” by S&P. |
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• | underlying risk (e.g. line of business), geographic region or treaty type (i.e. proportional or non-proportional); and | |
• | the time period at which losses are expected to be paid and reported (i.e. expected paid loss development factors and expected reported development factors). | |
For each REC, expected paid loss development factors and expected reported loss development factors are derived from either: | ||
• | statistics developed by pricing actuaries, or | |
• | actual paid loss and reported loss (of the reinsurance contracts assigned to a given REC) aggregated into underwriting year triangles. |
• | Expected Loss Method (normally derived from pricing as described above) | |
• | Paid Loss Bornhuetter Ferguson Method | |
• | Incurred Loss Bornhuetter Ferguson Method | |
• | Paid Loss Development Method | |
• | Incurred Loss Development Method |
• | select a different actuarial method (i.e. to be more responsive to actual loss experience) | |
• | revise the expected loss (see expected loss / expected loss ratio above) | |
• | revise the expected paid loss and / or expected reporting loss patterns |
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As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||
1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||||||||||||||||||
($ millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||
Gross reserves for losses and loss expenses | $ | 1,468.9 | $ | 1,891.4 | $ | 2,245.3 | $ | 2,636.4 | $ | 2,987.6 | $ | 3,482.3 | $ | 4,504.1 | $ | 5,642.3 | $ | 6,876.9 | $ | 7,879.7 | $ | 8,908.3 | ||||||||||||||||||||||
Reinsurance recoverable | 59.6 | 102.9 | 106.9 | 290.1 | 457.3 | 640.9 | 892.3 | 1,099.2 | 1,085.7 | 1,041.3 | 914.5 | |||||||||||||||||||||||||||||||||
Initial net reserves for losses and loss expenses | $ | 1,409.3 | $ | 1,788.5 | $ | 2,138.4 | $ | 2,346.3 | $ | 2,530.3 | $ | 2,841.4 | $ | 3,611.8 | $ | 4,543.1 | $ | 5,791.2 | $ | 6,838.4 | $ | 7,993.8 |
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As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||
1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||||||||||||||||||
($ millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative paid as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 405.9 | 443.9 | 466.0 | 514.5 | 610.0 | 850.6 | 890.6 | 1,171.0 | 1,504.4 | 1,938.9 | ||||||||||||||||||||||||||||||||||
Two years later | 611.1 | 669.4 | 721.2 | 843.0 | 968.8 | 1,339.2 | 1,575.8 | 2,119.4 | 2,760.8 | |||||||||||||||||||||||||||||||||||
Three years later | 736.2 | 803.1 | 921.7 | 1,064.4 | 1,250.7 | 1,670.1 | 2,180.9 | 3,027.2 | ||||||||||||||||||||||||||||||||||||
Four years later | 815.4 | 927.0 | 1,062.2 | 1,261.7 | 1,438.6 | 2,029.2 | 2,749.6 | |||||||||||||||||||||||||||||||||||||
Five years later | 896.9 | 1,007.7 | 1,178.3 | 1,336.5 | 1,622.3 | 2,312.8 | ||||||||||||||||||||||||||||||||||||||
Six years later | 949.9 | 1,093.8 | 1,197.5 | 1,436.7 | 1,772.9 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 1,006.5 | 1,087.1 | 1,249.3 | 1,545.8 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 986.5 | 1,115.7 | 1,319.4 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 1,004.1 | 1,157.8 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 1,025.8 | |||||||||||||||||||||||||||||||||||||||||||
Net reserves re-estimated as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 1,457.6 | 1,763.3 | 1,901.5 | 2,145.6 | 2,292.6 | 2,915.7 | 3,727.5 | 4,722.5 | 5,995.3 | 6,490.6 | ||||||||||||||||||||||||||||||||||
Two years later | 1,499.0 | 1,642.6 | 1,853.5 | 2,051.3 | 2,276.7 | 3,039.3 | 3,932.6 | 4,951.0 | 7,432.3 | |||||||||||||||||||||||||||||||||||
Three years later | 1,364.6 | 1,617.7 | 1,736.4 | 1,970.4 | 2,303.4 | 3,039.2 | 4,200.1 | 5,441.2 | ||||||||||||||||||||||||||||||||||||
Four years later | 1,396.2 | 1,541.1 | 1,677.3 | 1,989.1 | 2,337.8 | 3,189.2 | 4,576.2 | |||||||||||||||||||||||||||||||||||||
Five years later | 1,339.0 | 1,468.9 | 1,661.2 | 1,990.7 | 2,414.7 | 3,400.6 | ||||||||||||||||||||||||||||||||||||||
Six years later | 1,284.5 | 1,452.9 | 1,645.9 | 2,013.0 | 2,504.1 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 1,260.1 | 1,446.1 | 1,649.3 | 2,069.5 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 1,263.3 | 1,448.7 | 1,684.6 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 1,272.4 | 1,476.8 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 1,293.6 | |||||||||||||||||||||||||||||||||||||||||||
Reinsurance recoverable re-estimated as of December 31, 2004 | 130.6 | 246.3 | 336.3 | 422.8 | 687.7 | 1,216.9 | 1,238.0 | 1,160.6 | 1,091.4 | 873.1 | ||||||||||||||||||||||||||||||||||
Gross reserves re-estimated as of December 31, 2004 | 1,424.2 | 1,723.1 | 2,020.9 | 2,492.3 | 3,191.9 | 4,617.6 | 5,814.3 | 6,601.8 | 7,582.0 | 8,305.4 | ||||||||||||||||||||||||||||||||||
Cumulative net redundancy/(deficiency) | 115.8 | 311.7 | 453.8 | 276.8 | 26.2 | (559.2 | ) | (964.5 | ) | (898.1 | ) | (699.4 | ) | (593.8 | ) | |||||||||||||||||||||||||||||
Cumulative redundancy/(deficiency) as a percentage of initial net reserves | 8.2 | % | 17.4 | % | 21.2 | % | 11.8 | % | 1.0 | % | (19.7 | )% | (26.7) | % | (19.8 | )% | (12.1 | )% | (8.7 | )% | ||||||||||||||||||||||||
Cumulative gross redundancy/(deficiency) | 44.8 | 168.2 | 224.4 | 144.2 | (204.3 | ) | (1,135.3 | ) | (1,310.2 | ) | (959.5 | ) | (705.1 | ) | (425.6 | ) | ||||||||||||||||||||||||||||
Cumulative redundancy/(deficiency) as a percentage of initial gross reserves | 3.0 | % | 8.9 | % | 10.0 | % | 5.5 | % | (6.8 | )% | (32.6 | )% | (29.1) | % | (17.0 | )% | (10.3 | )% | (5.4 | )% |
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As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||
1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||||||||||||||||||
($ millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||
Initial net reserves for losses and loss expenses | $ | 1,409.3 | $ | 1,788.5 | $ | 2,138.4 | $ | 2,346.3 | $ | 2,530.3 | $ | 2,841.4 | $ | 3,611.8 | $ | 4,543.1 | $ | 5,791.2 | $ | 6,838.4 | $ | 7,993.8 | ||||||||||||||||||||||
Net reserves re-estimated as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 1,410.1 | 1,805.6 | 2,004.9 | 2,108.6 | 2,394.7 | 3,008.1 | 3,779.5 | 4,698.3 | 5,735.4 | 7,185.8 | ||||||||||||||||||||||||||||||||||
Two years later | 1,479.5 | 1,758.2 | 1,925.4 | 2,078.8 | 2,414.4 | 3,152.5 | 3,935.5 | 4,836.4 | 6,103.4 | |||||||||||||||||||||||||||||||||||
Three years later | 1,387.9 | 1,707.3 | 1,865.4 | 2,016.6 | 2,465.6 | 3,130.1 | 4,132.7 | 5,211.6 | ||||||||||||||||||||||||||||||||||||
Four years later | 1,405.6 | 1,674.5 | 1,819.3 | 2,035.0 | 2,474.0 | 3,230.8 | 4,442.4 | |||||||||||||||||||||||||||||||||||||
Five years later | 1,382.7 | 1,612.4 | 1,799.4 | 2,023.7 | 2,511.6 | 3,415.0 | ||||||||||||||||||||||||||||||||||||||
Six years later | 1,338.7 | 1,589.9 | 1,775.9 | 2,017.9 | 2,588.8 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 1,306.6 | 1,588.4 | 1,755.5 | 2,065.5 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 1,316.7 | 1,574.4 | 1,782.5 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 1,313.6 | 1,595.9 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 1,329.7 | |||||||||||||||||||||||||||||||||||||||||||
Cumulative redundancy/(deficiency) | 79.6 | 192.6 | 355.9 | 280.8 | (58.5 | ) | (573.6 | ) | (830.6 | ) | (668.5 | ) | (312.2 | ) | (347.4 | ) | ||||||||||||||||||||||||||||
Cumulative redundancy/(deficiency) as a percentage of initial net reserves | 5.7 | % | 10.8 | % | 16.6 | % | 12.0 | % | (2.3 | )% | (20.2 | )% | (23.0 | )% | (14.7 | )% | (5.4 | )% | (5.1 | )% |
($ millions) | 2004 | 2003 | 2002 | |||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
As of January 1, | ||||||||||||
Gross reserves for losses and loss expenses | $ | 7,879.7 | $ | 6,876.9 | $ | 5,642.3 | ||||||
Less reinsurance recoverable | 1,041.3 | 1,085.7 | 1,099.2 | |||||||||
Net reserves for losses and loss expenses | 6,838.4 | 5,791.2 | 4,543.1 | |||||||||
Losses and loss expenses incurred (1) |
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($ millions) | 2004 | 2003 | 2002 | |||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
Current year | 2,895.3 | 2,736.1 | 2,264.6 | |||||||||
Prior years | 336.8 | (63.5 | ) | 201.1 | ||||||||
Total | 3,232.1 | 2,672.6 | 2,465.6 | |||||||||
Losses and loss expenses paid | ||||||||||||
Current year | 541.4 | 437.1 | 340.2 | |||||||||
Prior years | 1,938.9 | 1,504.4 | 1,171.0 | |||||||||
Total | 2,480.3 | 1,941.5 | 1,511.2 | |||||||||
Foreign currency translation effects | 403.6 | 316.1 | 293.7 | |||||||||
As of December 31, | ||||||||||||
Net reserves for losses and loss expenses | 7,993.8 | 6,838.4 | 5,791.2 | |||||||||
Reinsurance recoverable | 914.5 | 1,041.3 | 1,085.7 | |||||||||
Gross reserves for losses and loss expenses | $ | 8,908.3 | $ | 7,879.7 | $ | 6,876.9 |
(1) | The loss and loss expenses incurred includes $219.5 million, $267.1 million and $234.1 million of loss and loss expenses incurred related to business included in the Life & Health Reinsurance segment for the years ended December 31, 2004, 2003 and 2002, respectively. |
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As of December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||
$ | % of | $ | % of | $ | % of | |||||||||||||||||||
millions | Total | millions | Total | millions | Total | |||||||||||||||||||
Fixed maturities securities | $ | 5,685.2 | 73.0 | % | $ | 4,928.6 | 65.7 | % | $ | 3,443.1 | 56.3 | % | ||||||||||||
Equity securities | 399.4 | 5.1 | 834.9 | 11.1 | 525.4 | 8.6 | ||||||||||||||||||
Funds Withheld Asset | 1,305.1 | 16.8 | 1,530.6 | 20.4 | 1,648.1 | 26.9 | ||||||||||||||||||
Short-term investments | 117.3 | 1.5 | 55.7 | 0.7 | 318.0 | 5.2 | ||||||||||||||||||
Other investments | 279.2 | 3.6 | 152.2 | 2.1 | 182.7 | 3.0 | ||||||||||||||||||
Total investments | $ | 7,786.2 | 100.0 | % | $ | 7,502.0 | 100.0 | % | $ | 6,117.3 | 100.0 | % |
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($ millions, except percentages) | Estimated fair value | % of total | Carrying value | % of total | ||||||||||||
As of December 31, 2004 | Available-for-sale (AFS) | AFS | Held-to-maturity (HTM) | HTM | ||||||||||||
Less than one year | $ | 182.5 | 3.8 | % | $ | 15.9 | 1.9 | % | ||||||||
One year through five years | 2,871.8 | 59.4 | 450.8 | 53.0 | ||||||||||||
Five years through ten years | 923.2 | 19.1 | 353.5 | 41.6 | ||||||||||||
Over ten years | 91.8 | 1.9 | 30.2 | 3.5 | ||||||||||||
Subtotal | 4,069.3 | 84.2 | 850.4 | 100.0 | ||||||||||||
Mortgage and asset-backed securities | 616.6 | 12.7 | — | — | ||||||||||||
Unit trust bonds | 148.9 | 3.1 | — | — | ||||||||||||
Total as of December 31, 2004 | $ | 4,834.8 | 100.0 | % | $ | 850.4 | 100.0 | % |
($ millions, except percentages) | Estimated fair value | % of total | Carrying value | % of total | ||||||||||||
As of December 31, 2004 | Available-for-sale (AFS) | AFS | Held-to-maturity (HTM) | HTM | ||||||||||||
AAA/Aaa | $ | 4,022.5 | 83.2 | % | $ | 822.1 | 96.7 | % | ||||||||
AA/Aa2 | 452.0 | 9.4 | 16.2 | 1.9 | ||||||||||||
A/A2 | 229.6 | 4.7 | 12.1 | 1.4 | ||||||||||||
BBB/Baa2 | 11.1 | 0.2 | — | — | ||||||||||||
BB | 3.0 | 0.1 | — | — | ||||||||||||
Not rated1 | 116.6 | 2.4 | — | — | ||||||||||||
Total as of December 31, 2004 | $ | 4,834.8 | 100.0 | % | $ | 850.4 | 100.0 | % |
1 Includes $89.3 million private collateralized loans issued by German banks with a credit rating equivalent to S&P AAA, purchased during 2004. |
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• | making any material change in its management or operations; | |
• | making any withdrawal of monies from its bank accounts, disbursements or payments outside the ordinary course of the business run-off; | |
• | incurring any debt, obligation or liability for borrowed money not related directly to the ordinary course of the business run-off; | |
• | writing, assuming or issuing any new insurance policies; | |
• | making any dividend payment or other payment or distribution to or engaging in any transaction, or entering into any agreement directly or indirectly with its parent company, or any affiliated company; | |
• | entering into any new material reinsurance agreement; and | |
• | entering into any sales, purchases, exchanges, loans, extensions of credit or investments not in the ordinary course of its run-off business. |
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• | cease issuing any new loans out of insurance funds; | |
• | cease acting as a guarantor/surety; | |
• | cease investing in the equities of related companies; and | |
• | refrain from appointing foreign custodians for any of the assets of the branch. |
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![(FLOW CHART)](https://capedge.com/proxy/20-FA/0001156973-06-000264/u49916u4991601.gif)
• | our US headquarters in New York, New York, at One Chase Manhattan Plaza, New York, NY 10005 where we sublease an aggregate of 77,013 square feet; and | |
• | our German headquarters in Cologne, Germany, at Clever Strasse 36, 50668 Köln, Germany where we lease an aggregate of 44,918 square feet. |
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(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2004 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | �� | 3,840.9 | -17.2 | — | 155.0 | 3,978.7 | ||||||||||||||
Less ceded premiums written | -287.9 | 70.6 | — | -35.3 | -252.6 | |||||||||||||||
Net premiums written | 3,553.0 | 53.4 | — | 119.7 | 3,726.1 | |||||||||||||||
Net change in unearned premiums | 132.1 | 24.0 | — | — | 156.1 | |||||||||||||||
Net premiums earned | 3,685.1 | 77.4 | — | 119.7 | 3,882.2 | |||||||||||||||
Net investment income | 311.6 | — | — | 1.1 | 312.7 | |||||||||||||||
Net realized capital gains (losses) | 46.5 | — | — | — | 46.5 | |||||||||||||||
Other (loss) income | -2.6 | 3.5 | — | -9.1 | -8.2 | |||||||||||||||
Total revenues | 4,040.6 | 80.9 | — | 111.7 | 4,233.2 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -3,263.1 | -44.7 | — | -34.7 | -3,342.5 | |||||||||||||||
Acquisition costs | -842.5 | 9.9 | — | -79.8 | -912.4 | |||||||||||||||
Other operating and administration expenses | -217.9 | — | — | -1.9 | -219.8 | |||||||||||||||
Interest expense | -33.1 | — | — | — | -33.1 | |||||||||||||||
Impairment of goodwill | -94.0 | — | — | — | -94.0 | |||||||||||||||
Amortization of intangible assets | -9.9 | — | — | — | -9.9 | |||||||||||||||
Restructuring costs | -2.7 | — | — | — | -2.7 | |||||||||||||||
Total benefits, losses and expenses | -4,463.2 | -34.8 | — | -116.4 | -4,614.4 | |||||||||||||||
(Loss) income before taxes | -422.6 | 46.1 | — | -4.7 | -381.2 | |||||||||||||||
Income tax (expense) benefit | -338.2 | -17.1 | 152.2 | 1.8 | -201.3 | |||||||||||||||
Net (loss) income | -760.8 | 29.0 | 152.2 | -2.9 | -582.5 |
60
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2003 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 4,223.9 | -28.4 | — | 104.9 | 4,300.4 | |||||||||||||||
Less ceded premiums written | -396.9 | 96.9 | — | -77.7 | -377.7 | |||||||||||||||
Net premiums written | 3,827.0 | 68.5 | — | 27.2 | 3,922.7 | |||||||||||||||
Net change in unearned premiums | -150.5 | -4.4 | — | — | -154.9 | |||||||||||||||
Net premiums earned | 3,676.5 | 64.1 | — | 27.2 | 3,767.8 | |||||||||||||||
Net investment income | 233.0 | — | — | 1.4 | 234.4 | |||||||||||||||
Net realized capital gains (losses) | 18.4 | — | — | — | 18.4 | |||||||||||||||
Other income (loss) | 2.7 | 17.5 | — | -2.7 | 17.5 | |||||||||||||||
Total revenues | 3,930.6 | 81.6 | — | 25.9 | 4,038.1 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -2,674.2 | -85.9 | — | — | -2,760.1 | |||||||||||||||
Acquisition costs | -803.2 | -16.6 | — | -12.2 | -832.0 | |||||||||||||||
Other operating and administration expenses | -197.8 | — | — | -4.7 | -202.5 | |||||||||||||||
Interest expense | -31.0 | — | — | — | -31.0 | |||||||||||||||
Impairment of goodwill | — | — | — | — | — | |||||||||||||||
Amortization of intangible assets | — | — | — | -1.8 | -1.8 | |||||||||||||||
Restructuring costs | — | — | — | — | — | |||||||||||||||
Total benefits, losses and expenses | -3,706.2 | -102.5 | — | -18.7 | -3,827.4 | |||||||||||||||
Income (loss) before taxes | 224.4 | -20.9 | — | 7.2 | 210.7 | |||||||||||||||
Income tax (expense) benefit | -39.3 | -10.2 | 13.2 | 3.5 | -32.8 | |||||||||||||||
Net income (loss) | 185.1 | -31.1 | 13.2 | 10.7 | 177.9 |
61
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2002 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 3,535.8 | -163.3 | — | -0.1 | 3,372.4 | |||||||||||||||
Less ceded premiums written | -213.6 | 76.4 | — | — | -137.2 | |||||||||||||||
Net premiums written | 3,322.2 | -86.9 | — | -0.1 | 3,235.2 | |||||||||||||||
Net change in unearned premiums | -156.7 | -1.0 | — | — | -157.7 | |||||||||||||||
Net premiums earned | 3,165.5 | -87.9 | — | -0.1 | 3,077.5 | |||||||||||||||
Net investment income | 251.8 | — | — | — | 251.8 | |||||||||||||||
Net realized capital gains (losses) | -10.3 | — | — | — | -10.3 | |||||||||||||||
Other (loss) income | -1.2 | 32.8 | — | — | 31.6 | |||||||||||||||
Total revenues | 3,405.8 | -55.1 | — | -0.1 | 3,350.6 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -2,492.0 | 1.0 | — | -0.1 | -2,491.1 | |||||||||||||||
Acquisition costs | -666.7 | 23.9 | — | -4.0 | -646.8 | |||||||||||||||
Other operating and administration expenses | -173.3 | — | — | -5.1 | -178.4 | |||||||||||||||
Interest expense | -16.4 | — | — | — | -16.4 | |||||||||||||||
Total benefits, losses and expenses | -3,348.4 | 24.9 | — | -9.2 | -3,332.7 | |||||||||||||||
Income (loss) before taxes | 57.4 | -30.2 | — | -9.3 | 17.9 | |||||||||||||||
Income tax benefit (expense) | 49.4 | 2.5 | -34.7 | 0.7 | 17.9 | |||||||||||||||
Net income (loss) | 106.8 | -27.7 | -34.7 | -8.6 | 35.8 |
62
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2001 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 2,881.2 | -34.4 | — | — | 2,846.8 | |||||||||||||||
Less ceded premiums written | -398.6 | 204.5 | — | — | -194.1 | |||||||||||||||
Net premiums written | 2,482.6 | 170.1 | — | — | 2,652.7 | |||||||||||||||
Net change in unearned premiums | -187.4 | -16.8 | — | — | -204.2 | |||||||||||||||
Net premiums earned | 2,295.2 | 153.3 | — | — | 2,448.5 | |||||||||||||||
Net investment income | 228.7 | — | — | 6.2 | 234.9 | |||||||||||||||
Net realized capital gains (losses) | -18.4 | — | — | — | -18.4 | |||||||||||||||
Other (loss) income | -5.8 | 14.9 | — | -6.2 | 2.9 | |||||||||||||||
Total revenues | 2,499.7 | 168.2 | — | — | 2,667.9 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -2,300.5 | -160.1 | — | — | -2,460.6 | |||||||||||||||
Acquisition costs | -508.1 | -8.8 | — | — | -516.9 | |||||||||||||||
Other operating and administration expenses | -146.4 | — | — | — | -146.4 | |||||||||||||||
Interest expense | -24.2 | — | — | — | -24.2 | |||||||||||||||
Total benefits, losses and expenses | -3,037.0 | -168.9 | — | — | -3,205.9 | |||||||||||||||
Loss before taxes | -537.3 | -0.7 | — | — | -538.0 | |||||||||||||||
Income tax benefit (expense) | 169.9 | -0.3 | 12.8 | — | 182.4 | |||||||||||||||
Net (loss) income | -367.4 | -1.0 | 12.8 | — | -355.6 |
63
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2000 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 2,565.8 | -18.7 | — | — | 2,547.1 | |||||||||||||||
Less ceded premiums written | -569.8 | 203.4 | — | — | -366.4 | |||||||||||||||
Net premiums written | 1,996.0 | 184.7 | — | — | 2,180.7 | |||||||||||||||
Net change in unearned premiums | -134.5 | 8.3 | — | — | -126.2 | |||||||||||||||
Net premiums earned | 1,861.5 | 193.0 | — | — | 2,054.5 | |||||||||||||||
Net investment income | 176.0 | — | — | — | 176.0 | |||||||||||||||
Net realized capital gains (losses) | 83.7 | — | — | — | 83.7 | |||||||||||||||
Other income | 29.3 | 13.9 | — | — | 43.2 | |||||||||||||||
Total revenues | 2,150.5 | 206.9 | — | — | 2,357.4 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -1,604.5 | -281.1 | — | — | -1,885.6 | |||||||||||||||
Acquisition costs | -454.4 | -27.2 | — | — | -481.6 | |||||||||||||||
Other operating and administration expenses | -116.0 | — | — | — | -116.0 | |||||||||||||||
Interest expense | -17.1 | — | — | — | -17.1 | |||||||||||||||
Amortization of goodwill | -7.3 | — | — | — | -7.3 | |||||||||||||||
Total benefits, losses and expenses | -2,199.3 | -308.3 | — | — | -2,507.6 | |||||||||||||||
Loss before taxes | -48.8 | -101.4 | — | — | -150.2 | |||||||||||||||
Income tax benefit (expense) | 19.5 | 28.2 | -9.6 | — | 38.1 | |||||||||||||||
Net loss | -29.3 | -73.2 | -9.6 | — | -112.1 |
64
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 1999 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 1,928.7 | -18.6 | — | — | 1,910.1 | |||||||||||||||
Less ceded premiums written | -358.5 | 17.5 | — | — | -341.0 | |||||||||||||||
Net premiums written | 1,570.2 | -1.1 | — | — | 1,569.1 | |||||||||||||||
Net change in unearned premiums | -168.7 | 1.0 | — | — | -167.7 | |||||||||||||||
Net premiums earned | 1,401.5 | -0.1 | — | — | 1,401.4 | |||||||||||||||
Net investment income | 214.0 | — | — | — | 214.0 | |||||||||||||||
Net realized capital gains (losses) | 76.3 | — | — | — | 76.3 | |||||||||||||||
Other income | 22.1 | 2.1 | — | 1.2 | 25.4 | |||||||||||||||
Total revenues | 1,713.9 | 2.0 | — | 1.2 | 1,717.1 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -1,138.7 | -0.6 | — | — | -1,139.3 | |||||||||||||||
Acquisition costs | -340.3 | -0.7 | — | -1.3 | -342.3 | |||||||||||||||
Other operating and administration expenses | -112.8 | — | — | — | -112.8 | |||||||||||||||
Interest expense | -17.5 | — | — | — | -17.5 | |||||||||||||||
Amortization of goodwill | -6.2 | — | — | — | -6.2 | |||||||||||||||
Total benefits, losses and expenses | -1,615.5 | -1.3 | — | -1.3 | -1,618.1 | |||||||||||||||
Income (loss) before taxes | 98.4 | 0.7 | — | -0.1 | 99.0 | |||||||||||||||
Income tax expense | -40.6 | -0.3 | — | — | -40.9 | |||||||||||||||
Net income (loss) | 57.8 | 0.4 | — | -0.1 | 58.1 |
65
Table of Contents
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 1998 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 1,458.8 | -6.1 | — | — | 1,452.7 | |||||||||||||||
Less ceded premiums written | -213.7 | 4.9 | — | — | -208.8 | |||||||||||||||
Net premiums written | 1,245.1 | -1.2 | — | — | 1,243.9 | |||||||||||||||
Net change in unearned premiums | -17.7 | 0.5 | — | — | -17.2 | |||||||||||||||
Net premiums earned | 1,227.4 | -0.7 | — | — | 1,226.7 | |||||||||||||||
Net investment income | 255.4 | — | — | — | 255.4 | |||||||||||||||
Net realized capital gains (losses) | 78.9 | — | — | — | 78.9 | |||||||||||||||
Other income | 24.8 | 0.7 | — | 2.1 | 27.6 | |||||||||||||||
Total revenues | 1,586.5 | — | — | 2.1 | 1,588.6 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -917.3 | 0.5 | — | — | -916.8 | |||||||||||||||
Acquisition costs | -340.7 | 0.3 | — | -2.1 | -342.5 | |||||||||||||||
Other operating and administration expenses | -127.9 | — | — | — | -127.9 | |||||||||||||||
Interest expense | -16.1 | — | — | — | -16.1 | |||||||||||||||
Amortization of goodwill | -6.2 | — | — | — | -6.2 | |||||||||||||||
Total benefits, losses and expenses | -1,408.2 | 0.8 | — | -2.1 | -1,409.5 | |||||||||||||||
Income before taxes | 178.3 | 0.8 | — | — | 179.1 | |||||||||||||||
Income tax expense | -62.0 | -0.3 | — | — | -62.3 | |||||||||||||||
Net income | 116.3 | 0.5 | — | — | 116.8 |
66
Table of Contents
(US$ million) | ||||||||||||||||||||
2004 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | 850.4 | — | — | — | 850.4 | |||||||||||||||
Available-for-sale securities: | �� | |||||||||||||||||||
Fixed maturities | 4,834.8 | — | — | — | 4,834.8 | |||||||||||||||
Equity securities | 399.4 | — | — | — | 399.4 | |||||||||||||||
Other investments | 281.4 | — | — | -2.2 | 279.2 | |||||||||||||||
Short-term investments | 117.3 | — | — | — | 117.3 | |||||||||||||||
Total investments | 6,483.3 | — | — | -2.2 | 6,481.1 | |||||||||||||||
Funds Withheld Asset | 1,305.1 | — | — | — | 1,305.1 | |||||||||||||||
Total invested assets | 7,788.4 | — | — | -2.2 | 7,786.2 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 680.9 | — | — | — | 680.9 | |||||||||||||||
Premiums receivable | 1,812.0 | 8.8 | — | 11.4 | 1,832.2 | |||||||||||||||
Reserves for unearned premiums, retro | 111.6 | -72.1 | — | 15.7 | 55.2 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,226.2 | -357.1 | — | 68.8 | 937.9 | |||||||||||||||
Insurance and reinsurance balances receivable | 233.5 | -94.2 | — | — | 139.3 | |||||||||||||||
Funds held by reinsureds | 1,721.3 | -78.9 | — | 95.3 | 1,737.7 | |||||||||||||||
Deposit assets | 137.0 | 33.4 | — | — | 170.4 | |||||||||||||||
Deferred policy acquisition costs | 484.7 | -0.8 | — | -1.2 | 482.7 | |||||||||||||||
Deferred income taxes | 78.3 | -67.2 | 61.6 | 7.1 | 79.8 | |||||||||||||||
Other assets | 335.4 | -35.1 | 58.2 | 0.1 | 358.6 | |||||||||||||||
Total assets | 14,609.3 | -663.2 | 119.8 | 195.0 | 14,260.9 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 8,915.6 | -115.2 | — | 107.9 | 8,908.3 | |||||||||||||||
Reserves for life benefits, gross | 407.1 | — | — | — | 407.1 | |||||||||||||||
Insurance and reinsurance balances payable | 585.9 | — | — | -2.4 | 583.5 | |||||||||||||||
Reserves for unearned premiums, gross | 1,312.3 | -80.4 | — | 15.8 | 1,247.7 | |||||||||||||||
Other reinsurance liabilities | 110.4 | -57.0 | — | 17.4 | 70.8 | |||||||||||||||
Funds held under reinsurance contracts | 379.3 | -237.8 | — | 53.3 | 194.8 | |||||||||||||||
Deposit liabilities | 348.5 | 8.0 | — | — | 356.5 | |||||||||||||||
Deferred income taxes | 157.2 | -69.7 | -6.8 | 1.1 | 81.8 | |||||||||||||||
Accrued expenses and other liabilities | 281.7 | — | — | 2.8 | 284.5 | |||||||||||||||
Debt | 391.1 | — | — | — | 391.1 | |||||||||||||||
Total liabilities | 12,889.1 | -552.1 | -6.8 | 195.9 | 12,526.1 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 554.9 | — | — | — | 554.9 | |||||||||||||||
Additional paid-in capital | 1,430.6 | — | — | -70.1 | 1,360.5 | |||||||||||||||
Treasury stock | -7.7 | — | — | — | -7.7 | |||||||||||||||
Unearned stock compensation | -7.5 | — | — | — | -7.5 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | -6.7 | — | -1.0 | — | -7.7 | |||||||||||||||
Net unrealized gains on investments, net of taxes | 116.7 | — | -11.7 | 0.2 | 105.2 | |||||||||||||||
Cumulative translation adjustments | 194.1 | -7.9 | 5.3 | -0.3 | 191.2 | |||||||||||||||
Total accumulated other comprehensive income | 304.1 | -7.9 | -7.4 | -0.1 | 288.7 | |||||||||||||||
Retained (deficit) earnings | -554.2 | -103.2 | 134.0 | 69.3 | -454.1 | |||||||||||||||
Total shareholders’ equity | 1,720.2 | -111.1 | 126.6 | -0.9 | 1,734.8 | |||||||||||||||
Total liabilities and shareholders’ equity | 14,609.3 | -663.2 | 119.8 | 195.0 | 14,260.9 |
67
Table of Contents
(US$ million) | ||||||||||||||||||||
2003 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | 500.4 | — | — | — | 500.4 | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 4,428.2 | — | — | — | 4,428.2 | |||||||||||||||
Equity securities | 840.2 | — | — | -5.3 | 834.9 | |||||||||||||||
Other investments | 173.5 | — | — | -21.3 | 152.2 | |||||||||||||||
Short-term investments | 55.8 | — | — | -0.1 | 55.7 | |||||||||||||||
Total investments | 5,998.1 | — | — | -26.7 | 5,971.4 | |||||||||||||||
Funds Withheld Asset | 1,530.6 | — | — | — | 1,530.6 | |||||||||||||||
Total invested assets | 7,528.7 | — | — | -26.7 | 7,502.0 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 280.8 | — | — | — | 280.8 | |||||||||||||||
Premiums receivable | 2,008.3 | -72.2 | — | -282.0 | 1,654.1 | |||||||||||||||
Reserves for unearned premiums, retro | — | -88.8 | — | 198.1 | 109.3 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,718.6 | -472.5 | — | -152.0 | 1,094.1 | |||||||||||||||
Insurance and reinsurance balances receivable | 224.0 | -183.2 | — | — | 40.8 | |||||||||||||||
Funds held by reinsureds | 1,374.0 | -121.2 | — | 42.1 | 1,294.9 | |||||||||||||||
Deposit assets | — | 58.8 | — | — | 58.8 | |||||||||||||||
Deferred policy acquisition costs | 380.1 | -0.8 | — | — | 379.3 | |||||||||||||||
Deferred income taxes | 345.1 | 21.2 | -5.8 | 4.2 | 364.7 | |||||||||||||||
Other assets | 495.0 | -39.8 | — | 46.4 | 501.6 | |||||||||||||||
Total assets | 14,354.6 | -898.5 | -5.8 | -169.9 | 13,280.4 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 7,842.8 | -127.8 | — | 164.7 | 7,879.7 | |||||||||||||||
Reserves for life benefits, gross | 483.5 | — | — | -139.2 | 344.3 | |||||||||||||||
Insurance and reinsurance balances payable | — | -108.8 | — | 313.4 | 204.6 | |||||||||||||||
Reserves for unearned premiums, gross | 1,467.4 | -73.5 | — | 21.1 | 1,415.0 | |||||||||||||||
Other reinsurance liabilities | 1,087.3 | -73.1 | — | -910.0 | 104.2 | |||||||||||||||
Funds held under reinsurance contracts | 529.8 | -399.0 | — | 42.1 | 172.9 | |||||||||||||||
Deposit liabilities | — | 22.4 | — | 335.8 | 358.2 | |||||||||||||||
Deferred income taxes | 158.3 | 1.6 | 14.3 | — | 174.2 | |||||||||||||||
Accrued expenses and other liabilities | 311.6 | -2.9 | — | -2.5 | 306.2 | |||||||||||||||
Debt | 390.6 | — | — | 2.5 | 393.1 | |||||||||||||||
Total liabilities | 12,271.3 | -761.1 | 14.3 | -172.1 | 11,352.4 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 253.0 | — | — | — | 253.0 | |||||||||||||||
Additional paid-in capital | 1,326.7 | — | — | -70.1 | 1,256.6 | |||||||||||||||
Treasury stock | -10.0 | — | — | — | -10.0 | |||||||||||||||
Unearned stock compensation | -6.1 | — | — | — | -6.1 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | -1.2 | -1.2 | |||||||||||||||
Net unrealized gains on investments, net of taxes | 145.3 | — | 0.3 | — | 145.6 | |||||||||||||||
Cumulative translation adjustments | 116.1 | -5.1 | -2.1 | 1.1 | 110.0 | |||||||||||||||
Total accumulated other comprehensive income | 261.4 | -5.1 | -1.8 | -0.1 | 254.4 | |||||||||||||||
Retained (deficit) earnings | 258.3 | -132.3 | -18.3 | 72.4 | 180.1 | |||||||||||||||
Total shareholders’ equity | 2,083.3 | -137.4 | -20.1 | 2.2 | 1,928.0 | |||||||||||||||
Total liabilities and shareholders’ equity | 14,354.6 | -898.5 | -5.8 | -169.9 | 13,280.4 |
68
Table of Contents
(US$ million) | ||||||||||||||||||||
2002 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | — | — | — | — | — | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 3,443.1 | — | — | — | 3,443.1 | |||||||||||||||
Equity securities | 530.8 | — | — | -5.4 | 525.4 | |||||||||||||||
Other investments | 177.3 | — | — | 5.4 | 182.7 | |||||||||||||||
Short-term investments | 318.0 | — | — | — | 318.0 | |||||||||||||||
Total investments | 4,469.2 | — | — | — | 4,469.2 | |||||||||||||||
Funds Withheld Asset | 1,648.1 | — | — | — | 1,648.1 | |||||||||||||||
Total invested assets | 6,117.3 | — | — | — | 6,117.3 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 361.5 | — | — | 39.7 | 401.2 | |||||||||||||||
Premiums receivable | 1,721.3 | -46.6 | — | -584.0 | 1,090.7 | |||||||||||||||
Reserves for unearned premiums, retro | — | -70.8 | — | 94.7 | 23.9 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,627.7 | -423.0 | — | -95.7 | 1,109.0 | |||||||||||||||
Insurance and reinsurance balances receivable | 239.9 | -142.8 | — | -5.0 | 92.1 | |||||||||||||||
Funds held by reinsureds | 935.9 | -76.4 | — | — | 859.5 | |||||||||||||||
Deposit assets | — | 45.7 | — | — | 45.7 | |||||||||||||||
Deferred policy acquisition costs | 264.9 | -0.9 | — | — | 264.0 | |||||||||||||||
Deferred income taxes | 391.8 | 28.8 | -31.4 | 0.7 | 389.9 | |||||||||||||||
Other assets | 390.7 | -60.2 | — | 33.7 | 364.2 | |||||||||||||||
Total assets | 12,051.0 | -746.2 | -31.4 | -515.9 | 10,757.5 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 6,821.3 | -130.0 | — | 185.6 | 6,876.9 | |||||||||||||||
Reserves for life benefits, gross | 371.7 | — | — | -185.6 | 186.1 | |||||||||||||||
Insurance and reinsurance balances payable | — | -96.7 | — | 20.4 | -76.3 | |||||||||||||||
Reserves for unearned premiums, gross | 1,170.7 | -61.5 | — | — | 1,109.2 | |||||||||||||||
Other reinsurance liabilities | 661.6 | -60.8 | — | -527.7 | 73.1 | |||||||||||||||
Funds held under reinsurance contracts | 429.5 | -351.5 | — | — | 78.0 | |||||||||||||||
Deposit liabilities | — | 58.1 | — | — | 58.1 | |||||||||||||||
Deferred income taxes | 133.9 | -1.0 | 0.1 | — | 133.0 | |||||||||||||||
Accrued expenses and other liabilities | 333.9 | — | — | -2.6 | 331.3 | |||||||||||||||
Debt | 390.4 | — | — | 2.5 | 392.9 | |||||||||||||||
Total liabilities | 10,313.0 | -643.4 | 0.1 | -507.4 | 9,162.3 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 253.0 | — | — | — | 253.0 | |||||||||||||||
Additional paid-in capital | 1,330.9 | — | — | -70.1 | 1,260.8 | |||||||||||||||
Treasury stock | -3.3 | — | — | — | -3.3 | |||||||||||||||
Unearned stock compensation | -10.0 | — | — | — | -10.0 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | |||||||||||||||
Net unrealized gains on investments, net of taxes | -53.3 | — | — | 50.3 | -3.0 | |||||||||||||||
Cumulative translation adjustments | 113.9 | -1.7 | — | -50.3 | 61.9 | |||||||||||||||
Total accumulated other comprehensive income | 60.6 | -1.7 | — | — | 58.9 | |||||||||||||||
Retained earnings (deficit) | 106.8 | -101.1 | -31.5 | 61.6 | 35.8 | |||||||||||||||
Total shareholders’ equity | 1,738.0 | -102.8 | -31.5 | -8.5 | 1,595.2 | |||||||||||||||
Total liabilities and shareholders’ equity | 12,051.0 | -746.2 | -31.4 | -515.9 | 10,757.5 |
69
Table of Contents
(US$ million) | ||||||||||||||||||||
2001 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | — | — | — | — | — | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 2,331.4 | — | — | — | 2,331.4 | |||||||||||||||
Equity securities | 701.4 | — | — | -63.3 | 638.1 | |||||||||||||||
Other investments | 195.1 | — | — | 63.5 | 258.6 | |||||||||||||||
Short-term investments | 89.5 | — | — | -24.0 | 65.5 | |||||||||||||||
Total investments | 3,317.4 | — | — | -23.8 | 3,293.6 | |||||||||||||||
Funds Withheld Asset | 1,598.5 | — | — | — | 1,598.5 | |||||||||||||||
Total invested assets | 4,915.9 | — | — | -23.8 | 4,892.1 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 420.5 | — | — | 49.7 | 470.2 | |||||||||||||||
Premiums receivable | 1,015.1 | -14.6 | — | -303.0 | 697.5 | |||||||||||||||
Reserves for unearned premiums, retro | — | -55.0 | — | 78.9 | 23.9 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,668.1 | -445.8 | — | -78.9 | 1,143.4 | |||||||||||||||
Insurance and reinsurance balances receivable | 400.2 | -104.3 | — | — | 295.9 | |||||||||||||||
Funds held by reinsureds | 523.4 | -40.2 | — | -28.4 | 454.8 | |||||||||||||||
Deposit assets | — | 52.6 | — | — | 52.6 | |||||||||||||||
Deferred policy acquisition costs | 217.9 | -1.0 | — | — | 216.9 | |||||||||||||||
Deferred income taxes | 300.4 | 37.1 | 3.3 | — | 340.8 | |||||||||||||||
Other assets | 245.0 | — | — | 29.0 | 274.0 | |||||||||||||||
Total assets | 9,706.5 | -571.2 | 3.3 | -276.5 | 8,862.1 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 5,710.5 | -68.2 | — | — | 5,642.3 | |||||||||||||||
Reserves for life benefits, gross | 252.0 | — | — | 8.3 | 260.3 | |||||||||||||||
Insurance and reinsurance balances payable | — | -12.7 | — | -18.6 | -31.3 | |||||||||||||||
Reserves for unearned premiums, gross | 968.7 | -48.2 | — | — | 920.5 | |||||||||||||||
Other reinsurance liabilities | 315.9 | -92.2 | — | -227.5 | -3.8 | |||||||||||||||
Funds held under reinsurance contracts | 430.8 | -333.9 | — | -28.4 | 68.5 | |||||||||||||||
Deposit liabilities | — | 47.6 | — | — | 47.6 | |||||||||||||||
Deferred income taxes | 106.5 | 9.8 | — | — | 116.3 | |||||||||||||||
Accrued expenses and other liabilities | 154.3 | — | — | -19.5 | 134.8 | |||||||||||||||
Debt | 197.0 | — | — | 9.1 | 206.1 | |||||||||||||||
Total liabilities | 8,135.7 | -497.8 | — | -276.6 | 7,361.3 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 253.0 | — | — | — | 253.0 | |||||||||||||||
Additional paid-in capital | 1,336.5 | — | — | -70.1 | 1,266.4 | |||||||||||||||
Treasury stock | — | — | — | — | — | |||||||||||||||
Unearned stock compensation | -27.1 | — | — | — | -27.1 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | |||||||||||||||
Net unrealized gains on investments, net of taxes | 30.3 | — | — | -19.0 | 11.3 | |||||||||||||||
Cumulative translation adjustments | -21.9 | — | — | 19.1 | -2.8 | |||||||||||||||
Total accumulated other comprehensive income | 8.4 | — | — | 0.1 | 8.5 | |||||||||||||||
Retained earnings (deficit) | — | -73.4 | 3.3 | 70.1 | — | |||||||||||||||
Total shareholders’ equity | 1,570.8 | -73.4 | 3.3 | 0.1 | 1,500.8 | |||||||||||||||
Total liabilities and shareholders’ equity | 9,706.5 | -571.2 | 3.3 | -276.5 | 8,862.1 |
70
Table of Contents
(US$ million) | ||||||||||||||||||||
2000 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | — | — | — | — | — | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 2,236.2 | — | — | — | 2,236.2 | |||||||||||||||
Equity securities | 611.0 | — | — | — | 611.0 | |||||||||||||||
Other investments | 52.2 | — | — | — | 52.2 | |||||||||||||||
Short-term investments | 115.1 | — | — | — | 115.1 | |||||||||||||||
Total investments | 3,014.5 | — | — | — | 3,014.5 | |||||||||||||||
Funds Withheld Asset | 1,335.2 | — | — | — | 1,335.2 | |||||||||||||||
Total invested assets | 4,349.7 | — | — | — | 4,349.7 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 121.9 | — | — | — | 121.9 | |||||||||||||||
Premiums receivable | 937.3 | 0.3 | — | — | 937.6 | |||||||||||||||
Reserves for unearned premiums, retro | — | -44.3 | — | — | -44.3 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,292.9 | -319.9 | — | — | 973.0 | |||||||||||||||
Insurance and reinsurance balances receivable | 341.6 | -53.8 | — | — | 287.8 | |||||||||||||||
Funds held by reinsureds | 681.8 | — | — | — | 681.8 | |||||||||||||||
Deposit assets | — | 85.1 | — | — | 85.1 | |||||||||||||||
Deferred policy acquisition costs | 184.6 | 2.2 | — | — | 186.8 | |||||||||||||||
Deferred income taxes | 165.2 | 27.2 | — | — | 192.4 | |||||||||||||||
Other assets | 246.3 | 0.2 | — | -0.1 | 246.4 | |||||||||||||||
Total assets | 8,321.3 | -303.0 | — | -0.1 | 8,018.2 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 4,546.0 | -41.9 | — | — | 4,504.1 | |||||||||||||||
Reserves for life benefits, gross | 162.0 | — | — | — | 162.0 | |||||||||||||||
Insurance and reinsurance balances payable | — | — | — | — | — | |||||||||||||||
Reserves for unearned premiums, gross | 774.4 | -54.2 | — | — | 720.2 | |||||||||||||||
Other reinsurance liabilities | 491.8 | -65.4 | — | — | 426.4 | |||||||||||||||
Funds held under reinsurance contracts | 512.4 | -127.2 | — | — | 385.2 | |||||||||||||||
Deposit liabilities | — | 58.4 | — | — | 58.4 | |||||||||||||||
Deferred income taxes | 175.2 | -1.6 | 9.6 | — | 183.2 | |||||||||||||||
Accrued expenses and other liabilities | 374.2 | 1.2 | — | — | 375.4 | |||||||||||||||
Debt | 196.9 | — | — | — | 196.9 | |||||||||||||||
Total liabilities | 7,232.9 | -230.7 | 9.6 | — | 7,011.8 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | — | — | — | — | — | |||||||||||||||
Treasury stock | — | — | — | — | — | |||||||||||||||
Unearned stock compensation | — | — | — | — | — | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | |||||||||||||||
Net unrealized gains on investments, net of taxes | 18.8 | — | — | — | 18.8 | |||||||||||||||
Cumulative translation adjustments | 40.5 | — | — | — | 40.5 | |||||||||||||||
Total accumulated other comprehensive income | 59.3 | — | — | — | 59.3 | |||||||||||||||
Retained earnings (deficit) | 1,029.1 | -72.3 | -9.6 | -0.1 | 947.1 | |||||||||||||||
Total shareholders’ equity | 1,088.4 | -72.3 | -9.6 | -0.1 | 1,006.4 | |||||||||||||||
Total liabilities and shareholders’ equity | 8,321.3 | -303.0 | — | -0.1 | 8,018.2 |
71
Table of Contents
(US$ million) | |||||||||||||||||||||
1999 | |||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | |||||||||||||||||
reported | transactions | Items | restated | ||||||||||||||||||
Assets | |||||||||||||||||||||
Invested assets | |||||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||||
Fixed maturities | — | — | — | — | — | ||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||
Fixed maturities | 2,098.9 | — | — | — | 2,098.9 | ||||||||||||||||
Equity securities | 557.3 | — | — | — | 557.3 | ||||||||||||||||
Other investments | 80.1 | — | — | — | 80.1 | ||||||||||||||||
Short-term investments | 83.8 | — | — | — | 83.8 | ||||||||||||||||
Total investments | 2,820.1 | — | — | — | 2,820.1 | ||||||||||||||||
Funds Withheld Asset | 1,412.7 | — | — | — | 1,412.7 | ||||||||||||||||
Total invested assets | 4,232.8 | — | — | — | 4,232.8 | ||||||||||||||||
Other assets | |||||||||||||||||||||
Cash and cash equivalents | 68.1 | — | — | — | 68.1 | ||||||||||||||||
Premiums receivable | 590.3 | -0.1 | — | — | 590.2 | ||||||||||||||||
Reserves for unearned premiums, retro | — | -18.2 | — | — | -18.2 | ||||||||||||||||
Reinsurance assets: | |||||||||||||||||||||
Underwriting reserves | 772.2 | -64.0 | — | — | 708.2 | ||||||||||||||||
Insurance and reinsurance balances receivable | 247.4 | — | — | — | 247.4 | ||||||||||||||||
Funds held by reinsureds | 484.8 | — | — | — | 484.8 | ||||||||||||||||
Deposit assets | — | 57.7 | — | — | 57.7 | ||||||||||||||||
Deferred policy acquisition costs | 168.6 | -1.1 | — | — | 167.5 | ||||||||||||||||
Deferred income taxes | 131.4 | 0.1 | — | — | 131.5 | ||||||||||||||||
Other assets | 220.4 | 0.6 | — | -0.1 | 220.9 | ||||||||||||||||
Total assets | 6,916.0 | -25.0 | — | -0.1 | 6,890.9 | ||||||||||||||||
Liabilities and shareholders’ equity | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||
Reinsurance liabilities | |||||||||||||||||||||
Unpaid losses and loss expenses | 3,545.7 | -63.4 | — | — | 3,482.3 | ||||||||||||||||
Reserves for life benefits, gross | 193.7 | — | — | — | 193.7 | ||||||||||||||||
Insurance and reinsurance balances payable | — | — | — | — | — | ||||||||||||||||
Reserves for unearned premiums, gross | 629.7 | -19.7 | — | — | 610.0 | ||||||||||||||||
Other reinsurance liabilities | 356.6 | -3.2 | — | — | 353.4 | ||||||||||||||||
Funds held under reinsurance contracts | 323.2 | — | — | — | 323.2 | ||||||||||||||||
Deposit liabilities | — | 59.8 | — | — | 59.8 | ||||||||||||||||
Deferred income taxes | 157.0 | -0.4 | — | — | 156.6 | ||||||||||||||||
Accrued expenses and other liabilities | 291.9 | 1.0 | — | — | 292.9 | ||||||||||||||||
Debt | 196.8 | — | — | — | 196.8 | ||||||||||||||||
Total liabilities | 5,694.6 | -25.9 | — | — | 5,668.7 | ||||||||||||||||
Shareholders’ equity | |||||||||||||||||||||
Common stock | — | — | — | — | — | ||||||||||||||||
Additional paid-in capital | — | — | — | — | — | ||||||||||||||||
Treasury stock | — | — | — | — | — | ||||||||||||||||
Unearned stock compensation | — | — | — | — | — | ||||||||||||||||
Total accumulated other comprehensive income: | |||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | ||||||||||||||||
Net unrealized gains on investments, net of taxes | 16.9 | — | — | — | 16.9 | ||||||||||||||||
Cumulative translation adjustments | 52.1 | — | — | — | 52.1 | ||||||||||||||||
Total accumulated other comprehensive income | 69.0 | — | — | — | 69.0 | ||||||||||||||||
Retained earnings (deficit) | 1,152.4 | 0.9 | — | -0.1 | 1,153.2 | ||||||||||||||||
Total shareholders’ equity | 1,221.4 | 0.9 | — | -0.1 | 1,222.2 | ||||||||||||||||
Total liabilities and shareholders’ equity | 6,916.0 | -25.0 | — | -0.1 | 6,890.9 |
72
Table of Contents
(US$ million) | ||||||||||||||||||||
1998 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | — | — | — | — | — | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 1,919.2 | — | — | — | 1,919.2 | |||||||||||||||
Equity securities | 487.3 | — | — | — | 487.3 | |||||||||||||||
Other investments | 116.7 | — | — | — | 116.7 | |||||||||||||||
Short-term investments | 115.1 | — | — | — | 115.1 | |||||||||||||||
Total investments | 2,638.3 | — | — | — | 2,638.3 | |||||||||||||||
Funds Withheld Asset | 1,259.8 | — | — | — | 1,259.8 | |||||||||||||||
Total invested assets | 3,898.1 | — | — | — | 3,898.1 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 286.1 | — | — | — | 286.1 | |||||||||||||||
Premiums receivable | 520.1 | -0.4 | — | — | 519.7 | |||||||||||||||
Reserves for unearned premiums, retro | — | -4.4 | — | — | -4.4 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 499.0 | — | — | — | 499.0 | |||||||||||||||
Insurance and reinsurance balances receivable | 164.8 | — | — | — | 164.8 | |||||||||||||||
Funds held by reinsureds | 436.0 | — | — | — | 436.0 | |||||||||||||||
Deposit assets | — | 66.8 | — | — | 66.8 | |||||||||||||||
Deferred policy acquisition costs | 118.3 | -1.0 | — | — | 117.3 | |||||||||||||||
Deferred income taxes | 109.3 | -0.1 | — | — | 109.2 | |||||||||||||||
Other assets | 259.2 | — | — | — | 259.2 | |||||||||||||||
Total assets | 6,290.9 | 60.9 | — | — | 6,351.8 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 2,988.1 | -0.5 | — | — | 2,987.6 | |||||||||||||||
Reserves for life benefits, gross | 312.7 | — | — | — | 312.7 | |||||||||||||||
Insurance and reinsurance balances payable | — | — | — | — | — | |||||||||||||||
Reserves for unearned premiums, gross | 450.1 | -4.9 | — | — | 445.2 | |||||||||||||||
Other reinsurance liabilities | 353.2 | -3.1 | — | — | 350.1 | |||||||||||||||
Funds held under reinsurance contracts | 305.8 | — | — | — | 305.8 | |||||||||||||||
Deposit liabilities | — | 68.7 | — | — | 68.7 | |||||||||||||||
Deferred income taxes | 185.6 | -0.3 | — | — | 185.3 | |||||||||||||||
Accrued expenses and other liabilities | 268.4 | 0.5 | — | — | 268.9 | |||||||||||||||
Debt | 196.7 | — | — | — | 196.7 | |||||||||||||||
Total liabilities | 5,060.6 | 60.4 | — | — | 5,121.0 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | — | — | — | — | — | |||||||||||||||
Treasury stock | — | — | — | — | — | |||||||||||||||
Unearned stock compensation | — | — | — | — | — | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | |||||||||||||||
Net unrealized gains on investments, net of taxes | 100.2 | — | — | — | 100.2 | |||||||||||||||
Cumulative translation adjustments | 16.7 | — | — | — | 16.7 | |||||||||||||||
Total accumulated other comprehensive income | 116.9 | — | — | — | 116.9 | |||||||||||||||
Retained earnings | 1,113.4 | 0.5 | — | — | 1,113.9 | |||||||||||||||
Total shareholders’ equity | 1,230.3 | 0.5 | — | — | 1,230.8 | |||||||||||||||
Total liabilities and shareholders’ equity | 6,290.9 | 60.9 | — | — | 6,351.8 |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
US$ | ||||||||||||||||||||||||||||
Basic (loss) earnings per share as previously reported | (12.00 | ) | 2.33 | 1.34 | (4.61 | ) | (0.73 | ) | 1.46 | 2.93 | ||||||||||||||||||
Adjustments to basic (loss) earnings per share | 2.81 | (0.09 | ) | (0.89 | ) | 0.15 | (2.07 | ) | — | — | ||||||||||||||||||
Basic (loss) earnings per share as restated | (9.19 | ) | 2.24 | 0.45 | (4.46 | ) | (2.80 | ) | 1.46 | 2.93 |
2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million, except per share amounts) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Gross premiums written | -17.2 | -28.4 | -163.3 | -34.4 | -18.7 | -18.6 | -6.1 | |||||||||||||||||||||
Net premiums written | 53.3 | 68.5 | -86.9 | 170.1 | 184.7 | -1.1 | -1.2 | |||||||||||||||||||||
Net premiums earned | 77.4 | 64.1 | -87.9 | 153.3 | 193.0 | -0.1 | -0.7 | |||||||||||||||||||||
Losses, loss expenses and life benefits | -44.7 | -85.9 | 1.0 | -160.1 | -281.1 | -0.6 | 0.5 | |||||||||||||||||||||
Acquisition costs | 9.9 | -16.6 | 23.9 | -8.8 | -27.2 | -0.7 | 0.3 | |||||||||||||||||||||
Income (loss) before taxes | 46.1 | -20.9 | -30.2 | -0.7 | -101.4 | 0.7 | 0.8 | |||||||||||||||||||||
Net income (loss) | 29.0 | -31.1 | -27.7 | -1.0 | -73.2 | 0.4 | 0.5 | |||||||||||||||||||||
Basic earnings (loss) per share (US$) | 0.46 | -0.39 | -0.35 | -0.01 | -1.83 | 0.01 | 0.01 | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | -523.4 | -744.5 | -636.6 | -605.1 | -418.0 | -82.2 | -4.4 | |||||||||||||||||||||
Funds held by reinsureds | -78.9 | -121.2 | -76.4 | -40.2 | — | — | — | |||||||||||||||||||||
Other assets | -35.1 | -39.8 | -60.2 | — | 0.2 | 0.6 | — | |||||||||||||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -195.6 | -310.1 | -288.2 | -129.1 | -96.1 | -83.1 | -5.4 | |||||||||||||||||||||
Funds held under reinsurance contracts | -237.8 | -399.0 | -351.5 | -333.9 | -127.2 | — | — | |||||||||||||||||||||
Shareholders’ equity | -111.1 | -137.4 | -102.8 | -73.4 | -72.3 | 0.9 | 0.5 |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Gross premiums written | -12.7 | -16.9 | -16.9 | -16.9 | -17.0 | -16.9 | -4.6 | |||||||||||||||||||||
Net premiums written | -1.5 | -2.1 | -0.9 | -3.8 | -2.4 | -2.5 | 0.3 | |||||||||||||||||||||
Net premiums earned | -0.8 | -0.7 | -0.7 | -0.3 | 0.9 | -0.6 | -0.1 | |||||||||||||||||||||
Losses, loss expenses and life benefits | 0.3 | 0.4 | 0.2 | 0.2 | -0.2 | — | — | |||||||||||||||||||||
Acquisition costs | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | — | — | |||||||||||||||||||||
(Loss) income before taxes | -0.8 | 0.3 | 0.7 | 1.8 | 3.1 | 2.1 | -0.1 | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | -69.8 | -64.1 | -53.1 | -43.1 | -33.9 | -18.2 | -4.4 | |||||||||||||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -81.3 | -74.6 | -61.7 | -51.3 | -38.5 | -19.7 | -4.0 |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Net premiums written | 12.4 | 25.0 | 5.3 | 5.1 | — | — | — | |||||||||||||||||||||
Net premiums earned | 22.0 | 15.3 | 5.3 | 5.1 | — | — | — | |||||||||||||||||||||
Losses, loss expenses and life benefits | -1.4 | -35.0 | — | — | — | — | — | |||||||||||||||||||||
Acquisition costs | -9.1 | — | — | — | — | — | — | |||||||||||||||||||||
Income (loss) before taxes | 11.6 | -21.7 | 5.1 | 5.0 | — | — | — | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | — | -44.7 | — | — | — | — | — | |||||||||||||||||||||
Other reinsurance liabilities | — | -36.5 | — | — | — | — | — |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Gross premiums written | — | — | — | -2.6 | -0.2 | -0.1 | — | |||||||||||||||||||||
Net premiums written | 36.9 | 30.3 | 4.6 | 138.8 | 137.3 | -0.1 | — | |||||||||||||||||||||
Net premiums earned | 34.9 | 30.3 | 6.4 | 138.8 | 135.5 | -0.1 | — | |||||||||||||||||||||
Losses, loss expenses and life benefits | -31.2 | -32.1 | -60.6 | -145.4 | -228.9 | — | — | |||||||||||||||||||||
Acquisition costs | 19.9 | -17.9 | 1.7 | — | -16.2 | -0.1 | — | |||||||||||||||||||||
Income (loss) before taxes | 38.1 | 7.3 | -30.5 | 5.1 | -99.2 | -0.5 | — | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | -291.3 | -451.9 | -436.2 | -447.5 | -284.6 | — | — | |||||||||||||||||||||
Funds held by reinsureds | -1.1 | -54.6 | -32.6 | -3.8 | — | — | — | |||||||||||||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -0.5 | -126.3 | -87.4 | -30.4 | -0.1 | — | — | |||||||||||||||||||||
Funds held under reinsurance contracts | -152.3 | -275.9 | -265.3 | -271.6 | -127.2 | — | — |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Gross premiums written | -4.5 | -11.4 | -33.1 | -14.9 | -1.5 | -1.5 | -1.5 | |||||||||||||||||||||
Net premiums written | -1.2 | 8.8 | -2.6 | 29.9 | 49.9 | 1.5 | -1.5 | |||||||||||||||||||||
Net premiums earned | 14.4 | 12.7 | -6.1 | 29.5 | 37.3 | 1.5 | -1.5 | |||||||||||||||||||||
Losses, loss expenses and life benefits | -12.5 | -16.2 | -0.6 | -33.3 | -34.1 | -0.5 | 0.5 | |||||||||||||||||||||
Acquisition costs | — | 1.3 | -5.6 | -8.8 | -11.1 | -0.8 | 0.3 | |||||||||||||||||||||
(Loss) income before taxes | -0.1 | -6.7 | -5.9 | -11.0 | -6.8 | — | — | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | -159.4 | -180.7 | -133.8 | -114.5 | -99.7 | -64.0 | — | |||||||||||||||||||||
Funds held by reinsureds | -77.8 | -66.6 | -32.0 | -36.4 | — | — | — | |||||||||||||||||||||
Other assets | -35.1 | -39.8 | -48.2 | — | — | — | — | |||||||||||||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -113.8 | -109.3 | -100.4 | -47.5 | -56.5 | -64.0 | -0.5 | |||||||||||||||||||||
Funds held under reinsurance contracts | -85.5 | -123.1 | -86.1 | -62.3 | — | — | — |
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2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||||||||||
Gross premiums written | — | -0.1 | -113.3 | — | — | -0.1 | — | |||||||||||||||||||||
Net premiums written | 6.8 | 6.5 | -93.3 | 0.1 | -0.1 | — | — | |||||||||||||||||||||
Net premiums earned | 6.9 | 6.5 | -92.8 | -19.8 | 19.3 | -0.9 | 0.9 | |||||||||||||||||||||
Losses, loss expenses and life benefits | 0.1 | -3.0 | 62.0 | 18.4 | -17.9 | -0.1 | — | |||||||||||||||||||||
Acquisition costs | -1.0 | — | 27.7 | -0.1 | — | 0.2 | — | |||||||||||||||||||||
(Loss) income before taxes | -2.7 | -0.2 | 0.4 | -1.6 | 1.5 | -0.9 | 0.9 | |||||||||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||||||||||
Reinsurance assets (including reserves for unearned premium) | -2.9 | -3.1 | -13.5 | — | 0.2 | — | — | |||||||||||||||||||||
Funds held by reinsureds | — | — | -11.8 | — | — | — | — | |||||||||||||||||||||
Other assets | — | — | -12.0 | — | 0.2 | 0.6 | — | |||||||||||||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | — | 0.1 | -38.7 | 0.1 | -1.0 | 0.6 | -1.4 |
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2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million, except per share amounts) | ||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||
Income taxes | -152.2 | -13.2 | 34.7 | -12.8 | 9.6 | |||||||||||||||
Net income (loss) | 152.2 | 13.2 | -34.7 | 12.8 | -9.6 | |||||||||||||||
Basic earnings (loss) per share (US$) | 2.39 | 0.17 | -0.44 | 0.16 | -0.24 | |||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||||||||||
Other assets | 58.2 | — | — | — | — | |||||||||||||||
Deferred income tax assets | 61.6 | -5.8 | -31.4 | 3.3 | — | |||||||||||||||
Deferred income tax liabilities | -6.8 | 14.3 | — | — | 9.6 | |||||||||||||||
Shareholders’ equity | 126.6 | -20.1 | -31.5 | 3.3 | -9.6 |
Participation at Lloyd’s | Other corrections | |||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2002 | ||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million, except per share amounts) | ||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||
Gross premiums written | 155.0 | 104.9 | — | — | — | |||||||||||||||
Income (loss) before taxes | 3.2 | — | -7.9 | 7.2 | -9.3 | |||||||||||||||
Net (loss) income | 2.1 | — | -5.0 | 10.7 | -8.6 | |||||||||||||||
Basic earnings (loss) per share (US$) | 0.03 | — | -0.08 | 0.13 | -0.11 | |||||||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||||||||||
Shareholders’ equity | 2.3 | — | -3.2 | 2.2 |
• | Gross presentation of syndicate transactions:Converium participates as a member of a number of syndicates operating in the Lloyd’s of London insurance market. Converium has in prior financial statements reported its participations in certain Lloyd’s syndicate premium and loss activity on a net basis. Subsequent accounting developments in the Lloyd’s market have led to the reporting of more detailed information to participants. Converium has corrected the previously reported amounts. | ||
• | Reinsurance to close:Syndicates at Lloyd’s are formed for a duration of one calendar year. Two years after the conclusion of that year the syndicate will typically transfer any remaining liabilities to a successor syndicate by way of payment of a portfolio premium, known as a reinsurance to close, “RITC”. In previously reported financial statements, Converium did not record the RITC in the correct reporting period; therefore, Converium has adjusted the recording of the RITC so that it is now reported in the proper period. | ||
• | Miscellaneous corrections:Corrections, which were originally concluded to be immaterial, arising on the accounting for the Lloyd’s participations were previously reported in the financial statements in the period they were identified. Through the Restatement, Converium is recording the adjustments made in previous periods in the proper period. |
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Increase (decrease) for the years ended December 31, | ||||||||
(US$ million) | 2004 | 2003 | ||||||
Selected consolidated statement of income accounts: | ||||||||
Gross premiums written | $ | 155.0 | $ | 104.9 | ||||
Net premiums written | 119.7 | 27.3 | ||||||
Net premiums earned | 119.7 | 27.3 | ||||||
Losses, loss expenses and life benefits | -34.8 | — | ||||||
Acquisition costs | -73.4 | -13.4 | ||||||
Income before taxes | 3.2 | — | ||||||
Increase (decrease) as of December 31, | ||||||||
(US$ million) | ||||||||
Selected consolidated balance sheet accounts: | ||||||||
Reinsurance assets, (including reserves for unearned premiums) | 83.3 | 47.1 | ||||||
Funds held by reinsureds | 94.5 | 42.1 | ||||||
Reinsurance liabilities, (including reserves for unearned premiums) | 118.1 | 47.1 | ||||||
Funds held under reinsurance contracts | 54.6 | 42.1 |
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• | premiums from our non-life and life reinsurance and insurance businesses; | |
• | investment income and investment gains from our portfolio of invested assets, net of investment expenses; and | |
• | interest on premium and loss deposits withheld by our clients. |
• | losses and loss expenses, which include: | |
• | non-life reinsurance and insurance losses and loss expenses; | |
• | death and other life reinsurance benefits; | |
• | operating and administration costs, which include: |
• | treaty and individual risk acquisition costs, commonly referred to as commissions; | ||
• | overhead costs, predominantly consisting of salaries and related costs; | ||
• | interest expenses; and | ||
• | income taxes. |
• | the quality of our underwriting and pricing; | |
• | the level of incurred losses and commissions; | |
• | the timing of loss and benefit payments; | |
• | our ability to earn appropriate yields on our investment portfolio; | |
• | our ability to manage operating and administration costs; and | |
• | our ability to efficiently and effectively manage risk, including retrocessions. |
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Total gross non-life loss | ||||||||||||
Case reserves | IBNR | reserves | ||||||||||
($ millions) | ($ millions) | ($ millions) | ||||||||||
Standard Property & Casualty | 1,565.7 | 1,944.2 | 3,509.9 | |||||||||
Specialty Lines | 2,343.7 | 2,692.4 | 5,036.1 | |||||||||
Life & Health Reinsurance | 80.0 | 282.3 | 362.3 | |||||||||
Total | 3,989.4 | 4,918.9 | 8,908.3 |
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Development of prior | ||||||||||||
Net loss reserves | years’ loss reserves | |||||||||||
beginning of year | during the year | Development on prior | ||||||||||
($ millions) | ($ millions) | years’ loss reserves (%) | ||||||||||
2000 | 2,841.4 | 165.0 | 5.9 | |||||||||
2001 | 3,611.8 | 167.8 | 4.6 | |||||||||
2002 | 4,543.1 | 201.1 | 4.4 | |||||||||
2003 | 5,791.2 | (63.5 | ) | (1.1 | ) | |||||||
2004 | 6,838.4 | 336.8 | 4.9 |
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Net Investment Income and Net Realized and Unrealized Capital Gains (Losses) | ||||||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||
Net | Realized | Net | Pre- | Realized | Realized | |||||||||||||||||||||||||||||||
Investment | Pre-tax | gains | Investment | tax | gains | Net Investment | Pre-tax | gains | ||||||||||||||||||||||||||||
Income | Yield | (losses) | Income | yield | (losses) | Income | yield | (losses) | ||||||||||||||||||||||||||||
($ millions, except percentages) | ||||||||||||||||||||||||||||||||||||
Fixed maturity securities | $ | 198.3 | 2.4 | % | $ | 5.7 | $ | 120.4 | 1.7 | % | $ | 34.5 | $ | 132.6 | 2.2 | % | $ | 88.0 | ||||||||||||||||||
Equity securities | 14.8 | 0.2 | 48.0 | 12.1 | 0.2 | (16.1 | ) | 13.4 | 0.2 | (101.2 | ) | |||||||||||||||||||||||||
Funds Withheld Asset /Zurich Financing Agreement | 75.1 | 0.9 | — | 85.6 | 1.2 | — | 81.9 | 1.4 | — | |||||||||||||||||||||||||||
Short-term and other | 37.7 | 0.5 | (7.2 | ) | 27.3 | 0.4 | — | 38.9 | 0.7 | 2.9 | ||||||||||||||||||||||||||
Less investment expenses | (13.2 | ) | — | (11.0 | ) | — | (15.0 | ) | — | |||||||||||||||||||||||||||
Total | 312.7 | 3.8 | 234.4 | 3.3 | 251.8 | 4.2 | ||||||||||||||||||||||||||||||
Net realized capital gains (losses) | 46.5 | 18.4 | -10.3 | |||||||||||||||||||||||||||||||||
Net investment income and net realized capital gains (losses) | 359.2 | 4.4 | 252.8 | 3.5 | 241.5 | 4.1 | ||||||||||||||||||||||||||||||
Change in net unrealized gains (losses) | (25.1 | ) | 154.2 | (109.0 | ) | |||||||||||||||||||||||||||||||
Total investment return | $ | 334.1 | 4.1 | % | $ | 407.0 | 5.7 | % | $ | 132.5 | 2.2 | % | ||||||||||||||||||||||||
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions) | ||||||||||||
Revenues: | ||||||||||||
Gross premiums written | $ | 3,978.7 | $ | 4,300.4 | $ | 3,372.4 | ||||||
Net premiums written | $ | 3,726.1 | $ | 3,922.7 | $ | 3,235.2 | ||||||
Net premiums earned | $ | 3,882.2 | $ | 3,767.8 | $ | 3,077.5 | ||||||
Net investment income | 312.7 | 234.4 | 251.8 | |||||||||
Net realized capital gains (losses) | 46.5 | 18.4 | (10.3 | ) | ||||||||
Other (loss) income | (8.2 | ) | 17.5 | 31.6 | ||||||||
Total revenues | 4,233.2 | 4,038.1 | 3,350.6 | |||||||||
Benefits, losses and expenses: | ||||||||||||
Losses, loss expenses and life benefits | (3,342.5 | ) | (2,760.1 | ) | (2,491.1 | ) | ||||||
Acquisition costs | (912.4 | ) | (832.0 | ) | (646.8 | ) | ||||||
Other operating and administration expenses | (219.8 | ) | (202.5 | ) | (178.4 | ) | ||||||
Interest expense | (33.1 | ) | (31.0 | ) | (16.4 | ) | ||||||
Impairment of goodwill | (94.0 | ) | — | — | ||||||||
Amortization of intangible assets | (9.9 | ) | (1.8 | ) | — | |||||||
Restructuring costs | (2.7 | ) | — | — | ||||||||
Total benefits, losses and expenses | (4,614.4 | ) | (3,827.4 | ) | (3,332.7 | ) | ||||||
(Loss) income before taxes | (381.2 | ) | 210.7 | 17.9 | ||||||||
Income tax (expense) benefit | (201.3 | ) | (32.8 | ) | 17.9 | |||||||
Net (loss) income | $ | (582.5 | ) | $ | 177.9 | $ | 35.8 |
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions) | ||||||||||||
Pre-Tax Operating (Loss) Income | ||||||||||||
(Loss) income before taxes | $ | (381.2 | ) | $ | 210.7 | $ | 17.9 | |||||
Net realized capital gains (losses) | 46.5 | 18.4 | (10.3 | ) | ||||||||
Impairment of goodwill | (94.0 | ) | — | — | ||||||||
Amortization of intangible assets | (9.9 | ) | (1.8 | ) | — | |||||||
Restructuring costs | (2.7 | ) | — | — | ||||||||
Pre-tax operating (loss) income | $ | (321.1 | ) | $ | 194.1 | $ | 28.2 | |||||
Net (loss) income | $ | (582.5 | ) | $ | 177.9 | $ | 35.8 |
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In late 2003, the Company entered into a Guaranteed Minimum Death Benefit (“GMDB”) Stop Loss Reinsurance Agreement (“the GMDB Contract”) with a third party which provided coverage of $75,000,000 in excess of reserves for losses arising out of GMDB reinsurance contracts bound or issued by the Company prior to January 1, 2003. The GMDB Contract was accounted for as if it had transferred sufficient risk to qualify for reinsurance accounting treatment. However, as a result of a related ceded property catastrophe contract with the same party, and a “master profit sharing agreement” with the same party linking both of the foregoing contracts, and certain other related transactions, the Company has now determined that the initial risk transfer analysis did not include evaluation of the entire arrangement between the parties and that there are transactions that involved other parties and payments to the third parties. The Company has now determined that at inception there was insufficient risk transfer such that the conditions for reinsurance accounting under SFAS 113 had not been met. Accordingly, the Company has corrected the accounting treatment of the GMDB Contract and the property catastrophe agreement from reinsurance to deposit accounting. Reinsurance accounting has been retained for that portion of the risk that was transferred to a separate third party.
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions) | ||||||||||||
Segment (loss) income: | ||||||||||||
Standard Property & Casualty Reinsurance | $ | 40.1 | $ | 187.8 | $ | 70.1 | ||||||
Specialty Lines | (252.1 | ) | 123.7 | (26.8 | ) | |||||||
Life & Health Reinsurance | 16.9 | (51.2 | ) | (10.3 | ) | |||||||
Corporate Center | (38.2 | ) | (34.3 | ) | (30.3 | ) | ||||||
Total segment (loss) income | (233.3 | ) | 226.0 | 2.7 | ||||||||
Other (loss) income | (8.2 | ) | 17.5 | 31.6 | ||||||||
Interest expense | (33.1 | ) | (31.0 | ) | (16.4 | ) | ||||||
Impairment of goodwill | (94.0 | ) | — | — | ||||||||
Amortization of intangible assets | (9.9 | ) | (1.8 | ) | — | |||||||
Restructuring costs | (2.7 | ) | — | — | ||||||||
(Loss) income before taxes | (381.2 | ) | 210.7 | 17.9 | ||||||||
Income tax (expense) benefit | (201.3 | ) | (32.8 | ) | 17.9 | |||||||
Net (loss) income | $ | (582.5 | ) | $ | 177.9 | $ | 35.8 |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions, except ratios) | ||||||||||||
Revenues: | ||||||||||||
Gross premiums written | $ | 3,532.7 | $ | 3,893.9 | $ | 3,029.2 | ||||||
Net premiums written | $ | 3,294.8 | $ | 3,542.5 | $ | 2,920.5 | ||||||
Net premiums earned | $ | 3,447.2 | $ | 3,383.7 | $ | 2,766.7 | ||||||
Net investment income and net realized capital gains (losses) | 329.2 | 235.3 | 223.4 | |||||||||
Total revenues | 3,776.4 | 3,619.0 | 2,990.1 | |||||||||
Losses and expenses: | ||||||||||||
Losses and loss expenses | (3,013.7 | ) | (2,405.7 | ) | (2,231.1 | ) | ||||||
Acquisition costs | (813.0 | ) | (752.0 | ) | (582.8 | ) | ||||||
Other operating and administration expenses | (161.7 | ) | (149.8 | ) | (132.9 | ) | ||||||
Total losses and expenses | (3,988.4 | ) | (3,307.5 | ) | (2,946.8 | ) | ||||||
Segment (loss) income | $ | (212.0 | ) | $ | 311.5 | $ | 43.3 | |||||
Ratios: |
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions, except ratios) | ||||||||||||
Loss ratio | 87.4 | % | 71.1 | % | 80.6 | % | ||||||
Underwriting expense ratio | 23.6 | % | 22.2 | % | 21.1 | % | ||||||
Administration expense ratio | 4.9 | % | 4.2 | % | 4.6 | % | ||||||
Combined ratio | 115.9 | % | 97.5 | % | 106.3 | % |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions, except ratios) | ||||||||||||
Revenues: | ||||||||||||
Gross premiums written | $ | 1,699.5 | $ | 1,820.4 | $ | 1,395.8 | ||||||
Net premiums written | $ | 1,557.9 | $ | 1,681.6 | $ | 1,335.6 | ||||||
Net premiums earned | $ | 1,652.8 | $ | 1,665.9 | $ | 1,282.3 | ||||||
Net investment income and net realized capital gains (losses) | 144.0 | 102.1 | 98.1 | |||||||||
Total revenues | 1,796.8 | 1,768.0 | 1,380.4 | |||||||||
Losses and expenses: | ||||||||||||
Losses and loss expenses | (1,268.7 | ) | (1,129.5 | ) | (968.9 | ) | ||||||
Acquisition costs | (411.8 | ) | (377.5 | ) | (280.3 | ) | ||||||
Other operating and administration expenses | (76.2 | ) | (73.2 | ) | (61.1 | ) | ||||||
Total losses and expenses | (1,756.7 | ) | (1,580.0 | ) | (1,310.3 | ) | ||||||
Segment income | $ | 40.1 | $ | 187.8 | $ | 70.1 | ||||||
Ratios: | ||||||||||||
Loss ratio | 76.8 | % | 67.8 | % | 75.6 | % | ||||||
Underwriting expense ratio | 24.9 | % | 22.7 | % | 21.9 | % | ||||||
Administration expense ratio | 4.9 | % | 4.4 | % | 4.6 | % | ||||||
Combined ratio | 106.6 | % | 94.9 | % | 102.1 | % |
• | Premium volume was impacted by clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $57.6 million in the second half of 2004. In addition to the reductions triggered by special termination clauses, the decrease of the Standard Property & Casualty Reinsurance segment’s net premium written was further affected by adjustments of ultimate premium estimates in the amount of $120.1 million resulting from a change in estimate due to the implementation of enhanced procedures for establishing written premium estimates throughout 2004, as well as additional expenses of $18.8 million for catastrophe protection. | |
• | Hurricanes in the US and the Caribbean, the Japanese typhoons and the tsunami in the Indian Ocean impacted results negatively by $154.5 million (incl.$3.7 million for the section Specialty). | |
• | The development of prior years’ reserves of $95.8 million primarily related to adverse developments of General Third Party Liability ($109.3 million), motor liability outside the United States ($91.7 million) and Personal Accident (assumed from non-life insurers) ($8.1 million), and was partially offset by positive developments related to Property ($82.1 million) and miscellaneous liability ($31.2 million) which also included the impact of whole account retrocessions. | |
• | Slightly offsetting the results for 2004 was the increase in investment results due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risk during 2004. |
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• | Property, which decreased by 24.4% or $193.3 million to $600.2 million, due to cedents in North America exercising special termination clauses as well as a restructuring of a specific treaty; and | |
• | Personal accident (non-life), which decreased by 2.3% or $0.8 million to $34.5 million. |
• | Motor, which increased by 1.0% or $4.7 million to $493.5 million, due to growth in Western Europe despite cedents in North America exercising special termination clauses, as well as a decrease in net premiums written in North America due to the ratings agencies’ actions; and | |
• | General Third Party Liability, which increased by 18.0% or $65.7 million to $429.7 million. |
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• | The non-life loss ratio improved by 7.8 percentage points for the year ended December 31, 2003, versus the same period in 2002. This improvement resulted from overall solid results in the Property line of business, as 2003 was absent any major catastrophe activity. | |
• | The investment results and return for 2003 were positively impacted by the recovery of the global capital markets. |
• | Property, increased by 22.8% or $147.5 million to $793.5million; | |
• | Motor, increased by 38.3% or $135.3 million to $488.8 million; and | |
• | General Third Party Liability, increased by 20.8% or $62.7 million to $364.0 million. |
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions, except ratios) | ||||||||||||
Revenues: | ||||||||||||
Gross premiums written | $ | 1,833.2 | $ | 2,073.5 | $ | 1,633.4 | ||||||
Net premiums written | $ | 1,736.9 | $ | 1,860.8 | $ | 1,584.9 | ||||||
Net premiums earned | $ | 1,794.4 | $ | 1,717.8 | $ | 1,484.4 | ||||||
Net investment income and net realized capital gains (losses) | 185.2 | 133.2 | 125.3 | |||||||||
Total revenues | 1,979.6 | 1,851.0 | 1,609.7 | |||||||||
Losses and expenses: | ||||||||||||
Losses and loss expenses | (1,745.0 | ) | (1,276.2 | ) | (1,262.2 | ) | ||||||
Acquisition costs | (401.2 | ) | (374.5 | ) | (302.5 | ) | ||||||
Other operating and administration expenses | (85.5 | ) | (76.6 | ) | (71.8 | ) | ||||||
Total losses and expenses | (2,231.7 | ) | (1,727.3 | ) | (1,636.5 | ) | ||||||
Segment (loss) income | $ | (252.1 | ) | $ | 123.7 | $ | (26.8 | ) | ||||
Ratios: | ||||||||||||
Loss ratio | 97.2 | % | 74.3 | % | 85.0 | % | ||||||
Underwriting expense ratio | 22.4 | % | 21.8 | % | 20.4 | % | ||||||
Administration expense ratio | 4.9 | % | 4.1 | % | 4.5 | % | ||||||
Combined ratio | 124.5 | % | 100.2 | % | 109.9 | % |
• | Premium volume was impacted by clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $50.5 million in the second half of 2004. In addition to the reductions triggered by special termination clauses, the decrease of the Specialty Lines segment’s net premium written was further affected by adjustments of ultimate premium estimates, net of expenses, in the amount of $101.0 million resulting from a change in estimate due to the implementation of enhanced procedures for establishing written premium estimates throughout 2004. | |
• | The development of prior years’ reserves of $469.9 million primarily related to adverse developments of the Professional Liability and other Special Liability lines ($430.7 million), particularly excess & surplus lines and umbrella, Workers’ Compensation ($55.4 million) and Engineering ($12.9 million). These adverse developments in the Specialty Lines were partially offset by positive developments related to Aviation & Space ($24.5 million), Agribusiness ($0.7 million) and Credit & Surety ($3.8 million). | |
• | Slightly offsetting the results for 2004 was the increase in investment results due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risks during 2004. |
• | Workers’ Compensation, which decreased by 27.1% or $84.4 million to $226.5 million, due to the result of lower premium accruals in |
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2004 related to the 2003 underwriting year based on revised estimated premiums received from a large cedent who reports on a lag, as well as a decrease in run-off premiums from older underwriting years. In addition, there was a reduction of participation on premiums written through the involuntary market with one of our ceding companies; | ||
• | Credit & Surety, which decreased by 29.2% or $69.8 million to $169.6 million, due to cedents in North America exercising special termination clauses, as well as a decrease in net premiums written due to the ratings agencies’ actions; and | |
• | Professional Liability and other Special Liability, which decreased by 5.1% or $32.7 million to $611.0 million, due to cedents in North America exercising special termination clauses, as well as a decrease in net premiums written due to the ratings agencies’ actions. |
• | The non-life loss ratio improved by 10.7 percentage points for the year ended December 31, 2003, versus the same period in 2002. This was primarily attributable to an improved loss ratio for the Aviation & Space line of business of 28.4 percentage points, which was due to the absence of any major losses in 2003. |
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• | The investment results and return for 2003 were positively impacted by the recovery of the global capital markets. |
• | Professional Liability and other Special Liability, which increased by 13.4% or $76.3 million to $643.7 million, as a result of the improving directors and officers market in the United States and new business written in North America and sourced through the London broker market; | |
• | Workers’ Compensation, which increased by 40.9% or $90.3 million to $310.9 million, as a result of the renewal of a large program in 2003; | |
• | Credit & Surety, which increased by 20.2% or $40.2 million to $239.4 million; and | |
• | Agribusiness, which increased by 309.1% or $68.0 million to $90.0 million, reflecting the hardening market that resulted from the exit of several insurers and reinsurers in mid-to-late 2002. |
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Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(Restated) | (Restated) | (Restated) | ||||||||||
($ millions, except ratios) | ||||||||||||
Revenues: | ||||||||||||
Gross premiums written | $ | 446.0 | $ | 406.5 | $ | 343.2 | ||||||
Net premiums written | $ | 431.3 | $ | 380.3 | $ | 314.7 | ||||||
Net premiums earned | $ | 435.0 | $ | 384.1 | $ | 310.8 | ||||||
Net investment income and net realized capital gains (losses) | 30.0 | 17.5 | 18.1 | |||||||||
Total revenues | 465.0 | 401.6 | 328.9 | |||||||||
Losses and expenses: | ||||||||||||
Losses, loss expenses and life benefits | (328.8 | ) | (354.4 | ) | (260.0 | ) | ||||||
Acquisition costs | (99.4 | ) | (80.0 | ) | (64.0 | ) | ||||||
Other operating and administration expenses | (19.9 | ) | (18.4 | ) | (15.2 | ) | ||||||
Total benefits, losses and expenses | (448.1 | ) | (452.8 | ) | (339.2 | ) | ||||||
Segment income (loss) | $ | 16.9 | $ | (51.2 | ) | $ | (10.3 | ) | ||||
Ratios: | ||||||||||||
Underwriting expense ratio | 22.9 | % | 20.8 | % | 20.6 | % | ||||||
Administration expense ratio | 4.6 | % | 4.8 | % | 4.8 | % |
• | Strong growth in premium volume driven by the expansion of existing reinsurance transactions in Continental Europe and increased shares of current business, which was slightly offset by a decline in premiums due to commutations in the Accident and Health line of business.•The termination of the Life & Health Reinsurance segment’s Master Retrocession Agreement for its financing contracts, resulting in a repayment of the non-amortized financing of $36.9 million. The provisions for this termination led to a realization of a profit of $3.4 million in 2004. | |
• | The termination of the Life & Health Reinsurance segment’s Master Retrocession Agreement for its financing contracts, resulting in a repayment of the non-amortized financing of $36.9 million. The provisions for this termination led to a realization of a profit of $3.4 million in 2004. | |
• | The development of our GMDB book during 2004 as compared to 2003. In 2003 net reserves were strengthened by $55.5 million, while no actions were required in 2004. As a result of the strong performance of the US stock markets, the GMDB’s net amount at risk further decreased to $635.5 million at December 31, 2004 from $809.7 million at December 31, 2003. | |
In late 2003, the Company entered into a Guaranteed Minimum Death Benefit (“GMDB”) Stop Loss Reinsurance Agreement (“the GMDB Contract”) with a third party which provided coverage of $75,000,000 in excess of reserves for losses arising out of GMDB reinsurance contracts bound or issued by the Company prior to January 1, 2003. The GMDB Contract was accounted for as if it had transferred sufficient risk to qualify for reinsurance accounting treatment. However, as a result of a related ceded property catastrophe contract with the same party, and a “master profit sharing agreement” with the same party linking both of the foregoing contracts, and certain other related transactions, the Company has now determined that the initial risk transfer analysis did not include evaluation of the entire arrangement between the parties and that there are transactions that involved other parties and payments to the third parties. The Company has now determined that at inception there was insufficient risk transfer such that the conditions for reinsurance accounting under SFAS 113 had not been met. Accordingly, the Company has corrected the accounting treatment of the GMDB Contract and the property catastrophe agreement from reinsurance to deposit accounting. Reinsurance accounting has been retained for that portion of the risk that was transferred to a separate third party. |
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The Company entered into a Combined Excess of Loss Reinsurance Agreement (the “CEL Agreement”) with another third party, effective October 1, 2001 for a three-month period and subsequently renewed the CEL Agreement for calendar years 2002, 2003 and 2004, respectively. In 2003, coverage for GMDB liability was added to the CEL Agreement. Based upon evidence from the internal review, the Company determined that the initial risk transfer analysis did not include evaluation of the entire arrangement between the parties and that there is a likelihood that a side agreement was consummated. The Company has now determined that at inception there was insufficient risk transfer such that the conditions for reinsurance accounting under SFAS 113 had not been met. Accordingly, the Company has corrected the accounting treatment for these transactions from reinsurance to deposit accounting. For the year ended December 31, 2003, this resulted in a charge to income (loss) before taxes of approximately $35.0 million. | ||
• | The increase was offset by a reduction in premium volume due to clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $6.4 million in the second half of 2004. |
• | Life and Disability reinsurance, which increased by 35.8% or $61.9 million to $234.8 million, which grew due to the expansion of existing financing reinsurance transactions in Continental Europe and increased shares of current business. |
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• | Accident and Health, which increased by 29.6% or $47.4 million to $207.4 million. This growth primarily resulted from the further development of this line of business, which Converium began to underwrite in North America in 2001, as well as growth of business written in Continental Europe. |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
($ millions) | ||||||||||||
Other operating and administration expenses | $ | (38.2 | ) | $ | (34.3 | ) | $ | (30.3 | ) | |||
Segment loss | $ | (38.2 | ) | $ | (34.3 | ) | $ | (30.3 | ) |
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Restated) | (Restated) | (Restated) | |||||||||||
($ millions) | |||||||||||||
Cash Flows | |||||||||||||
Cash flow data: | |||||||||||||
Cash provided by operating activities | $ | 358.7 | $ | 917.2 | $ | 868.6 | |||||||
Net cash used in investing activities | (315.4 | ) | (1,314.2 | ) | (1,110.2 | ) | |||||||
Net cash provided by financing activities | 347.8 | 252.9 | 189.5 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 9.0 | 23.7 | (16.9 | ) | |||||||||
Change in cash and cash equivalents | 400.1 | 120.4 | 69.0 | ||||||||||
Cash and cash equivalents, beginning of period | 280.8 | 401.2 | 470.2 | ||||||||||
Cash and cash equivalents, end of period | $ | 680.9 | $ | 280.8 | $ | 401.2 |
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Contractual Obligations | Payment due by period | |||||||||||||||||||
Less than 1 | More than | |||||||||||||||||||
($ thousands) | Total | year | 1-3 years | 3-5 years | 5 years | |||||||||||||||
Long-Term Debt Obligations - - Principal | $ | 400,000 | — | — | — | $ | 400,000 | |||||||||||||
Long-Term Debt Obligations - - Interest | 732,750 | 30,750 | 61,500 | 61,500 | 579,000 | |||||||||||||||
Operating Lease Obligations | 85,600 | 13,300 | 26,500 | 24,900 | 20,900 | |||||||||||||||
Losses and loss expenses, gross (1) | 8,908,300 | 2,077,814 | 2,666,051 | 1,435,101 | 2,729,333 | |||||||||||||||
Total | $ | 10,126,650 | $ | 2,121,864 | $ | 2,754,051 | $ | 1,521,501 | $ | 3,729,233 |
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(1) | The Company’s unpaid losses and loss expenses represent management’s best estimate of the cost to settle the ultimate liabilities based on information available as of December 31, 2004 and are not fixed amounts payable pursuant to contractual commitments. The timing and amounts of actual claims payments related to these reserves might vary significantly based on many factors including large individual losses as well as general market conditions. |
Name | Date of Birth | Nationality | Term Expires in | |||||
Peter C. Colombo (Chairman)(1)(2)(4) | June 15, 1934 | Swiss | 2007 | |||||
Georg Mehl (Vice-Chairman)(1)(2)(4) | August 11, 1939 | German | 2006 | |||||
Terry G. Clarke (1)(2)(3)(5) | October 31, 1941 | British | 2007 | |||||
Derrell J. Hendrix (3) | August 9, 1953 | American | 2007 | |||||
George G. C. Parker (3)(4) | March 29, 1939 | American | 2006 | |||||
Anton K. Schnyder (1)(2) | November 29, 1952 | Swiss | 2006 | |||||
Markus Dennler (6) | January 24, 1956 | Swiss | 2008 | |||||
Rudolf Kellenberger (6) | April 30, 1945 | Swiss | 2008 |
(1) | Member of the Nomination Committee |
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(2) | Member of the Remuneration Committee | |
(3) | Member of the Finance Committee | |
(4) | Member of the Audit Committee | |
(5) | In connection with his appointment as Chief Executive Officer in February 2005, Mr. Clarke has resigned from all committees of the Board. | |
(6) | Member elected to the Board of Directors at the Company’s Annual General Meeting on April 12, 2005 in Zug, Switzerland, for a three-year term of office. |
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Name | Date of Birth | Nationality | Position Held | |||
Inga K. Beale (1) | May 15,1963 | British | Chief Executive Officer | |||
Terry G. Clarke (2) | October 31, 1941 | British | Chief Executive Officer | |||
Dirk Lohmann (2) | November 8, 1958 | German | Chief Executive Officer | |||
Frank Schaar | April 16, 1960 | German | Executive Vice President for Standard Property & Casualty Reinsurance | |||
Benjamin Gentsch | April 21, 1960 | Swiss | Executive Vice President for Specialty Lines | |||
Christoph Ludemann | January 12, 1956 | German | Executive Vice President for Life & Health Reinsurance | |||
Hans Peter Boller | October 25, 1962 | German | Chief Risk Officer | |||
Andreas Zdrenyk (3) | June 5, 1959 | Swiss | Interim Chief Financial Officer | |||
Martin Kauer | January 20, 1959 | Swiss | Chief Financial Officer | |||
Christian Felderer | January 5, 1954 | Swiss | General Legal Counsel |
(1) | Appointed Chief Executive Officer of the Company as of February 1, 2006. | |
(2) | On February 23, 2005, the Board of Directors appointed Terry G. Clarke as Chief Executive Officer and replaced Dirk Lohmann with immediate effect. | |
(3) | Appointed interim Chief Financial Officer of the Company as of February 28, 2005. |
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• | $3,224 for membership of a second Committee | |
• | $2,418 for membership of a third and any subsequent Committee and additionally, | |
• | $4,030 if the member holds one or more chairmanships in the Committees. |
Shares | Shares held at | Options | Options held | |||||||||||||||||
Cash | allocated in | December 31, | allocated in | at December | ||||||||||||||||
Board Member | Compensation | 2004 | 2004 (1) | 2004 (2) | 31, 2004 (3) | |||||||||||||||
Peter C. Colombo | $ | 130,556 | 641 | 3,495 | 2,172 | 6,375 | ||||||||||||||
Georg Mehl | 110,408 | 534 | 2,158 | 1,810 | 5,172 | |||||||||||||||
Terry G. Clarke(4) | 128,944 | 427 | 1,563 | 1,448 | 3,993 | |||||||||||||||
Jürgen Förterer(5) | 75,698 | 1,698 | 2,834 | 1,448 | — | |||||||||||||||
Derrell J. Hendrix | 80,590 | 427 | 427 | 1,448 | 4,249 | |||||||||||||||
George G.C. Parker | 87,843 | 427 | 727 | (6) | 1,448 | 4,249 | ||||||||||||||
Anton K. Schnyder | 83,814 | 427 | 427 | 1,448 | 4,249 |
(1) | Includes shares personally bought. | |
(2) | Options vest immediately, have a term of 10.5 years and an exercise price to equal fair market value at the beginning of the period for which they were granted. | |
(3) | An adjustment to the exercise price of all options outstanding prior to the 2004 rights offering will be made in early 2005 in order to account for the dilution of the value of the options as a result of the 2004 rights offering. The reduction in exercise price maintains the same Black-Scholes value of the option before and after the 2004 rights offering and does not reflect any other decrease in the share price. | |
(4) | Includes $38,683 for additional professional services as a Board member and does not include Mr Clarke’s compensation as Managing Director of £50,000 per month plus reimbursement of customary expenses. | |
(5) | Resigned as Board member as of September 21, 2004 and includes pro rata equity compensation for the office term 2004/2005. Options held by Mr Förterer expired on December 29, 2004 due to this resignation. | |
(6) | 427 shares and 600 ADSs. |
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Options vested of | ||||||||||||||||||||
Shares held at | Options held at | options held at | ||||||||||||||||||
Global Executive | Shares granted | December 31, | Options granted | December 31, | December 31, | |||||||||||||||
Committee member | in 2004 (1) | 2004 (2) | in 2004 (3) | 2004 | 2004 | |||||||||||||||
Dirk Lohmann | 96,566 | 105,994 | 176,688 | 432,755 | 263,949 | |||||||||||||||
Frank Schaar | 27,176 | 10,049 | 53,617 | 129,998 | 80,170 | |||||||||||||||
Benjamin Gentsch | 28,610 | 36,006 | 53,239 | 99,672 | 50,032 | |||||||||||||||
Martin Kauer | 25,104 | — | 56,537 | 138,196 | 84,416 | |||||||||||||||
Gary Prestia(4) | 3,903 | — | 9,103 | — | — | |||||||||||||||
Hans Peter Boller | 21,361 | 14,051 | 42,402 | 79,161 | 41,322 | |||||||||||||||
Christian Felderer | 16,014 | 4,024 | 32,980 | 45,328 | 15,790 | |||||||||||||||
Christoph Ludemann | 19,086 | 2,683 | 41,932 | 46,981 | 13,005 |
(1) | Shares granted in 2004 include shares awarded under the AIP and LTIP, which are subjected to various vesting schedules, and shares purchased through the employee stock purchase plan. | |
(2) | Includes only vested shares (includes shares held by closely linked parties). A majority of shares granted in 2004 vest ratably over three years. Thus certain shares granted in 2004 or prior are not indicated to be held by Global Executive Committee members at December 31, 2004. | |
(3) | Options have an exercise price equal to the market value of the shares or ADSs on date of grant, vest 25% immediately on the grant date and 25% each year thereafter, and have a 10.5-year term. | |
(4) | Resigned on September 16, 2004. |
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• | to evaluate the reliability and controls of the financial and risk reporting systems processes and to provide reasonable assurance that material errors and irregularities will be detected on a timely basis; | |
• | to evaluate the integrity of financial information; | |
• | to evaluate compliance with policies, plans, procedures, regulations, laws and contracts; | |
• | to safeguard Converium’s assets; | |
• | to evaluate and promote efficient use of resources; and | |
• | to coordinate and manage, on behalf of the Audit Committee, the relationships with the public accounting firms working for Converium. |
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As of May 31, | As of December 31, | |||||||||||||||
2005* | 2004 | 2003 | 2002 | |||||||||||||
Number of employees | 676 | 771 | 847 | 813 | ||||||||||||
Breakdown by geographic location | ||||||||||||||||
Switzerland | 331 | 369 | 332 | 274 | ||||||||||||
United States | 105 | 138 | 231 | 237 | ||||||||||||
Germany | 165 | 169 | 160 | 148 | ||||||||||||
Asia-Pacific region | 29 | 33 | 31 | 29 | ||||||||||||
Other regions | 46 | 62 | 59 | 52 | ||||||||||||
Breakdown by main category of activity | ||||||||||||||||
Underwriting | 215 | 257 | 290 | 274 | ||||||||||||
Finance | 180 | 212 | 200 | 176 | ||||||||||||
Actuarial | 64 | 67 | 77 | 69 | ||||||||||||
Other | 217 | 235 | 246 | 221 |
* | As a result of ratings downgrades and the placement of CRNA into orderly run-off, during 2005 we are in the process of downsizing our organization to adjust our cost base to the reduced volume of business. The reduction in headcount is reflected above. |
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• | Odey Asset Management LLP, London, United Kingdom: 11.2% (date of notification March 4, 2005). Odey Asset Management LLP acts as the investment manager for several funds. | |
• | Dodge & Cox, San Francisco, California, United States: 5.04% (date of notification June 22, 2005). Dodge & Cox provides investment management to institutions and individuals through separately managed portfolios and mutual funds. |
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High | Low | |||||||
CHF | CHF | |||||||
Calendar Year 2001 (from December 11, 2001) | 82.10 | 79.00 | ||||||
Calendar Year 2002 | 89.75 | 54.85 | ||||||
Calendar Year 2003 | 74.50 | 49.60 | ||||||
First Quarter | 69.85 | 49.60 | ||||||
Second Quarter | 74.50 | 55.45 | ||||||
Third Quarter | 67.00 | 59.10 | ||||||
Fourth Quarter | 69.10 | 60.05 | ||||||
Calendar Year 2004 (1) | 73.75 | 7.42 | ||||||
First Quarter | 73.75 | 60.25 | ||||||
Second Quarter | 68.95 | 60.50 | ||||||
Third Quarter | 65.05 | 16.25 | ||||||
Fourth Quarter (1) | 17.05 | 7.42 | ||||||
Calendar Year 2005 (until May 31, 2005) | 12.50 | 9.00 | ||||||
First Quarter | 12.20 | 10.05 | ||||||
Last 6 Months | ||||||||
December 2004 | 10.90 | 9.77 | ||||||
January 2005 | 11.50 | 10.05 | ||||||
February 2005 | 12.20 | 10.60 | ||||||
March 2005 | 12.00 | 10.20 | ||||||
April 2005 | 12.50 | 10.30 | ||||||
May 2005 | 10.90 | 9.00 |
(1) | Includes the effect of the 2004 rights offering. |
High | Low | |||||||
$ | $ | |||||||
Calendar Year 2001 (from December 11, 2001) | 27.40 | 23.02 | ||||||
Calendar Year 2002 | 28.52 | 18.30 | ||||||
First Quarter | 26.50 | 21.77 | ||||||
Second Quarter | 28.52 | 24.25 | ||||||
Third Quarter | 26.05 | 18.96 | ||||||
Fourth Quarter | 24.10 | 18.30 | ||||||
Calendar Year 2003 | 26.63 | 19.15 | ||||||
First Quarter | 25.15 | 19.15 | ||||||
Second Quarter | 26.42 | 20.52 | ||||||
Third Quarter | 24.20 | 21.55 | ||||||
Fourth Quarter | 26.63 | 22.77 | ||||||
Calendar Year 2004 | 29.57 | 3.15 | ||||||
First Quarter | 29.57 | 23.55 |
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High | Low | |||||||
$ | $ | |||||||
Second Quarter | 26.80 | 23.70 | ||||||
Third Quarter | 26.04 | 6.76 | ||||||
Fourth Quarter | 6.85 | 3.15 | ||||||
Calendar Year 2005 (until May 31, 2005) | 5.20 | 3.59 | ||||||
First Quarter | 5.18 | 4.44 | ||||||
Last 6 Months | ||||||||
December 2004 | 4.87 | 4.29 | ||||||
January 2005 | 5.06 | 4.44 | ||||||
February 2005 | 5.08 | 4.50 | ||||||
March 2005 | 5.18 | 4.50 | ||||||
April 2005 | 5.20 | 4.37 | ||||||
May 2005 | 4.59 | 3.59 |
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• | an alteration of the purpose of Converium | |
• | the creation of super-voting shares | |
• | restrictions on the transfer of registered shares and the removal of such restrictions as well as restrictions to vote and the removal of such restrictions | |
• | an authorized or contingent increase of share capital | |
• | an increase of share capital by conversion of capital surplus, by contribution in kind or for the purpose of an acquisition of assets and the grant of special rights | |
• | a restriction or exclusion of the subscription right or advance subscription right | |
• | a change of Converium’s registered office | |
• | the dissolution of Converium without liquidation |
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• | the separation of substantially all of the third party reinsurance business from the businesses of Zurich Financial Services; and | |
• | the consolidation of this business under Converium Holding AG. |
• | to execute the agreements, and to cooperate and act in accordance with the arrangements described below; and | |
• | not to, except for certain specified exceptions, disclose confidential information of the other party or an entity of such party’s group which is not known to third parties but which is known by the parties due to the fact that the parties were previously part of the same group of companies or as a result of the Formation Transactions contemplated by the Master Agreement. |
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• | liabilities assumed by or transferred to us in the separation; | |
• | liabilities incurred by Zurich Financial Services or its affiliates (other than us) while carrying on business on our behalf pursuant to the terms of agreements entered into in connection with the Formation Transactions before and after the dates of the separation of US and non-US business from Zurich Financial Services; | |
• | liabilities incurred by us on our own behalf at any time, which are deemed to be or become a liability of Zurich Financial Services or any of its affiliates (other than us); and | |
• | losses suffered by Zurich Financial Services or any of its affiliates (other than us) that relate to any reasonable action to avoid, resist or defend against liabilities assumed by or indemnified against by us. |
• | liabilities retained by Zurich Financial Services and its affiliates and not assumed by or transferred to us in the separation; | |
• | liabilities arising out of or relating to the assets not assumed by or transferred to us in the separation; | |
• | liabilities arising out of specified contracts we have not assumed pursuant to the terms of the Quota Share Retrocession Agreement; and | |
• | losses suffered by us or any of our affiliates that relate to any reasonable action to avoid, resist or defend against liabilities not relating to our business. |
• | ZRCH, in respect of the US Converium entities, which we refer to as the “US Tax Sharing Agreement;” and | |
• | Zurich Financial Services in respect of the non-US Converium entities, which we refer to as the “Non-US Tax Sharing Agreement”. |
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• | CRNA’s coverage for net losses of $320.4 million with respect to all Amerisafe business retroceded to the Unicover Pool remains in effect, with ZIC as counterparty; | |
• | CRNA’s coverage for net losses of $307.5 million from the September 11th terrorist attacks that exceed $58.2 million remains in effect, with ZIC as counterparty; and | |
• | the remainder of the coverage under the agreement is commuted. |
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Washington DC 20549, USA
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Adverse exchange rate movement | Approximate decline in | |||||
against the US dollar(1) | shareholders’ equity | |||||
Euro | 10 | % | $63.6 million | |||
Swiss franc | 10 | % | $45.7 million | |||
UK pound | 10 | % | $10.0 million |
(1) | A weakening of the respective currency against the US dollar . |
US | U.K | Swiss | Japanese | |||||||||||||||||||||||||
Dollar | Euro | Pound | franc | yen | Other | Total | ||||||||||||||||||||||
Income statement | ||||||||||||||||||||||||||||
Net premiums written | 43 | % | 24 | % | 19 | % | 1 | % | 2 | % | 11 | % | 100 | % | ||||||||||||||
Net investment income | 57 | % | 14 | % | 24 | % | 2 | % | — | 3 | % | 100 | % | |||||||||||||||
Losses, loss expenses and life benefits | 57 | % | 20 | % | 14 | % | 2 | % | — | 7 | % | 100 | % | |||||||||||||||
Acquisition costs | 43 | % | 24 | % | 19 | % | 1 | % | 2 | % | 11 | % | 100 | % | ||||||||||||||
Other operating and administration expenses | 30 | % | 17 | % | 4 | % | 47 | % | — | 2 | % | 100 | % | |||||||||||||||
Interest expense | 93 | % | 5 | % | 2 | % | — | — | — | 100 | % | |||||||||||||||||
Balance sheet | ||||||||||||||||||||||||||||
Total invested assets | 58 | % | 17 | % | 18 | % | 4 | % | — | 3 | % | 100 | % | |||||||||||||||
Reinsurance assets | 80 | % | 9 | % | 10 | % | — | — | 1 | % | 100 | % | ||||||||||||||||
Losses and loss expenses, gross | 56 | % | 18 | % | 19 | % | 1 | % | 1 | % | 5 | % | 100 | % | ||||||||||||||
Unearned premiums, gross | 49 | % | 16 | % | 26 | % | 1 | % | 1 | % | 7 | % | 100 | % | ||||||||||||||
Future life benefits, gross | 39 | % | 60 | % | 1 | % | — | — | — | 100 | % | |||||||||||||||||
Debt | 100 | % | — | — | — | — | — | 100 | % |
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% | ||||||||||||
($ thousands) | 2004 | Approved (1) | 2003 | |||||||||
Audit Fees | $ | 4,741 | 100 | % | $ | 2,296 | ||||||
Audit-Related Fees | 1,060 | 100 | % | 374 | ||||||||
Tax Fees | 189 | 100 | % | 161 | ||||||||
All Other Fees | 145 | 100 | % | 7 | ||||||||
Total fees | $ | 6,135 | 100 | % | $ | 2,838 |
(1) | Represents percentage of fees approved by the Audit Committee. |
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Exhibit Number | Description | |
1.1 | Articles of Incorporation of Converium Holding AG, adopted November 8, 2001.* | |
1.2 | Bylaws of Converium Holding AG, adopted November 16, 2001.* | |
1.3 | Articles of Incorporation of Converium Holding AG, revised October 12, 2004.\ | |
1.4 | Bylaws of Converium Holding AG, revised April 11, 2005.\ | |
2.1 | Form of Deposit Agreement among Converium Holding AG, The Bank of New York, as Depositary, and all owners and beneficial owners from time to time of ADSs issued thereunder (including the form of ADS), incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.* | |
2.2 | Indenture, dated as of October 20, 1993 between Zurich Reinsurance Centre Holdings, Inc. and The Bank of New York, as Trustee, relating to $200,000,000 principal amount of 7 1/8% Senior Notes due 2023 (and assumed by Converium Holdings (North America) Inc. pursuant to the Supplement Indenture included as Exhibit 2.3 hereto).* (Previously filed as Exhibit 3.1) | |
2.3 | First Supplemental Indenture among Zurich Reinsurance Centre Holdings, Inc., as Issuer, Converium Holdings (North America) Inc., as Guarantor, and The Bank of New York, as Trustee, dated as of November 20, 2001.* (Previously filed as Exhibit 3.2) | |
2.4 | Form of Indenture between Converium Finance, S.A., as Issuer, Converium AG and Converium Holding AG as Guarantors and JPMorgan Chase Bank as Trustee, Calculation Agent and Paying Agent.+ | |
2.5 | Form of the $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032 (included in Exhibit 2.4 hereto).+ | |
2.6 | Subordinated Guarantee by Converium Holding AG and Converium AG relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^ | |
2.7 | Indenture, dated December 23, 2002 between Converium Finance S.A., Converium Holding AG, Converium AG and JP Morgan Chase Bank, as trustee, relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^ | |
4.1 | Master Agreement by and among Zurich Financial Services and Converium Holding AG, dated December 1, 2001.* | |
4.2 | Stock Purchase Agreement between Zurich Reinsurance Centre Stock Purchase Agreement between Zurich Reinsurance Centre Holdings, Inc. and Converium Holdings (North America) Inc., dated as of October 1, 2001.* | |
4.3 | Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln) Aktiengesellschaft, dated September 28, 2001.* | |
4.4 | Quota Share Retrocession Agreement between Zurich Insurance Company (including its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1, 2001.* | |
4.5 | Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd. and Converium AG, dated October 1, (and effective as of July 1, 2001).* | |
4.6 | Asset purchase and Assumption of Liability Agreement between Zurich Insurance Company and Converium AG, dated September 28, 2001.* | |
4.7 | Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.8 | Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.9 | Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung (Köln) Aktiengesellschaft and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.10 | Partial Commutation Agreement between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* |
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Exhibit Number | Description | |
4.11 | Master Novation and Indemnity Reinsurance Agreement among Zurich Reinsurance (North America), Inc., Centre Insurance Company, Centre Solutions (U.S.) Limited and Zurich Insurance Company, Bermuda Branch, dated as of October 1, 2001.* | |
4.12 | Group Reinsurance Business Master Novation and Indemnity Reinsurance Agreement by and among Zurich Reinsurance (North America), Inc., Zurich Insurance Company and Zurich International (Bermuda) Ltd., dated as of October 1, 2001.* | |
4.13 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1991 through December 31, 1993) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.14 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1994 through December 31, 1994) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.* | |
4.15 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.16 | Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective October 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.17 | Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective November 6, 1992) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.* | |
4.18 | Agreement Amending and Terminating Centre Reinsurance Dublin Affiliated Group Tax Allocation Agreement among Orange Stone Delaware Holdings Limited, Orange Stone Reinsurance, Centre Reinsurance Holdings (Delaware) Limited, Centre Reinsurance (U.S.) Limited, Zurich Reinsurance Centre Holdings, Inc., Zurich Reinsurance (North America), Inc., ZC Insurance Company, ZC Specialty Insurance Company, Centre Risk Advisors, Inc., Constellation Reinsurance Company, Centre Re Services, Inc., Zurich Global Assets LLC, formerly known as BDA/US Services Limited, ZC Management Corporation, ZC Resource LLC, ZC Property Management, Inc. and Claims Solutions Group, dated October 1, 2001.* | |
4.19 | Catastrophe Cover Retrocession Agreement by and between Converium AG and Zurich Insurance Company, dated December 1, 2001.* | |
4.20 | Stock Purchase Agreement between Zurich Reinsurance (North America), Inc. and Centre Strategic Investments Holdings Limited, dated August 23, 2001.* | |
4.21 | Run-off Services and Management Agreement between Zurich Insurance Company and Converium AG, dated December 3, 2001.* | |
4.22 | Tax Sharing and Indemnification Agreement among Zurich Reinsurance Centre Holdings, Inc., Orange Stone Delaware Holdings Limited, Converium Holdings (North America) Inc., Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001. * | |
4.23 | Tax Sharing and Indemnification Agreement between Zurich Financial Services, Zurich Insurance Company, Converium Holding AG and Converium AG dated December 3, 2001. * | |
4.24 | Form of Converium Standard Stock Option Plan for Non-US Employees. * | |
4.25 | Form of Converium Standard Stock Purchase Plan for Non-US Employees. * | |
4.26 | Omnibus Share Plan for US Employees. * | |
4.27 | Converium Employee Stock Purchase Plan for US Subsidiaries.* | |
4.28 | Form of Converium Annual Incentive Deferral Plan.* | |
4.29 | Lease, between Zurich Insurance Company and Converium AG, dated August 29, 2001.* | |
4.30 | Sublease Support Agreement among Zurich Reinsurance (North America), Inc., Global Asset Holdings Limited and Centre Insurance Company, dated as of October 1, 2001.* | |
4.31 | Sublease between ZC Resource LLC and Zurich Reinsurance (North America), Inc., dated as of June 20, 2001.* | |
4.32 | Form of Letter Agreement between Converium Holding AG and The Bank of New York, relating to the pre-release of the ADRs, incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.* | |
4.33 | Agreement dated September 2, 2002, between Converium AG and MDU Investments Ltd, regarding subscription of up to 20 million shares at £1 each. ^ | |
4.34 | Share Purchase Agreement dated November 27, 2002, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ | |
4.35 | Shareholder’s Agreement dated March 12, 2003, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ |
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Exhibit Number | Description | |
4.36 | Sale and Purchase Agreement and Assignment between Converium AG and Converium Finance S.A. regarding the transfer of a $150 million loan granted to Converium Holding AG. ^ | |
4.37 | Amendment to Share Purchase Agreement dated November 27, 2002 between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ | |
4.38 | Agreement dated December 30, 2003, for the sale and purchase of 5.1% of Royal and Sun Alliance Insurance PLC’s shareholding in Global Aerospace Underwriting Managers Limited (GAUM). # | |
4.39 | Agreement dated July 24, 2003 $900,000,000 Credit Facility for Converium AG, Zurich arranged by ABN Amro Bank N.V., Barclay’s Capital and Commerzbank Aktiengesellschaft. # | |
4.40 | Agreement dated November 29, 2004, USD 1,600,000,000 Credit Facility for Converium AG, arranged by ABN AMRO Bank N.V., Barclay’s Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan.\ | |
4.41 | Deed of Pledge, dated December 15, 2004, Converium Rückversicherung (Deutschland) AG as the Pledgor and ABN Amro Mellon Global Securities Services as the Account Bank and ABN Amro Bank N.V. as the Pledgee.\ | |
4.42 | Deed of Pledge, dated December 15, 2004, Converium AG, Zürich, as the Pledgor, and ABN Amro Bank N.V. as the Pledgee and ABN Amro Mello Global Securities Services as the Account Bank.\ | |
4.43 | Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Insurance (UK) Limited.\ | |
4.44 | Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Rückversicherung (Deutschland) AG.\ | |
4.45 | Fronting and Administration Agreement relating to the Global Aerospace Underwriters Pool, dated January 7, 2005, between Global Aerospace Underwriting Managers Limited, Global Aerospace, Inc., Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, National Indemnity Company and Converium AG.\ | |
7.1 | Computation of ratio of earnings to fixed charges. | |
8.1 | Subsidiaries of the Registrant.\ | |
12.1 | 302 Certification of Chief Executive Officer. | |
12.2 | 302 Certification of Chief Financial Officer. | |
13.1 | 906 Certification of Chief Executive Officer. | |
13.2 | 906 Certification of Chief Financial Officer. | |
14.1 | Consent of PricewaterhouseCoopers Ltd, independent group auditors. |
* | Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 10, 2001. | |
+ | Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 18, 2002. | |
^ | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2002, filed on April 18, 2003. | |
# | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2003, filed on April 5, 2004. | |
\ | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2004, filed on June 30, 2005. |
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page | ||||
Report of the independent group auditors on the Financial Statements | F-2 | |||
Consolidated Statements of (Loss) income for the years ended December 31, 2004, 2003 and 2002 | F-3 | |||
Consolidated Balance Sheets as of December 31, 2004 and 2003 | F-4 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 | F-5 | |||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002 | F-6 | |||
Notes to the Consolidated Financial Statements | F-7 | |||
Schedules | ||||
Report of the independent group auditors on the Financial Statement Schedules | S-1 | |||
I Summary of Investments Other than Investments in Related Parties as of December 31, 2004 and 2003 | S-2 | |||
II Condensed Financial Information of the Registrant | ||||
Statements of Income for the years ended December 31, 2004, 2003 and 2002 | S-3 | |||
Balance Sheets as of December 31, 2004 and 2003 | S-4 | |||
Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 | S-5 | |||
IV Reinsurance for the years ended December 31, 2004, 2003 and 2002 | S-6 |
F-1
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A. Hill | M. Frei |
March 4, 2005 except as to Notes 3 and 14b to the consolidated financial statements as to which the date is February 27, 2006.
F-2
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(US$ million, except per share information) | 2004 | 2003 | 2002 | |||||||||||||
Year ended December 31 | Notes | (Restated) | (Restated) | (Restated) | ||||||||||||
Revenues | ||||||||||||||||
Gross premiums written | 3,978.7 | 4,300.4 | 3,372.4 | |||||||||||||
Less ceded premiums written | -252.6 | -377.7 | -137.2 | |||||||||||||
Net premiums written | 12 | 3,726.1 | 3,922.7 | 3,235.2 | ||||||||||||
Net change in unearned premiums | 156.1 | -154.9 | -157.7 | |||||||||||||
Net premiums earned | 12 | 3,882.2 | 3,767.8 | 3,077.5 | ||||||||||||
Net investment income | 8 | 312.7 | 234.4 | 251.8 | ||||||||||||
Net realized capital gains (losses) | 8 | 46.5 | 18.4 | -10.3 | ||||||||||||
Other (loss) income | -8.2 | 17.5 | 31.6 | |||||||||||||
Total revenues | 4,233.2 | 4,038.1 | 3,350.6 | |||||||||||||
Benefits, losses and expenses | ||||||||||||||||
Losses, loss expenses and life benefits | 10,12 | -3,342.5 | -2,760.1 | -2,491.1 | ||||||||||||
Acquisition costs | 12 | -912.4 | -832.0 | -646.8 | ||||||||||||
Other operating and administration expenses | -219.8 | -202.5 | -178.4 | |||||||||||||
Interest expense | 13 | –33.1 | –31.0 | –16.4 | ||||||||||||
Impairment of goodwill | 9 | –94.0 | — | — | ||||||||||||
Amortization of intangible assets | 9 | –9.9 | -1.8 | — | ||||||||||||
Restructuring costs | 5 | –2.7 | — | — | ||||||||||||
Total benefits, losses and expenses | -4,614.4 | -3,827.4 | -3,332.7 | |||||||||||||
(Loss) income before taxes | -381.2 | 210.7 | 17.9 | |||||||||||||
Income tax (expense) benefit | 14 | -201.3 | -32.8 | 17.9 | ||||||||||||
Net (loss) income | -582.5 | 177.9 | 35.8 | |||||||||||||
Basic (loss) earnings per share | 25 | -9.19 | 2.24 | 0.45 | ||||||||||||
Diluted (loss) earnings per share | 25 | -9.19 | 2.23 | 0.45 |
F-3
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(US$ million, except share information) | 2004 | 2003 | ||||||||||
Year ended December 31 | Notes | (Restated) | (Restated) | |||||||||
Assets | ||||||||||||
Invested assets | ||||||||||||
Held-to-maturity securities: | ||||||||||||
Fixed maturities | 8 | 850.4 | 500.4 | |||||||||
Available-for-sale securities: | ||||||||||||
Fixed maturities | 8 | 4,834.8 | 4,428.2 | |||||||||
Equity securities | 8 | 399.4 | 834.9 | |||||||||
Other investments | 8 | 279.2 | 152.2 | |||||||||
Short-term investments | 117.3 | 55.7 | ||||||||||
Total investments | 6,481.1 | 5,971.4 | ||||||||||
Funds Withheld Asset | 8 | 1,305.1 | 1,530.6 | |||||||||
Total invested assets | 7,786.2 | 7,502.0 | ||||||||||
Other assets | ||||||||||||
Cash and cash equivalents | 680.9 | 280.8 | ||||||||||
Premiums receivable | 1,832.2 | 1,654.1 | ||||||||||
Reserves for unearned premiums, retro | 55.2 | 109.3 | ||||||||||
Reinsurance assets: | ||||||||||||
Underwriting reserves | 12 | 937.9 | 1,094.1 | |||||||||
Insurance and reinsurance balances receivable, net | 139.3 | 40.8 | ||||||||||
Funds held by reinsureds | 1,737.7 | 1,294.9 | ||||||||||
Deposit assets | 170.4 | 58.8 | ||||||||||
Deferred policy acquisition costs | 482.7 | 379.3 | ||||||||||
Deferred income taxes | 14 | 79.8 | 364.7 | |||||||||
Other assets | 9 | 358.6 | 501.6 | |||||||||
Total assets | 14,260.9 | 13,280.4 | ||||||||||
Liabilities and equity | ||||||||||||
Liabilities | ||||||||||||
Reinsurance liabilities: | ||||||||||||
Unpaid losses and loss expenses | 10 | 8,908.3 | 7,879.7 | |||||||||
Future life benefits, gross | 12 | 407.1 | 344.3 | |||||||||
Insurance and reinsurance balances payable | 12 | 583.5 | 204.6 | |||||||||
Reserves for unearned premiums, gross | 1,247.7 | 1,415.0 | ||||||||||
Other reinsurance liabilities | 70.8 | 104.2 | ||||||||||
Funds held under reinsurance contracts | 194.8 | 172.9 | ||||||||||
Deposit liabilities | 356.5 | 358.2 | ||||||||||
Deferred income taxes | 14 | 81.8 | 174.2 | |||||||||
Accrued expenses and other liabilities | 284.5 | 306.2 | ||||||||||
Debt | 13 | 391.1 | 393.1 | |||||||||
Total liabilities | 12,526.1 | 11,352.4 | ||||||||||
Shareholders’ equity | ||||||||||||
Common stock CHF 5 nominal value, 146,689,462 shares issued, (146,272,886 shares outstanding), respectively, CHF 10 nominal value, 40,006,217 shares issued, (39,775,620 shares outstanding) | 17 | 554.9 | 253.0 | |||||||||
Additional paid-in capital | 1,360.5 | 1,256.6 | ||||||||||
Treasury stock, (416,576 and 230,597 shares, respectively) | -7.7 | -10.0 | ||||||||||
Unearned stock compensation | 16 | -7.5 | -6.1 | |||||||||
Total accumulated other comprehensive income: | ||||||||||||
Accumulated other comprehensive income | -7.7 | -1.2 | ||||||||||
Net unrealized gains on investments, net of taxes | 8 | 105.2 | 145.6 | |||||||||
Cumulative translation adjustments | 191.2 | 110.0 | ||||||||||
Total accumulated other comprehensive income | 288.7 | 254.4 | ||||||||||
Retained (deficit) earnings | -454.1 | 180.1 | ||||||||||
Total shareholders’ equity | 1,734.8 | 1,928.0 | ||||||||||
Total liabilities and shareholders’ equity | 14,260.9 | 13,280.4 |
F-4
Table of Contents
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Cash flows from operating activities | ||||||||||||
Net (loss) income | -582.5 | 177.9 | 35.8 | |||||||||
Adjustments for | ||||||||||||
Net realized capital (gains) losses on investments | -46.5 | -18.4 | 10.3 | |||||||||
Amortization of premium/discount | 59.1 | 43.9 | 20.6 | |||||||||
Depreciation and amortization | 34.2 | 30.5 | 38.2 | |||||||||
Impairment of goodwill and deferred tax asset | 567.7 | — | — | |||||||||
Total adjustments | 614.5 | 56.0 | 69.1 | |||||||||
Changes in operational assets and liabilities | ||||||||||||
Deferred policy acquisition costs | -80.8 | -90.6 | -47.1 | |||||||||
Reinsurance assets | 183.7 | 69.4 | 368.6 | |||||||||
Funds held by reinsureds | -332.9 | -305.1 | -303.4 | |||||||||
Funds Withheld Asset | 283.8 | 230.6 | 100.0 | |||||||||
Premiums receivable | -106.7 | -438.6 | -252.1 | |||||||||
Unearned premiums, gross | -224.4 | 213.3 | 125.7 | |||||||||
Losses and loss expenses, gross | 716.6 | 585.0 | 868.3 | |||||||||
Future life benefits, gross | 41.2 | 131.4 | -74.2 | |||||||||
Reinsurance balances payable | 378.9 | 280.9 | -45.0 | |||||||||
Funds held under reinsurance contracts | -5.0 | 67.3 | -27.4 | |||||||||
Other reinsurance liabilities | -94.3 | -65.6 | 11.4 | |||||||||
Income taxes, net | -240.1 | 35.6 | -1.2 | |||||||||
Net changes in all other operational assets and liabilities | -193.3 | -30.3 | 40.1 | |||||||||
Total changes in operational assets and liabilities | 326.7 | 683.3 | 763.7 | |||||||||
Cash provided by operating activities | 358.7 | 917.2 | 868.6 | |||||||||
Cash flows from investing activities | ||||||||||||
Purchases of fixed maturities held-to-maturity | -228.2 | -192.4 | — | |||||||||
Proceeds from sales and maturities of fixed maturities available-for-sale | 4,116.0 | 3,813.4 | 4,573.3 | |||||||||
Purchases of fixed maturities available-for-sale | -4,420.2 | -5,054.0 | -5,375.3 | |||||||||
Cash flows from investing activities (fixed maturities) | -532.4 | -1,433.0 | -802.0 | |||||||||
Proceeds from sales of equity securities | 983.1 | 94.3 | 599.2 | |||||||||
Purchases of equity securities | -537.5 | -244.3 | -709.0 | |||||||||
Cash flows from investing activities (equity securities) | 445.6 | -150.0 | -109.8 | |||||||||
Net (increase) decrease in short-term investments | -55.3 | 277.2 | -252.5 | |||||||||
Proceeds from sales of other assets | 82.3 | 47.4 | 33.0 | |||||||||
Purchases of other assets | -144.0 | -42.7 | 14.2 | |||||||||
Net (increase) decrease in deposit assets | -111.6 | -13.1 | 6.9 | |||||||||
Cash flows from investing activities (other) | -228.6 | 268.8 | -198.4 | |||||||||
Net cash used in investing activities | -315.4 | -1,314.2 | -1,110.2 | |||||||||
Cash flows from financing activities | ||||||||||||
Net purchases of common shares | -6.0 | -17.3 | -14.7 | |||||||||
Dividends to shareholders | -47.8 | -29.9 | — | |||||||||
Proceeds from Rights Offering | 428.4 | — | — | |||||||||
Rights Offering issuance costs | -25.1 | — | — | |||||||||
Issuance of guaranteed subordinated notes | — | — | 193.7 | |||||||||
Net (decrease) increase in deposit liabilities | -1.7 | 300.1 | 10.5 | |||||||||
Net cash provided by financing activities | 347.8 | 252.9 | 189.5 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 9.0 | 23.7 | -16.9 | |||||||||
Change in cash and cash equivalents | 400.1 | -120.4 | -69.0 | |||||||||
Cash and cash equivalents as of January 1 | 280.8 | 401.2 | 470.2 | |||||||||
Cash and cash equivalents as of December 31 | 680.9 | 280.8 | 401.2 |
F-5
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Additional | Unearned | other | Retained | |||||||||||||||||||||||||
Common | paid-in | Treasury | stock | comprehensive | deficit | Total | ||||||||||||||||||||||
(US$ million) | stock | capital | stock | compensation | income | (deficit) | equity | |||||||||||||||||||||
Balance, December 31, 2001 (As previously reported) | 253.0 | 1,336.5 | — | -27.1 | 8.4 | — | 1,570.8 | |||||||||||||||||||||
Restatement adjustments | -70.1 | — | — | 0.1 | — | -70.0 | ||||||||||||||||||||||
Balance, December 31, 2001 | 253.0 | 1,266.4 | — | -27.1 | 8.5 | — | 1,500.8 | |||||||||||||||||||||
Net income (loss) | — | — | — | — | — | 35.8 | 35.8 | |||||||||||||||||||||
Change in net unrealized gains (losses) on investments, net of taxes | — | — | — | — | -14.3 | -14.3 | ||||||||||||||||||||||
Translation adjustments | — | — | — | — | 64.7 | 64.7 | ||||||||||||||||||||||
Total comprehensive income | 86.2 | |||||||||||||||||||||||||||
Purchases of common shares | — | — | -14.7 | — | — | — | -14.7 | |||||||||||||||||||||
Releases of common shares from treasury | — | -12.9 | 11.4 | — | — | — | -1.5 | |||||||||||||||||||||
Net amortization of stock compensation | — | 7.3 | — | 17.1 | — | — | 24.4 | |||||||||||||||||||||
Balance, December 31, 2002 | 253.0 | 1,260.8 | -3.3 | -10.0 | 58.9 | 35.8 | 1,595.2 | |||||||||||||||||||||
Net (loss) income | — | — | — | — | — | 177.9 | 177.9 | |||||||||||||||||||||
Change in net unrealized gains (losses) on investments, net of taxes | — | — | — | — | 148.6 | — | 148.6 | |||||||||||||||||||||
Translation adjustments | — | — | — | — | 46.9 | — | 46.9 | |||||||||||||||||||||
Total comprehensive income | 373.4 | |||||||||||||||||||||||||||
Dividends to shareholders | — | — | — | — | — | -29.9 | -29.9 | |||||||||||||||||||||
Transfer to general legal reserve | — | 3.7 | — | — | — | -3.7 | — | |||||||||||||||||||||
Purchases of common shares | — | — | -17.3 | — | — | — | -17.3 | |||||||||||||||||||||
Releases of common shares from treasury | — | -14.0 | 10.6 | — | — | — | -3.4 | |||||||||||||||||||||
Net amortization of stock compensation | — | 6.1 | — | 3.9 | — | 10.0 | ||||||||||||||||||||||
Balance, December 31, 2003 | 253.0 | 1,256.6 | -10.0 | -6.1 | 254.4 | 180.1 | 1,928.0 | |||||||||||||||||||||
Net loss (income) | -582.5 | -582.5 | ||||||||||||||||||||||||||
Change in net unrealized gains (losses) on investments, net of taxes | — | — | — | — | -40.6 | — | -40.6 | |||||||||||||||||||||
Translation adjustments | — | — | — | — | 74.9 | — | 74.9 | |||||||||||||||||||||
Total comprehensive loss | -548.2 | |||||||||||||||||||||||||||
Dividends to shareholders | — | — | — | — | — | -47.8 | -47.8 | |||||||||||||||||||||
Transfer to general legal reserve | — | 3.9 | — | — | — | -3.9 | — | |||||||||||||||||||||
Purchases of common shares | — | — | -6.0 | — | — | — | -6.0 | |||||||||||||||||||||
Releases of common shares from treasury | — | -8.2 | 8.3 | — | — | — | 0.1 | |||||||||||||||||||||
Net amortization of stock compensation | — | 11.0 | — | -1.4 | — | — | 9.6 | |||||||||||||||||||||
Increase in capital due to rights offering | 428.4 | — | — | — | — | — | 428.4 | |||||||||||||||||||||
Decrease of nominal value | -126.5 | 126.5 | — | — | — | — | — | |||||||||||||||||||||
Rights offering issuance costs | — | -29.3 | — | — | — | — | -29.3 | |||||||||||||||||||||
Balance, December 31, 2004 | 554.9 | 1,360.5 | -7.7 | -7.5 | 288.7 | -454.1 | 1,734.8 |
F-6
Table of Contents
Standard Property & Casualty Reinsurance | Specialty Lines | Total Non-life consolidated | Life & Health Reinsurance | Corporate Center | Total consolidated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(US$ million) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended December 31 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross premiums written | 1,699.5 | 1,820.4 | 1,395.8 | 1,833.2 | 2,073.5 | 1,633.4 | 3,532.7 | 3,893.9 | 3,029.2 | 446.0 | 406.5 | 343.2 | — | — | — | 3,978.7 | 4,300.4 | 3,372.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less ceded premiums written | -141.6 | -138.8 | -60.2 | -96.3 | -212.7 | -48.5 | -237.9 | -351.5 | -108.7 | -14.7 | -26.2 | -28.5 | — | — | — | -252.6 | -377.7 | -137.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net premiums written | 1,557.9 | 1,681.6 | 1,335.6 | 1,736.9 | 1,860.8 | 1,584.9 | 3,294.8 | 3,542.4 | 2,920.5 | 431.3 | 380.3 | 314.7 | — | — | — | 3,726.1 | 3,922.7 | 3,235.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net change in unearned premiums | 94.9 | -15.7 | -53.3 | 57.5 | -143.0 | -100.5 | 152.4 | -158.7 | -153.8 | 3.7 | 3.8 | -3.9 | — | — | — | 156.1 | -154.9 | -157.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net premiums earned | 1,652.8 | 1,665.9 | 1,282.3 | 1,794.4 | 1,717.8 | 1,484.4 | 3,447.2 | 3,383.7 | 2,766.7 | 435.0 | 384.1 | 310.8 | — | — | — | 3,882.2 | 3,767.8 | 3,077.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment results | 144.0 | 102.1 | 98.1 | 185.2 | 133.2 | 125.3 | 329.2 | 235.3 | 223.4 | 30.0 | 17.5 | 18.1 | — | — | — | 359.2 | 252.8 | 241.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | 1,796.8 | 1,768.0 | 1,380.4 | 1,979.6 | 1,851.0 | 1,609.7 | 3,776.4 | 3,619.0 | 2,990.1 | 465.0 | 401.6 | 328.9 | — | — | — | 4,241.4 | 4,020.6 | 3,319.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses, loss expenses and life benefits | -1,268.7 | -1,129.5 | -968.9 | -1,745.0 | -1,276.2 | -1,262.2 | -3,013.7 | -2,405.7 | -2,231.1 | -328.8 | -354.4 | -260.0 | — | — | — | -3,342.5 | -2,760.1 | -2,491.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition costs | -411.8 | -377.5 | -280.3 | -401.2 | -374.5 | -302.5 | -813.0 | -752.0 | -582.8 | -99.4 | -80.0 | -64.0 | — | — | — | -912.4 | -832.0 | -646.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other operating and administration expenses | -76.2 | -73.2 | -61.1 | -85.5 | -76.6 | -71.8 | -161.7 | -149.8 | -132.9 | -19.9 | -18.4 | -15.2 | -38.2 | -34.3 | -30.3 | -219.8 | -202.5 | -178.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefits, losses and expenses | -1,756.7 | -1,580.2 | -1,310.3 | -2,231.7 | -1,727.3 | -1,636.5 | -3,988.4 | -3,307.5 | -2,946.8 | -448.1 | -452.8 | -339.2 | -38.2 | -34.3 | -30.3 | -4,474.7 | -3,794.6 | -3,316.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment income (loss) | 40.1 | 187.8 | 70.1 | -252.1 | 123.7 | -26.8 | -212.0 | 311.5 | 43.3 | 16.9 | -51.2 | -10.3 | -38.2 | -34.3 | -30.3 | -233.3 | 226.0 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (loss) income | -8.2 | 17.5 | 31.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | -33.1 | -31.0 | -16.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill | -94.0 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | -9.9 | -1.8 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring costs | -2.7 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss (income) before taxes | -381.2 | 210.7 | 17.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit | -201.3 | -32.8 | 17.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income | -582.5 | 177.9 | 35.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance assets — underwriting reserves | 192.3 | 280.1 | 421.9 | 706.2 | 726.3 | 613.2 | 898.5 | 1,006.4 | 1,035.1 | 39.4 | 87.7 | 73.9 | 937.9 | 1,094.1 | 1,109.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses and loss expenses, gross | 3,509.9 | 3,152.0 | 2,663.1 | 5,036.1 | 4,404.7 | 3,880.5 | 8,546.0 | 7,556.7 | 6,543.6 | 362.3 | 323.0 | 333.3 | 8,908.3 | 7,879.7 | 6,876.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future life benefits, gross | 407.1 | 344.3 | 186.1 | 407.1 | 344.3 | 186.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss ratio (Losses divided by net premiums earned) | 76.8 | % | 67.8 | % | 75.6 | % | 97.2 | % | 74.3 | % | 85.0 | % | 87.4 | % | 71.1 | % | 80.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting expense ratio (Underwriting acquisition costs divided by net premiums earned) | 24.9 | % | 22.7 | % | 21.9 | % | 22.4 | % | 21.8 | % | 20.4 | % | 23.6 | % | 22.2 | % | 21.1 | % | 22.9 | % | 20.8 | % | 20.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Administration expense ratio (Other operating and administration expenses divided by net premiums written) | 4.9 | % | 4.4 | % | 4.6 | % | 4.9 | % | 4.1 | % | 4.5 | % | 4.9 | % | 4.2 | % | 4.6 | % | 4.6 | % | 4.8 | % | 4.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Combined ratio (Sum of the loss, underwriting expense and administration expense ratios) | 106.6 | % | 94.9 | % | 102.1 | % | 124.5 | % | 100.2 | % | 109.9 | % | 115.9 | % | 97.5 | % | 106.3 | % |
F-7
Table of Contents
Notes to the consolidated financial statements (continued)
F-8
Table of Contents
Notes to the consolidated financial statements (continued)
F-9
Table of Contents
Notes to the consolidated financial statements (continued)
F-10
Table of Contents
Notes to the consolidated financial statements (continued)
F-11
Table of Contents
Notes to the consolidated financial statements (continued)
F-12
Table of Contents
Notes to the consolidated financial statements (continued)
F-13
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Gross premiums written | 137.8 | 76.5 | -163.3 | |||||||||
Net premiums written | 173.1 | 95.7 | -86.9 | |||||||||
Net premiums earned | 197.1 | 91.3 | -87.9 | |||||||||
(Loss) income before taxes | 41.4 | -13.7 | -39.5 | |||||||||
Income taxes | 136.9 | 6.5 | -31.5 | |||||||||
Net income (loss) | 178.3 | -7.2 | -71.0 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Shareholders’ equity | 14.6 | -155.3 | -142.8 |
F-14
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
US$ | ||||||||||||
Basic (loss) earnings per share as previously reported | (12.00 | ) | 2.33 | 1.34 | ||||||||
Adjustments to basic earnings (loss) per share | 2.81 | (0.09 | ) | (0.89 | ) | |||||||
Basic (loss) earnings per share as restated | (9.19 | ) | 2.24 | 0.45 |
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million, except per share amounts) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | -17.2 | -28.4 | -163.3 | |||||||||
Net premiums written | 53.3 | 68.5 | -86.9 | |||||||||
Net premiums earned | 77.4 | 64.1 | -87.9 | |||||||||
Losses, loss expenses and life benefits | -44.7 | -85.9 | 1.0 | |||||||||
Acquisition costs | 9.9 | -16.6 | 23.9 | |||||||||
Income (loss) before taxes | 46.1 | -21.0 | -30.2 | |||||||||
Net income (loss) | 29.1 | -31.1 | -27.8 | |||||||||
Basic earnings (loss) per share (US$) | 0.46 | -0.39 | -0.35 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | -523.4 | -744.5 | ||||||||||
Funds held by reinsureds | -78.9 | -121.2 | ||||||||||
Other assets | -35.1 | -39.8 | ||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -195.6 | -310.1 | ||||||||||
Funds held under reinsurance contracts | -237.8 | -399.0 | ||||||||||
Shareholders’ equity | -111.1 | -137.3 |
F-15
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | -12.7 | -16.9 | -16.9 | |||||||||
Net premiums written | -1.5 | -2.1 | -0.9 | |||||||||
Net premiums earned | -0.8 | -0.7 | -0.7 | |||||||||
Losses, loss expenses and life benefits | 0.3 | 0.4 | 0.2 | |||||||||
Acquisition costs | 0.1 | 0.1 | 0.1 | |||||||||
(Loss) income before taxes | -0.8 | 0.3 | 0.7 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | -69.8 | -64.1 | ||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -81.3 | -74.6 |
F-16
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | — | — | — | |||||||||
Net premiums written | 12.4 | 25.0 | 5.3 | |||||||||
Net premiums earned | 22.0 | 15.3 | 5.3 | |||||||||
Losses, loss expenses and life benefits | -1.4 | -35.0 | — | |||||||||
Acquisition costs | -9.1 | — | — | |||||||||
Income (loss) before taxes | 11.6 | -21.7 | 5.1 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | — | -44.7 | ||||||||||
Other reinsurance liabilities | — | -36.5 |
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | — | — | — | |||||||||
Net premiums written | 36.9 | 30.3 | 4.6 | |||||||||
Net premiums earned | 34.9 | 30.3 | 6.4 | |||||||||
Losses, loss expenses and life benefits | -31.2 | -32.1 | -60.6 | |||||||||
Acquisition costs | 19.9 | -17.9 | 1.7 | |||||||||
Income (loss) before taxes | 38.1 | 7.3 | -30.5 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | -291.3 | -451.9 | ||||||||||
Funds held by reinsureds | -1.1 | -54.6 | ||||||||||
Other assets | — | — | ||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -0.5 | -126.3 | ||||||||||
Funds held under reinsurance contracts | -152.3 | -275.9 |
F-17
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | -4.5 | -11.4 | -33.1 | |||||||||
Net premiums written | -1.2 | 8.8 | -2.6 | |||||||||
Net premiums earned | 14.4 | 12.7 | -6.1 | |||||||||
Losses, loss expenses and life benefits | -12.5 | -16.2 | -0.6 | |||||||||
Acquisition costs | — | 1.3 | -5.6 | |||||||||
(Loss) income before taxes | -0.1 | -6.7 | -5.9 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | -159.4 | -180.7 | ||||||||||
Funds held by reinsureds | -77.8 | -66.6 | ||||||||||
Other assets | -35.1 | -39.8 | ||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | -113.8 | -109.3 | ||||||||||
Funds held under reinsurance contracts | -85.5 | -123.1 |
F-18
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Gross premiums written | — | -0.1 | -113.3 | |||||||||
Net premiums written | 6.8 | 6.5 | -93.3 | |||||||||
Net premiums earned | 6.9 | 6.5 | -92.8 | |||||||||
Losses, loss expenses and life benefits | 0.1 | -3.0 | 62.0 | |||||||||
Acquisition costs | -1.0 | — | 27.7 | |||||||||
(Loss) income before taxes | -2.7 | -0.2 | 0.4 | |||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Reinsurance assets (including reserves for unearned premiums) | -2.9 | -3.1 | ||||||||||
Reinsurance liabilities (including reserves for unearned premiums) | — | 0.1 |
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) for the years ended December 31, (US$ million, except per share amounts) | ||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||
Income taxes | -152.2 | -13.2 | 34.7 | |||||||||
Net (loss) income | 152.2 | 13.2 | -34.7 | |||||||||
Basic earnings (loss) per share (US$) | 2.40 | 0.17 | -0.44 |
F-19
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||||||
Selected consolidated balance sheet accounts: | ||||||||||||
Other assets | 58.2 | — | ||||||||||
Deferred income tax assets | 61.6 | -5.8 | ||||||||||
Deferred income tax liabilities | -6.8 | 14.3 | ||||||||||
Shareholders’ equity | 126.6 | -20.1 |
Participation at Lloyd’s | Other corrections | |||||||||||||||||||
2004 | 2003 | 2004 | 2003 | 2002 | ||||||||||||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||||||||||||||
Selected consolidated statement of income accounts: | ||||||||||||||||||||
Gross premiums written | 155.0 | 104.9 | — | — | — | |||||||||||||||
Income (loss) before taxes | 3.2 | — | -7.9 | 7.2 | -9.3 | |||||||||||||||
Net income (loss) | 2.1 | — | -5.0 | 10.7 | -8.6 | |||||||||||||||
Basic earnings (loss) per share (US$) | 0.03 | — | -0.08 | 0.13 | -0.11 | |||||||||||||||
Shareholders’ equity | 2.3 | — | -3.2 | 2.2 |
• | Gross presentation of syndicate transactions:Converium participates as a member of a number of syndicates operating in the Lloyd’s of London insurance market. Converium has in prior financial statements reported its participations in certain Lloyd’s syndicate premium and loss activity on a net basis. Subsequent accounting developments in the Lloyd’s market have led to the reporting of more detailed information to participants. Converium has corrected the previously reported amounts. | ||
• | Reinsurance to close:Syndicates at Lloyd’s are formed for a duration of one calendar year. Two years after the conclusion of that year the syndicate will typically transfer any remaining liabilities to a successor syndicate by way of payment of a portfolio premium, known as a reinsurance to close, “RITC”. In previously reported financial statements, Converium did not record the RITC in the correct reporting period; therefore, Converium has adjusted the recording of the RITC so that it is now reported in the proper period. | ||
• | Miscellaneous corrections:Corrections, which were originally concluded to be immaterial, arising on the accounting for the Lloyd’s participations were previously reported in the financial statements in the period they were identified. Through the Restatement, Converium is recording the adjustments made in previous periods in the proper period. |
F-20
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | |||||||
Increase (decrease) for the years ended December 31, (US$ million) | ||||||||
Selected consolidated statement of income accounts: | ||||||||
Gross premiums written | $ | 155.0 | $ | 104.9 | ||||
Net premiums written | 119.7 | 27.3 | ||||||
Net premiums earned | 119.7 | 27.3 | ||||||
Losses, loss expenses and life benefits | -34.8 | — | ||||||
Acquisition costs | -73.4 | -13.4 | ||||||
Income before taxes | 3.2 | — | ||||||
Increase (decrease) as of December 31, (US$ million) | ||||||||
Selected consolidated balance sheet accounts: | ||||||||
Reinsurance assets, (including reserves for unearned premiums) | 83.3 | 47.1 | ||||||
Funds held by reinsureds | 94.5 | 42.1 | ||||||
Reinsurance liabilities, (including reserves for unearned premiums) | 118.1 | 47.1 | ||||||
Funds held under reinsurance contracts | 54.6 | 42.1 |
F-21
Table of Contents
Notes to the consolidated financial statements (continued)
Consolidated statement of loss
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2004 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 3,840.9 | -17.2 | — | 155.0 | 3,978.7 | |||||||||||||||
Less ceded premiums written | -287.9 | 70.6 | — | -35.3 | -252.6 | |||||||||||||||
Net premiums written | 3,553.0 | 53.4 | — | 119.7 | 3,726.1 | |||||||||||||||
Net change in unearned premiums | 132.1 | 24.0 | — | — | 156.1 | |||||||||||||||
Net premiums earned | 3,685.1 | 77.4 | — | 119.7 | 3,882.2 | |||||||||||||||
Net investment income | 311.6 | — | — | 1.1 | 312.7 | |||||||||||||||
Net realized capital gains (losses) | 46.5 | — | — | — | 46.5 | |||||||||||||||
Other (loss) income | -2.6 | 3.5 | — | -9.1 | -8.2 | |||||||||||||||
Total revenues | 4,040.6 | 80.9 | — | 111.7 | 4,233.2 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -3,263.1 | -44.7 | — | -34.7 | -3,342.5 | |||||||||||||||
Acquisition costs | -842.5 | 9.9 | — | -79.8 | -912.4 | |||||||||||||||
Other operating and administration expenses | -217.9 | — | — | -1.9 | -219.8 | |||||||||||||||
Interest expense | -33.1 | — | — | — | -33.1 | |||||||||||||||
Impairment of goodwill | -94.0 | — | — | — | -94.0 | |||||||||||||||
Amortization of intangible assets | -9.9 | — | — | — | -9.9 | |||||||||||||||
Restructuring costs | -2.7 | — | — | — | -2.7 | |||||||||||||||
Total benefits, losses and expenses | -4,463.2 | -34.8 | — | -116.4 | -4,614.4 | |||||||||||||||
(Loss) income before taxes | -422.6 | 46.1 | — | -4.7 | -381.2 | |||||||||||||||
Income tax (expense) benefit | -338.2 | -17.1 | 152.2 | 1.8 | -201.3 | |||||||||||||||
Net (loss) income | -760.8 | 29.0 | 152.2 | -2.9 | -582.5 |
F-22
Table of Contents
Notes to the consolidated financial statements (continued)
Consolidated statement of income
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2003 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 4,223.9 | -28.4 | — | 104.9 | 4,300.4 | |||||||||||||||
Less ceded premiums written | -396.9 | 96.9 | — | -77.7 | -377.7 | |||||||||||||||
Net premiums written | 3,827.0 | 68.5 | — | 27.2 | 3,922.7 | |||||||||||||||
Net change in unearned premiums | -150.5 | -4.4 | — | — | -154.9 | |||||||||||||||
Net premiums earned | 3,676.5 | 64.1 | — | 27.2 | 3,767.8 | |||||||||||||||
Net investment income | 233.0 | — | — | 1.4 | 234.4 | |||||||||||||||
Net realized capital gains (losses) | 18.4 | — | — | — | 18.4 | |||||||||||||||
Other income (loss) | 2.7 | 17.5 | — | -2.7 | 17.5 | |||||||||||||||
Total revenues | 3,930.6 | 81.6 | — | 25.9 | 4,038.1 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -2,674.2 | -85.9 | — | — | -2,760.1 | |||||||||||||||
Acquisition costs | -803.2 | -16.6 | — | -12.2 | -832.0 | |||||||||||||||
Other operating and administration expenses | -197.8 | — | — | -4.7 | -202.5 | |||||||||||||||
Interest expense | -31.0 | — | — | — | -31.0 | |||||||||||||||
Impairment of goodwill | — | — | — | — | — | |||||||||||||||
Amortization of intangible assets | — | — | — | -1.8 | -1.8 | |||||||||||||||
Restructuring costs | — | — | — | — | — | |||||||||||||||
Total benefits, losses and expenses | -3,706.2 | -102.5 | — | -18.7 | -3,827.4 | |||||||||||||||
Income (loss) before taxes | 224.4 | -20.9 | — | 7.2 | 210.7 | |||||||||||||||
Income tax (expense) benefit | -39.3 | -10.2 | 13.2 | 3.5 | -32.8 | |||||||||||||||
Net income (loss) | 185.1 | -31.1 | 13.2 | 10.7 | 177.9 |
F-23
Table of Contents
Notes to the consolidated financial statements (continued)
Consolidated statement of income
(US$ million) | ||||||||||||||||||||
Year ended December 31 | 2002 | |||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | 3,535.8 | -163.3 | — | -0.1 | 3,372.4 | |||||||||||||||
Less ceded premiums written | -213.6 | 76.4 | — | — | -137.2 | |||||||||||||||
Net premiums written | 3,322.2 | -86.9 | — | -0.1 | 3,235.2 | |||||||||||||||
Net change in unearned premiums | -156.7 | -1.0 | — | — | -157.7 | |||||||||||||||
Net premiums earned | 3,165.5 | -87.9 | — | -0.1 | 3,077.5 | |||||||||||||||
Net investment income | 251.8 | — | — | — | 251.8 | |||||||||||||||
Net realized capital gains (losses) | -10.3 | — | — | — | -10.3 | |||||||||||||||
Other (loss) income | -1.2 | 32.8 | — | — | 31.6 | |||||||||||||||
Total revenues | 3,405.8 | -55.1 | — | -0.1 | 3,350.6 | |||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||
Losses, loss expenses and life benefits | -2,492.0 | 1.0 | — | -0.1 | -2,491.1 | |||||||||||||||
Acquisition costs | -666.7 | 23.9 | — | -4.0 | -646.8 | |||||||||||||||
Other operating and administration expenses | -173.3 | — | — | -5.1 | -178.4 | |||||||||||||||
Interest expense | -16.4 | — | — | — | -16.4 | |||||||||||||||
Total benefits, losses and expenses | -3,348.4 | 24.9 | — | -9.2 | -3,332.7 | |||||||||||||||
Income (loss) before taxes | 57.4 | -30.2 | — | -9.3 | 17.9 | |||||||||||||||
Income tax benefit (expense) | 49.4 | 2.5 | -34.7 | 0.7 | 17.9 | |||||||||||||||
Net income (loss) | 106.8 | -27.7 | -34.7 | -8.6 | 35.8 |
F-24
Table of Contents
Notes to the consolidated financial statements (continued)
Consolidated balance sheet
(US$ million) | ||||||||||||||||||||
2004 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | 850.4 | — | — | — | 850.4 | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 4,834.8 | — | — | — | 4,834.8 | |||||||||||||||
Equity securities | 399.4 | — | — | — | 399.4 | |||||||||||||||
Other investments | 281.4 | — | — | -2.2 | 279.2 | |||||||||||||||
Short-term investments | 117.3 | — | — | — | 117.3 | |||||||||||||||
Total investments | 6,483.3 | — | — | -2.2 | 6,481.1 | |||||||||||||||
Funds Withheld Asset | 1,305.1 | — | — | — | 1,305.1 | |||||||||||||||
Total invested assets | 7,788.4 | — | — | -2.2 | 7,786.2 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 680.9 | — | — | — | 680.9 | |||||||||||||||
Premiums receivable | 1,812.0 | 8.8 | — | 11.4 | 1,832.2 | |||||||||||||||
Reserves for unearned premiums, retro | 111.6 | -72.1 | — | 15.7 | 55.2 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,226.2 | -357.1 | — | 68.8 | 937.9 | |||||||||||||||
Insurance and reinsurance balances receivable | 233.5 | -94.2 | — | — | 139.3 | |||||||||||||||
Funds held by reinsureds | 1,721.3 | -78.9 | — | 95.3 | 1,737.7 | |||||||||||||||
Deposit assets | 137.0 | 33.4 | — | — | 170.4 | |||||||||||||||
Deferred policy acquisition costs | 484.7 | -0.8 | — | -1.2 | 482.7 | |||||||||||||||
Deferred income taxes | 78.3 | -67.2 | 61.6 | 7.1 | 79.8 | |||||||||||||||
Other assets | 335.4 | -35.1 | 58.2 | 0.1 | 358.6 | |||||||||||||||
Total assets | 14,609.3 | -663.2 | 119.8 | 195.0 | 14,260.9 | |||||||||||||||
Liabilities and shareholders��� equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 8,915.6 | -115.2 | — | 107.9 | 8,908.3 | |||||||||||||||
Reserves for life benefits, gross | 407.1 | — | — | — | 407.1 | |||||||||||||||
Insurance and reinsurance balances payable | 585.9 | — | — | -2.4 | 583.5 | |||||||||||||||
Reserves for unearned premiums, gross | 1,312.3 | -80.4 | — | 15.8 | 1,247.7 | |||||||||||||||
Other reinsurance liabilities | 110.4 | -57.0 | — | 17.4 | 70.8 | |||||||||||||||
Funds held under reinsurance contracts | 379.3 | -237.8 | — | 53.3 | 194.8 | |||||||||||||||
Deposit liabilities | 348.5 | 8.0 | — | — | 356.5 | |||||||||||||||
Deferred income taxes | 157.2 | -69.7 | -6.8 | 1.1 | 81.8 | |||||||||||||||
Accrued expenses and other liabilities | 281.7 | — | — | 2.8 | 284.5 | |||||||||||||||
Debt | 391.1 | — | — | — | 391.1 | |||||||||||||||
Total liabilities | 12,889.1 | -552.1 | -6.8 | 195.9 | 12,526.1 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 554.9 | — | — | — | 554.9 | |||||||||||||||
Additional paid-in capital | 1,430.6 | — | — | -70.1 | 1,360.5 | |||||||||||||||
Treasury stock | -7.7 | — | — | — | -7.7 | |||||||||||||||
Unearned stock compensation | -7.5 | — | — | — | -7.5 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | -6.7 | — | -1.0 | — | -7.7 | |||||||||||||||
Net unrealized gains on investments, net of taxes | 116.7 | — | -11.7 | 0.2 | 105.2 | |||||||||||||||
Cumulative translation adjustments | 194.1 | -7.9 | 5.3 | -0.3 | 191.2 | |||||||||||||||
Total accumulated other comprehensive income | 304.1 | -7.9 | -7.4 | -0.1 | 288.7 | |||||||||||||||
Retained (deficit) earnings | -554.2 | -103.2 | 134.0 | 69.3 | -454.1 | |||||||||||||||
Total shareholders’ equity | 1,720.2 | -111.1 | 126.6 | -0.9 | 1,734.8 | |||||||||||||||
Total liabilities and shareholders’ equity | 14,609.3 | -663.2 | 119.8 | 195.0 | 14,260.9 |
F-25
Table of Contents
Notes to the consolidated financial statements (continued)
Consolidated balance sheet
(US$ million) | ||||||||||||||||||||
2003 | ||||||||||||||||||||
As previously | Reinsurance | Taxes | Other | As | ||||||||||||||||
reported | transactions | Items | restated | |||||||||||||||||
Assets | ||||||||||||||||||||
Invested assets | ||||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||
Fixed maturities | 500.4 | — | — | — | 500.4 | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Fixed maturities | 4,428.2 | — | — | — | 4,428.2 | |||||||||||||||
Equity securities | 840.2 | — | — | -5.3 | 834.9 | |||||||||||||||
Other investments | 173.5 | — | — | -21.3 | 152.2 | |||||||||||||||
Short-term investments | 55.8 | — | — | -0.1 | 55.7 | |||||||||||||||
Total investments | 5,998.1 | — | — | -26.7 | 5,971.4 | |||||||||||||||
Funds Withheld Asset | 1,530.6 | — | — | — | 1,530.6 | |||||||||||||||
Total invested assets | 7,528.7 | — | — | -26.7 | 7,502.0 | |||||||||||||||
Other assets | ||||||||||||||||||||
Cash and cash equivalents | 280.8 | — | — | — | 280.8 | |||||||||||||||
Premiums receivable | 2,008.3 | -72.2 | — | -282.0 | 1,654.1 | |||||||||||||||
Reserves for unearned premiums, retro | — | -88.8 | — | 198.1 | 109.3 | |||||||||||||||
Reinsurance assets: | ||||||||||||||||||||
Underwriting reserves | 1,718.6 | -472.5 | — | -152.0 | 1,094.1 | |||||||||||||||
Insurance and reinsurance balances receivable | 224.0 | -183.2 | — | — | 40.8 | |||||||||||||||
Funds held by reinsureds | 1,374.0 | -121.2 | — | 42.1 | 1,294.9 | |||||||||||||||
Deposit assets | — | 58.8 | — | — | 58.8 | |||||||||||||||
Deferred policy acquisition costs | 380.1 | -0.8 | — | — | 379.3 | |||||||||||||||
Deferred income taxes | 345.1 | 21.2 | -5.8 | 4.2 | 364.7 | |||||||||||||||
Other assets | 495.0 | -39.8 | — | 46.4 | 501.6 | |||||||||||||||
Total assets | 14,354.6 | -898.5 | -5.8 | -169.9 | 13,280.4 | |||||||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Reinsurance liabilities | ||||||||||||||||||||
Unpaid losses and loss expenses | 7,842.8 | -127.8 | — | 164.7 | 7,879.7 | |||||||||||||||
Reserves for life benefits, gross | 483.5 | — | — | -139.2 | 344.3 | |||||||||||||||
Insurance and reinsurance balances payable | — | -108.8 | — | 313.4 | 204.6 | |||||||||||||||
Reserves for unearned premiums, gross | 1,467.4 | -73.5 | — | 21.1 | 1,415.0 | |||||||||||||||
Other reinsurance liabilities | 1,087.3 | -73.1 | — | -910.0 | 104.2 | |||||||||||||||
Funds held under reinsurance contracts | 529.8 | -399.0 | — | 42.1 | 172.9 | |||||||||||||||
Deposit liabilities | — | 22.4 | — | 335.8 | 358.2 | |||||||||||||||
Deferred income taxes | 158.3 | 1.6 | 14.3 | — | 174.2 | |||||||||||||||
Accrued expenses and other liabilities | 311.6 | -2.9 | — | -2.5 | 306.2 | |||||||||||||||
Debt | 390.6 | — | — | 2.5 | 393.1 | |||||||||||||||
Total liabilities | 12,271.3 | -761.1 | 14.3 | -172.1 | 11,352.4 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | 253.0 | — | — | — | 253.0 | |||||||||||||||
Additional paid-in capital | 1,326.7 | — | — | -70.1 | 1,256.6 | |||||||||||||||
Treasury stock | -10.0 | — | — | — | -10.0 | |||||||||||||||
Unearned stock compensation | -6.1 | — | — | — | -6.1 | |||||||||||||||
Total accumulated other comprehensive income: | ||||||||||||||||||||
Accumulated other comprehensive income | — | — | — | -1.2 | -1.2 | |||||||||||||||
Net unrealized gains on investments, net of taxes | 145.3 | — | 0.3 | — | 145.6 | |||||||||||||||
Cumulative translation adjustments | 116.1 | -5.1 | -2.1 | 1.1 | 110.0 | |||||||||||||||
Total accumulated other comprehensive income | 261.4 | -5.1 | -1.8 | -0.1 | 254.4 | |||||||||||||||
Retained (deficit) earnings | 258.3 | -132.3 | -18.3 | 72.4 | 180.1 | |||||||||||||||
Total shareholders’ equity | 2,083.3 | -137.4 | -20.1 | 2.2 | 1,928.0 | |||||||||||||||
Total liabilities and shareholders’ equity | 14,354.6 | -898.5 | -5.8 | -169.9 | 13,280.4 |
F-26
Table of Contents
Notes to the consolidated financial statements (continued)
Condensed consolidated statements of cash flows
2004 | 2003 | 2002 | ||||||||||||||||||||||
Year ended December 31, | (As previously | (As previously | (As previously | |||||||||||||||||||||
(US$ million) | reported) | (As restated) | reported) | (As restated) | reported) | (As restated) | ||||||||||||||||||
Cash provided by operating activities | 224.5 | 358.7 | 1,265.3 | 917.2 | 870.4 | 868.6 | ||||||||||||||||||
Net cash used in investing activities | -195.3 | -315.4 | -1,314.2 | -1,314.2 | -1,093.3 | -1,110.2 | ||||||||||||||||||
Net cash provided by (used in) financing activities | 349.5 | 347.8 | -47.2 | 252.9 | 179.0 | 189.5 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 5.4 | 9.0 | 29.0 | 23.7 | -15.1 | -16.9 | ||||||||||||||||||
Change in cash and cash equivalents | 384.1 | 400.1 | -80.7 | -120.4 | -59.0 | -69.0 | ||||||||||||||||||
Cash and cash equivalents as of January 1 | 280.8 | 280.8 | 361.5 | 401.2 | 420.5 | 470.2 | ||||||||||||||||||
Cash and cash equivalents as of December 31 | 664.9 | 680.9 | 280.8 | 280.8 | 361.5 | 401.2 |
• | CRNA has been placed into run-off and will seek to commute its liabilities wherever appropriate. In addition, CRNA has hired an experienced run-off professional as its new President and CEO and has restructured its senior level staffing to function as an entity in run-off; |
• | Converium implemented a fronting arrangement to enable it to continue to participate in the Global Aerospace Underwriting Managers Limited (“GAUM”) pool; |
• | Converium Insurance (North America) Inc. (“CINA”) is now a limited writer, offering continuing coverage for only two discrete primary programs, one of which is mandated by state law. The plan is for CINA to maintain this status until such time as it becomes a wider accepted carrier for its clients; and |
• | Converium will offer reinsurance for US-origin business to select US-based clients. This business will be underwritten and managed through Converium AG, Zurich. |
2004 | 2003 | 2002 | ||||||||||
(US$ million) | (Restated) | (Restated) | (Restated) | |||||||||
Gross premiums written | 560.2 | 1,384.3 | 1,076.8 | |||||||||
Net loss before income taxes | -468.3 | -39.3 | -71.7 | |||||||||
Net loss | -662.5 | -60.1 | -39.7 |
F-27
Table of Contents
Notes to the consolidated financial statements (continued)
Statements of (loss) | ||||||||||||||||||||
Balance sheets | income and cash flows | |||||||||||||||||||
Exchange rates against US$ | 2004 | 2003 | 2004 | 2003 | 2002 | |||||||||||||||
UK pound | 1.9199 | 1.7804 | 1.8324 | 1.6349 | 1.5031 | |||||||||||||||
Euro | 1.3593 | 1.2531 | 1.2439 | 1.1317 | 0.9453 | |||||||||||||||
100 Japanese yen | 0.9759 | 0.9352 | 0.9254 | 0.8637 | 0.7998 | |||||||||||||||
Swiss franc | 0.8794 | 0.8033 | 0.8059 | 0.7441 | 0.6446 |
Net premiums written by line of business
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Standard Property & Casualty Reinsurance: | ||||||||||||
General Third Party Liability | 429.7 | 364.0 | 301.1 | |||||||||
Motor | 493.5 | 488.8 | 353.5 | |||||||||
Personal Accident (assumed from non-life insurers) | 34.5 | 35.3 | 35.0 | |||||||||
Property | 600.2 | 793.5 | 646.0 | |||||||||
Total Standard Property & Casualty Reinsurance | 1,557.9 | 1,681.6 | 1,335.6 | |||||||||
Specialty Lines: | ||||||||||||
Agribusiness | 126.9 | 90.0 | 22.0 | |||||||||
Aviation & Space | 404.5 | 341.6 | 365.3 | |||||||||
Credit & Surety | 169.6 | 239.4 | 199.2 | |||||||||
Engineering | 112.2 | 139.9 | 116.1 | |||||||||
Marine & Energy | 86.2 | 95.3 | 94.3 | |||||||||
Professional Liability and other Special Liability | 611.0 | 643.7 | 567.4 | |||||||||
Workers’ Compensation | 226.5 | 310.9 | 220.6 | |||||||||
Total Specialty Lines | 1,736.9 | 1,860.8 | 1,584.9 | |||||||||
Total non-life reinsurance | 3,294.8 | 3,542.4 | 2,920.5 | |||||||||
Life & Health Reinsurance: | ||||||||||||
Life and Disability | 234.8 | 172.9 | 154.7 | |||||||||
Accident and Health | 196.5 | 207.4 | 160.0 | |||||||||
Total Life & Health Reinsurance | 431.3 | 380.3 | 314.7 | |||||||||
Total | 3,726.1 | 3,922.7 | 3,235.2 |
F-28
Table of Contents
Notes to the consolidated financial statements (continued)
Gross premiums written by geographic area of ceding company
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
United Kingdom* | 1,160.8 | 1,188.0 | 910.4 | |||||||||
Germany | 389.6 | 286.9 | 176.1 | |||||||||
France | 158.2 | 160.4 | 106.9 | |||||||||
Italy | 162.2 | 131.2 | 84.0 | |||||||||
Rest of Europe | 379.8 | 338.9 | 224.0 | |||||||||
Far East | 238.5 | 266.4 | 191.9 | |||||||||
Near and Middle East | 124.3 | 134.3 | 124.3 | |||||||||
North America | 1,235.3 | 1,642.6 | 1,389.8 | |||||||||
Latin America | 130.0 | 151.7 | 165.0 | |||||||||
Total | 3,978.7 | 4,300.4 | 3,372.4 |
* | Premiums from the United Kingdom include business assumed through GAUM and Lloyd’s syndicates for such lines of business as Aviation & Space as well as marine, where the exposures are worldwide in nature. Therefore, geographic location of the ceding company may not necessarily be indicative of the location of risk. |
Investment income
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Investment income: | ||||||||||||
Fixed maturities | 198.3 | 120.4 | 132.6 | |||||||||
Equity securities | 14.8 | 12.1 | 13.4 | |||||||||
Short-term investments and cash and cash equivalents | 8.0 | 7.4 | 12.9 | |||||||||
Real estate | 9.4 | 11.5 | 11.5 | |||||||||
Other | 20.3 | 8.4 | 14.5 | |||||||||
Funds Withheld Asset | 75.1 | 85.6 | 81.9 | |||||||||
Total investment income | 325.9 | 245.4 | 266.8 | |||||||||
Investment expenses | -11.5 | -8.0 | -9.1 | |||||||||
Real estate expenses | -1.7 | -3.0 | -5.9 | |||||||||
Net investment income | 312.7 | 234.4 | 251.8 |
F-29
Table of Contents
Notes to the consolidated financial statements (continued)
Net realized capital gains and losses
(US$ million) | ||||||||||||
Year ended December 31 | 2004 | 2003 | 2002 | |||||||||
Fixed maturities: | ||||||||||||
Realized capital gains | 23.9 | 46.1 | 145.9 | |||||||||
Realized capital losses | -18.2 | -11.3 | -57.9 | |||||||||
Equity securities: | ||||||||||||
Realized capital gains | 61.2 | 9.1 | 37.5 | |||||||||
Realized capital losses | -10.0 | -1.7 | -90.4 | |||||||||
Write-down of impaired investments | -6.2 | -27.4 | -48.3 | |||||||||
Other | -4.2 | 3.6 | 2.9 | |||||||||
Net realized capital gains (losses) | 46.5 | 18.4 | -10.3 |
Unrealized investment gains and losses (Restated)
(included in other comprehensive income)
Net change for the | Total as | |||||||||||||||||||
year ended December 31 | of December 31 | |||||||||||||||||||
(US$ million) | 2004 | 2003 | 2002 | 2004 | 2003 | |||||||||||||||
Fixed maturities held-to-maturity | -4.3 | 14.1 | – | 9.8 | 14.1 | |||||||||||||||
Fixed maturities available-for-sale | 0.9 | -8.0 | 11.2 | 26.7 | 25.8 | |||||||||||||||
Equity securities available-for-sale | -24.2 | 148.1 | -75.7 | 70.3 | 94.5 | |||||||||||||||
Hedge funds | 2.5 | — | — | 2.5 | — | |||||||||||||||
Less amounts of net unrealized investment gains (losses) attributable to: | ||||||||||||||||||||
Net deferred income taxes | -15.3 | -5.6 | 31.2 | -4.1 | 11.2 | |||||||||||||||
Foreign currency effect | — | 50.3 | -50.3 | — | — | |||||||||||||||
Total | -40.4 | 198.9 | -83.6 | 105.2 | 145.6 |
Investments in fixed maturities
and equity securities
Cost or | Gross | Gross | Estimated | |||||||||||||||||||||||||||||
(US$ million) | amortized cost | unrealized gains | unrealized losses | fair value | ||||||||||||||||||||||||||||
As of December 31 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||
Held-to-maturity | ||||||||||||||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||||||||||
Transferred in: | ||||||||||||||||||||||||||||||||
US government | 414.2 | 294.0 | — | 6.2 | –11.3 | — | 402.9 | 300.2 | ||||||||||||||||||||||||
Other governments | 15.3 | 14.0 | 0.5 | 0.1 | — | — | 15.8 | 14.1 | ||||||||||||||||||||||||
Newly invested: | ||||||||||||||||||||||||||||||||
US government | 170.1 | 169.8 | 0.9 | 1.8 | –0.2 | — | 170.8 | 171.6 | ||||||||||||||||||||||||
Other governments | 250.8 | 22.6 | 3.7 | — | — | –0.8 | 254.5 | 21.8 | ||||||||||||||||||||||||
Total held-to-maturity | 850.4 | 500.4 | 5.1 | 8.1 | –11.5 | –0.8 | 844.0 | 507.7 | ||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||||||||||
US government | 1,765.6 | 1,728.0 | 9.1 | 13.6 | –11.6 | –8.0 | 1,763.1 | 1,733.6 | ||||||||||||||||||||||||
Other governments | 1,769.3 | 1,163.4 | 15.7 | 3.8 | –2.0 | –2.6 | 1,783.0 | 1,164.6 | ||||||||||||||||||||||||
Corporate and other debt securities | 661.1 | 671.6 | 13.4 | 12.7 | –2.4 | –3.4 | 672.1 | 680.9 |
F-30
Table of Contents
Notes to the consolidated financial statements (continued)
Cost or | Gross | Gross | Estimated | |||||||||||||||||||||||||||||
(US$ million) | amortized cost | unrealized gains | unrealized losses | fair value | ||||||||||||||||||||||||||||
As of December 31 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||||||||
Mortgage and asset-backed securities | 612.2 | 839.4 | 5.7 | 11.5 | –1.3 | –1.8 | 616.6 | 849.1 | ||||||||||||||||||||||||
Total | 4,808.2 | 4,402.4 | 43.9 | 41.6 | –17.3 | –15.8 | 4,834.8 | 4,428.2 | ||||||||||||||||||||||||
Equity securities (Restated) | 328.9 | 740.4 | 73.0 | 96.2 | -2.5 | -1.7 | 399.4 | 834.9 | ||||||||||||||||||||||||
Total available-for-sale (Restated) | 5,137.1 | 5,142.8 | 116.9 | 137.8 | -19.8 | -17.5 | 5,234.2 | 5,263.1 |
Maturities of unrealized investment losses on
fixed maturities and equity securities
Gross unrealized losses | ||||||||||||||||
Total gross | ||||||||||||||||
(US$ million) | Estimated fair | Less than | Greater | unrealized | ||||||||||||
As of December 31, 2004 | value | one year | than one year | losses | ||||||||||||
Held-to-maturity | ||||||||||||||||
Fixed maturities | 91.6 | -11.2 | -0.3 | -11.5 | ||||||||||||
Available-for-sale | ||||||||||||||||
Fixed maturities | 1,989.2 | -15.8 | -1.5 | -17.3 | ||||||||||||
Equity securities | 31.9 | -2.5 | — | -2.5 | ||||||||||||
Total available-for-sale | 2,021.1 | -18.3 | -1.5 | -19.8 |
Fixed maturity schedule by maturity
(US$ million) | Estimated fair value | % of total | Carrying value | % of total | ||||||||||||
As of December 31, 2004 | Available-for-sale (AFS) | AFS | Held-to-maturity (HTM) | HTM | ||||||||||||
Less than one year | 182.5 | 3.8 | 15.9 | 1.9 | ||||||||||||
One year through five years | 2,871.8 | 59.4 | 450.8 | 53.0 | ||||||||||||
Five years through ten years | 923.2 | 19.1 | 353.5 | 41.6 | ||||||||||||
Over ten years | 91.8 | 1.9 | 30.2 | 3.5 | ||||||||||||
Subtotal | 4,069.3 | 84.2 | 850.4 | 100.0 | ||||||||||||
Mortgage and asset-backed securities | 616.6 | 12.7 | — | — | ||||||||||||
Unit trust bonds | 148.9 | 3.1 | — | — | ||||||||||||
Total | 4,834.8 | 100.0 | 850.4 | 100.0 |
F-31
Table of Contents
Notes to the consolidated financial statements (continued)
F-32
Table of Contents
Notes to the consolidated financial statements (continued)
Reserves for losses and loss expenses
(Restated) | (Restated) | (Restated) | ||||||||||
(US$ million) | 2004 | 2003 | 2002 | |||||||||
As of January 1 | ||||||||||||
Gross reserves for losses and loss expenses | 7,879.7 | 6,876.9 | 5,642.3 | |||||||||
Less reinsurance recoverable | 1,041.3 | 1,085.7 | 1,099.2 | |||||||||
Net reserves for losses and loss expenses | 6,838.4 | 5,791.2 | 4,543.1 | |||||||||
Loss and loss expenses incurred | ||||||||||||
Current year | 2,895.3 | 2,736.1 | 2,264.6 | |||||||||
Prior years | 336.8 | -63.5 | 201.1 | |||||||||
Total | 3,232.1 | 2,672.6 | 2,465.6 | |||||||||
Losses and loss expenses paid | ||||||||||||
Current year | 541.4 | 437.1 | 340.2 | |||||||||
Prior years | 1,938.9 | 1,504.4 | 1,171.0 | |||||||||
Total | 2,480.3 | 1,941.5 | 1,511.2 | |||||||||
Foreign currency translation effects | 403.6 | 316.9 | 293.7 | |||||||||
As of December 31 | ||||||||||||
Net reserves for losses and loss expenses | 7,993.8 | 6,838.4 | 5,791.2 | |||||||||
Reinsurance recoverable | 914.5 | 1,041.3 | 1,085.7 | |||||||||
Gross reserves for losses and loss expenses | 8,908.3 | 7,879.7 | 6,876.9 |
F-33
Table of Contents
Notes to the consolidated financial statements (continued)
Retrocessional | ||||||||||||
Segment | reinsurance | |||||||||||
(US$ million) | Gross losses | recoveries | Net losses | |||||||||
Standard Property & Casualty Reinsurance | 263.7 | 155.2 | 108.5 | |||||||||
Specialty Lines | 380.0 | 211.3 | 168.7 | |||||||||
Life & Health Reinsurance | 20.0 | 8.0 | 12.0 | |||||||||
Total | 663.7 | 374.5 | 289.2 |
F-34
Table of Contents
Notes to the consolidated financial statements (continued)
• | Return of premium: The GMDB is the amount of total deposits adjusted for partial withdrawals, if any. |
• | Ratchet: After a given number of years, the GMDB is adjusted to the current account balance, if greater. Most common is a one-year ratchet, meaning that the GMDB is adjusted annually on the policy’s anniversary date. |
• | Rollup: The GMDB increases each year from the initial premium adjusted for later deposits and partial withdrawals by a fixed percentage. Rollup guarantees reinsured under Converium’s agreements grant an annual accumulation percentage between 3% and 7%. In many products, especially for higher rollup percentages, an upper limit applies (e.g. 200% of the paid policy- holder premium adjusted for later deposits and partial withdrawals). |
• | Reset: After a given number of years, the GMDB is adjusted to the current account balance. This means that the GMDB can be reduced but often not below the paid-up premium (adjusted for later deposits and partial withdrawals). |
• | Combinations of the above. |
F-35
Table of Contents
Notes to the consolidated financial statements (continued)
Gross | ||||||||||||||||||||
Average | Account | SOP 03-1 | ||||||||||||||||||
(US$ million) | age | GMDB | value | NAR | reserve | |||||||||||||||
Guarantee type | ||||||||||||||||||||
Ratchet | 65.4 | 2,110.4 | 1,771.9 | 407.4 | 24.7 | |||||||||||||||
Rollup | 70.1 | 585.0 | 405.5 | 188.7 | 21.7 | |||||||||||||||
Rollup & ratchet | 66.7 | 21.6 | 18.2 | 4.9 | 0.2 | |||||||||||||||
Return of premium | 63.3 | 21.5 | 21.2 | 2.6 | 0.1 | |||||||||||||||
Reset | 58.3 | 288.4 | 296.9 | 23.3 | 1.1 | |||||||||||||||
Reset & return of premium | 59.8 | 131.1 | 131.0 | 8.6 | 0.4 | |||||||||||||||
Total | 66.5 | 3,158.0 | 2,644.7 | 635.5 | 48.2 |
(US$ million)
Year ended December 31 | 2004 | 2003 | 2002 | |||||||||
Received reinsurance premium, net of commission and brokerage | 5.1 | 4.5 | 5.4 | |||||||||
Paid losses | 13.3 | 20.4 | 12.5 | |||||||||
As of December 31 | 2004 | 2003 | ||||||||||
Claim reserves (including case reserves and IBNR) | 4.9 | 7.7 |
F-36
Table of Contents
Notes to the consolidated financial statements (continued)
Gross | Reinsurance assets | Net of reinsurance | ||||||||||||||||||||||
(US$ million) | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||
Reserves for losses and loss expenses | 8,908.3 | 7,879.7 | 914.5 | 1,041.3 | 7,993.8 | 6,838.4 | ||||||||||||||||||
Reserves for unearned premiums | 1,247.7 | 1,415.0 | 55.2 | 109.3 | 1,192.5 | 1,305.7 | ||||||||||||||||||
Future life benefits | 407.1 | 344.3 | 23.4 | 52.8 | 383.7 | 291.5 | ||||||||||||||||||
Total underwriting reserves | 10,563.1 | 9,639.0 | 993.1 | 1,203.4 | 9,570.0 | 8,435.6 |
Premiums written and earned
Premiums written | Premiums earned | |||||||||||||||||||||||
(US$ million) | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||
For the years ended December 31 | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||||
Direct premiums | 490.9 | 561.4 | 88.1 | 574.1 | 325.9 | 77.1 | ||||||||||||||||||
Assumed premiums | 3,493.4 | 3,748.5 | 3,293.7 | 3,622.7 | 3,747.0 | 3,148.4 | ||||||||||||||||||
Ceded premiums | -252.6 | -377.8 | -137.2 | -309.0 | -295.7 | -138.6 | ||||||||||||||||||
Catastrophe Agreement | -5.6 | -9.4 | -9.4 | -5.6 | -9.4 | -9.4 | ||||||||||||||||||
Total | 3,726.1 | 3,922.7 | 3,235.2 | 3,882.2 | 3,767.8 | 3,077.5 |
Benefits, losses and expenses
(US$ million) | 2004 | 2003 | 2002 | |||||||||
For the years ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Losses, loss expenses and life benefits | ||||||||||||
Direct | -205.6 | -13.3 | 125.2 | |||||||||
Assumed | 3,695.9 | 2,905.4 | 2,469.2 | |||||||||
Ceded | -147.8 | -132.0 | -103.3 | |||||||||
Total | 3,342.5 | 2,760.1 | 2,491.1 |
F-37
Table of Contents
Notes to the consolidated financial statements (continued)
(US$ million) | 2004 | 2003 | 2002 | |||||||||
For the years ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Acquisition costs | ||||||||||||
Direct | -12.7 | 7.0 | 24.6 | |||||||||
Assumed | 967.7 | 852.9 | 645.4 | |||||||||
Ceded | -42.6 | -27.9 | -23.2 | |||||||||
Total | 912.4 | 832.0 | 646.8 |
F-38
Table of Contents
Notes to the consolidated financial statements (continued)
Income tax expense (benefit)
(US$ million) | 2004 | 2003 | 2002 | |||||||||
For the years ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Current | ||||||||||||
Switzerland | -1.8 | 5.4 | 23.2 | |||||||||
Non-Switzerland | 14.1 | -46.1 | 0.9 | |||||||||
Total current | 12.3 | -40.7 | 24.1 | |||||||||
Deferred | ||||||||||||
Switzerland | -17.5 | 33.3 | -24.8 | |||||||||
Non-Switzerland | 206.5 | 40.2 | -17.2 | |||||||||
Total deferred | 189.0 | 73.5 | -42.0 | |||||||||
Total income tax expense (benefit) | 201.3 | 32.8 | -17.9 |
Expected and actual income tax expense (benefit)
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Year ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
(Loss) income before tax | -381.2 | 210.6 | 18.2 | |||||||||
Statutory average tax rate Converium AG | 21.4 | % | 21.4 | % | 21.4 | % | ||||||
Expected income tax expense (benefit) | -81.6 | 45.1 | 3.9 | |||||||||
Increase (reduction) in taxes resulting from: | ||||||||||||
Change in valuation allowance | 473.7 | — | — | |||||||||
Foreign tax-rate differential | -216.7 | -27.3 | -26.1 | |||||||||
Accrued income taxes | — | 38.0 | — | |||||||||
Tax exempt investment income | — | — | -2.9 | |||||||||
Tax exempt realized gains (losses) from equity securities | -3.3 | 1.8 | 5.6 | |||||||||
Change in applicable tax rate | 1.2 | 3.9 | -0.6 | |||||||||
Change in net operating loss | -6.0 | -29.8 | 13.5 | |||||||||
Impairment of goodwill | 32.9 | — | — | |||||||||
Stop loss | — | — | -4.9 | |||||||||
Other | 1.0 | 1.1 | -6.3 | |||||||||
Actual income tax expense (benefit) | 201.3 | 32.8 | -17.8 | |||||||||
Effective tax rate | 52.8 | % | 15.6 | % | -99.4 | % |
F-39
Table of Contents
Notes to the consolidated financial statements (continued)
Deferred income taxes
(US$ million)
2004 | 2003 | |||||||
(Restated) | (Restated) | |||||||
Deferred income tax assets | ||||||||
Loss reserve discount | 106.9 | 106.6 | ||||||
Other technical adjustments | 32.9 | 52.4 | ||||||
Accruals not currently deductible | 20.5 | 25.4 | ||||||
Partnership loss | 2.6 | 5.5 | ||||||
Net operating loss carryforwards | 490.0 | 153.9 | ||||||
Goodwill | 8.1 | 11.0 | ||||||
Unrealized currency losses | 21.4 | 7.5 | ||||||
Other | 14.2 | 40.3 | ||||||
Total deferred income tax assets | 696.6 | 402.6 | ||||||
Valuation allowance | -534.1 | -37.9 | ||||||
Net deferred income tax assets | 162.5 | 364.7 | ||||||
Deferred income tax liabilities | ||||||||
Loss and benefit reserves | 25.5 | 13.3 | ||||||
Deferred policy acquisition costs | 74.3 | 70.8 | ||||||
Unrealized appreciation of investments | 21.9 | 34.4 | ||||||
Investments | 10.2 | 10.8 | ||||||
Other technical adjustments | 27.4 | 41.1 | ||||||
Other | 5.2 | 3.8 | ||||||
Total deferred income tax liabilities | 164.5 | 174.2 | ||||||
Net deferred income taxes as of December 31 | -2.0 | 190.5 |
Net operating loss carryforwards
(US$ million)
Deferred | ||||||||
Net operating loss | income | |||||||
carryforward | tax asset | |||||||
One year through five years | 111.2 | 17.1 | ||||||
Over five years | 1,998.5 | 472.9 | ||||||
Total as of December 31, 2004 (Restated) | 2,109.7 | 490.0 |
F-40
Table of Contents
Notes to the consolidated financial statements (continued)
Weighted average
2004 | 2003 | 2002 | ||||||||||
Discount rate | 3.46 | % | 3.99 | % | 3.85 | % | ||||||
Expected long-term rate of return on assets | 5.50 | % | 6.00 | % | 6.00 | % | ||||||
Future salary increases | 2.00 | % | 2.00 | % | 2.16 | % | ||||||
Future pension increases | 0.89 | % | 0.90 | % | 0.91 | % |
F-41
Table of Contents
Notes to the consolidated financial statements (continued)
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Projected benefit obligation | ||||||||||||
Projected benefit obligation as of January 1 | 80.3 | 64.9 | 43.6 | |||||||||
Service cost | 7.4 | 7.6 | 5.0 | |||||||||
Interest cost | 3.2 | 2.6 | 2.1 | |||||||||
Actuarial losses (gains) | 10.1 | –3.8 | 4.5 | |||||||||
Foreign currency translation effects | 9.3 | 8.8 | 9.8 | |||||||||
Benefits paid | –0.9 | 0.2 | –0.1 | |||||||||
Projected benefit obligation as of December 31 | 109.4 | 80.3 | 64.9 | |||||||||
Fair value of plan assets | ||||||||||||
Fair value of plan assets as of January 1 | 50.6 | 35.6 | 23.6 | |||||||||
Actual return on plan assets | 2.5 | 2.9 | –0.9 | |||||||||
Employee contributions | 3.1 | 2.6 | 1.8 | |||||||||
Employer contributions | 7.1 | 4.4 | 5.9 | |||||||||
Foreign currency translation effects | 5.8 | 4.9 | 5.3 | |||||||||
Benefits paid | –0.9 | 0.2 | –0.1 | |||||||||
Fair value of plan assets as of December 31 | 68.2 | 50.6 | 35.6 | |||||||||
Funded status | ||||||||||||
Funded status | –41.2 | –29.7 | –29.3 | |||||||||
Unrecognized transition obligation | — | — | 2.8 | |||||||||
Unrecognized net actuarial losses (gains) | 18.9 | 6.6 | 8.2 | |||||||||
Unrecognized prior service cost | –1.7 | –1.7 | –1.7 | |||||||||
Additional plan liabilities | –7.7 | — | –1.1 | |||||||||
Accrued benefit liability | –31.7 | –24.8 | –21.1 | |||||||||
Amounts recognized in the balance sheet | ||||||||||||
Accrued benefit liability | –31.7 | –24.8 | –21.1 |
Net periodic benefit expense
(US$ million) | ||||||||||||
For the years ended December 31 | 2004 | 2003 | 2002 | |||||||||
Service cost | 7.4 | 7.6 | 5.0 | |||||||||
Interest cost | 3.2 | 2.6 | 2.1 | |||||||||
Expected return on plan assets | –3.1 | –2.4 | –1.7 | |||||||||
Employee contributions | –3.1 | –2.6 | –1.8 | |||||||||
Amortization of transition obligation | — | 0.6 | 0.5 | |||||||||
Amortization of actuarial (gains) losses | — | 0.4 | — | |||||||||
Amortization of past service cost | –0.2 | –0.2 | –0.2 | |||||||||
Net periodic benefit expense | 4.2 | 6.0 | 3.9 |
Accrued benefit liability
(US$ million) | ||||||||||||
Year ended December 31 | 2004 | 2003 | 2002 | |||||||||
Balance at January 1 | –24.8 | –21.1 | –18.6 | |||||||||
Current year expense | –4.2 | –6.0 | –3.9 | |||||||||
Contributions paid | 7.1 | 4.4 | 5.9 | |||||||||
Foreign currency translation effects | –2.1 | –2.1 | –3.4 | |||||||||
Additional plan liabilities | –7.7 | — | –1.1 | |||||||||
Balance at December 31 | –31.7 | –24.8 | –21.1 |
F-42
Table of Contents
Notes to the consolidated financial statements (continued)
Expected future cash flows
(US$ million) | ||||
Employer contributions | ||||
2005 (estimate) | 5.9 | |||
Expected future benefit payments | ||||
2005 | 3.1 | |||
2006 | 3.3 | |||
2007 | 3.5 | |||
2008 | 3.6 | |||
2009 | 3.8 | |||
2010–2014 | 21.5 |
Weighted average assets allocation of defined benefit plans
Year ended December 31 | Long-term target | 2004 | 2003 | |||||||||
Debt securities | 46%–70 | % | 50 | % | 51 | % | ||||||
Equity securities | 19%–33 | % | 31 | % | 27 | % | ||||||
Real estate | 14%–20 | % | 17 | % | 17 | % | ||||||
Cash and other investments | 0%– 8 | % | 2 | % | 5 | % | ||||||
Total | 100 | % | 100 | % |
F-43
Table of Contents
Notes to the consolidated financial statements (continued)
2004 | 2003 | 2002 | ||||||||||
Unvested shares at beginning of year | 160,859 | 363,278 | 706,451 | |||||||||
Shares granted | 438,795 | 133,930 | 29,732 | |||||||||
Shares vested | –30,288 | –311,587 | –299,214 | |||||||||
Shares forfeited | –112,185 | –24,762 | –73,691 | |||||||||
Unvested shares at end of year | 457,181 | 160,859 | 363,278 |
2004 | 2003 | 2002 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
exercise | exercise | exercise | ||||||||||||||||||||||
Options | price | Options | price | Options | price | |||||||||||||||||||
Outstanding at beginning of year | 1,728,744 | CHF 71.17 | 1,115,424 | CHF 79.28 | 732,329 | CHF 82.00 | ||||||||||||||||||
Granted | 1,238,640 | 17.75 | 699,555 | 58.14 | 442,514 | 74.66 | ||||||||||||||||||
Exercised | –39,806 | 68.64 | –23,450 | 60.10 | –3,574 | 78.85 | ||||||||||||||||||
Forfeited | –567,624 | 59.90 | –62,785 | 74.31 | –55,845 | 80.40 | ||||||||||||||||||
Outstanding at end of year | 2,359,954 | 45.88 | 1,728,744 | 71.17 | 1,115,424 | 79.28 | ||||||||||||||||||
Options exercisable at end of year | 1,311,491 | 61.38 | 901,933 | 75.74 | 423,509 | 80.47 |
Weighted average | 2004 | 2003 | 2002 | |||||||||
Risk-free rate | 2.11 | % | 1.51 | % | 1.87 | % | ||||||
Expected life | 3 years | 3 years | 3 years | |||||||||
Expected volatility | 31.74 | % | 27.24 | % | 31.27 | % | ||||||
Dividend yield | 2.00 | % | 1.78 | % | 0.80 | % | ||||||
Fair value of options granted | US$ | 3.38 | US$ | 7.43 | US$ | 11.11 |
F-44
Table of Contents
Notes to the consolidated financial statements (continued)
Options outstanding | Options exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Range of | Number | average remaining | Weighted average | Number | Weighted average | |||||||||||||||
exercise prices | outstanding | contractual life | exercise price | exercisable | exercise price | |||||||||||||||
CHF 8.64 – 25.56 | 958,765 | 10.4 | CHF 9.72 | 252,494 | CHF 9.96 | |||||||||||||||
CHF 56.05 – 62.50 | 734,017 | 9.0 | 59.44 | 413,604 | 59.30 | |||||||||||||||
CHF 82.00 – 89.10 | 667,172 | 7.4 | 82.93 | 645,393 | 82.83 | |||||||||||||||
CHF 8.64 – 89.10 | 2,359,954 | 9.1 | 45.88 | 1,311,491 | 61.38 |
• | Reduce the share capital of the Company from CHF 400,062,170 by 200,031,085 to CHF 200,031,085 by reducing the nominal value of CHF 10 per share by CHF 5 to CHF 5 per share; |
• | Increase the share capital by CHF 533,416,225 through the issuance of 106,683,245 fully paid registered shares with a nominal value of CHF 5 each at an issue price of CHF 5 per share; and |
• | Amend the Articles of Incorporation as a consequence of the reduction of the nominal value. |
F-45
Table of Contents
Notes to the consolidated financial statements (continued)
F-46
Table of Contents
Notes to the consolidated financial statements (continued)
• | CRNA’s coverage for net losses of US$ 320.4 million with respect to all Amerisafe business retroceded to the Unicover Pool remains in effect, with ZIC as counterparty; |
• | CRNA’s coverage for net losses of US$ 307.5 million from the September 11th terrorist attacks that exceed US$ 58.2 million remains in effect, with ZIC as counterparty; and |
• | The remainder of the coverage under the agreement is commuted. |
F-47
Table of Contents
Notes to the consolidated financial statements (continued)
Supplemental cash flow disclosures
(US$ million) | 2004 | 2003 | 2002 | |||||||||
Income taxes paid | -10.2 | -2.7 | -2.3 | |||||||||
Interest expense paid | –33.1 | –31.0 | –16.4 |
• | Fixed maturities securities:fair values are generally based upon quoted market prices. Where market prices are not readily available, fair values are estimated using either values obtained from independent pricing services or quoted market prices of comparable investments. |
• | Equity securities:fair values are based on quoted market prices. |
• | Funds Withheld Asset:carrying value of the Funds Withheld Asset approximates fair value. |
F-48
Table of Contents
Notes to the consolidated financial statements (continued)
• | Other investments:for which quoted market prices are not readily available are not fair valued and are not significant to Converium. |
• | Cash and short-term investments:carrying amounts approximate fair value. |
• | Debt:fair values are generally based upon quoted market prices. |
Fair value of financial instruments
Total | Total | Total | Total | |||||||||||||
fair | carrying | fair | carrying | |||||||||||||
value | value | value | value | |||||||||||||
(US$ million) | 2004 | 2004 | 2003 | 2003 | ||||||||||||
As of December 31 | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||
Fixed maturities | 5,678.8 | 5,685.2 | 4,935.9 | 4,928.6 | ||||||||||||
Equity securities | 399.4 | 399.4 | 834.9 | 834.9 | ||||||||||||
Other investments (excluding real estate) | 140.4 | 140.4 | 22.0 | 22.0 | ||||||||||||
Short-term investments | 117.3 | 117.3 | 55.7 | 55.7 | ||||||||||||
Funds Withheld Asset | 1,305.1 | 1,305.1 | 1,530.6 | 1,530.6 | ||||||||||||
Cash and cash equivalents | 680.9 | 680.9 | 280.8 | 280.8 | ||||||||||||
Debt | –330.6 | –391.1 | –428.6 | –393.1 |
Minimum future payments under operating leases | Rental | |||
(US$ million) | payments | |||
2005 | 13.3 | |||
2006 | 13.3 | |||
2007 | 13.2 | |||
2008 | 13.1 |
F-49
Table of Contents
Notes to the consolidated financial statements (continued)
Minimum future payments under operating leases | Rental | |||
(US$ million) | payments | |||
2009 | 11.8 | |||
2010 and thereafter | 20.9 | |||
Total | 85.6 |
F-50
Table of Contents
Notes to the consolidated financial statements (continued)
F-51
Table of Contents
Notes to the consolidated financial statements (continued)
F-52
Table of Contents
Notes to the consolidated financial statements (continued)
• | Making any material change in its management or operations; |
• | Making any withdrawal of monies from its bank accounts, disbursements or payments outside the ordinary course of the business run-off; |
• | Incurring any debt, obligation or liability for borrowed money not related directly to the ordinary course of the business run-off; |
• | Writing, assuming or issuing any new insurance policies; |
• | Making any dividend payment or other payment or distribution to or engaging in any transaction, or entering into any agreement directly or indirectly with its parent company, or any affiliated company; |
• | Entering into any new material reinsurance agreement; and |
• | Entering into any sales, purchases, exchanges, loans, extensions of credit or investments not in the ordinary course of its run-off business. |
F-53
Table of Contents
Notes to the consolidated financial statements (continued)
Country of | % of equity | Share | ||||||||||||||
incorporation | shares held | Currency | capital | |||||||||||||
Converium Rückversicherung (Deutschland) AG | Germany | 100 | EUR | 4,601,627 | ||||||||||||
Converium Finance S.A. | Luxembourg | 100 | EUR | 31,000 | ||||||||||||
Converium Holding AG | Switzerland | 100 | CHF | 733,447,310 | ||||||||||||
Converium AG | Switzerland | 100 | CHF | 400,000,000 | ||||||||||||
Converium Holdings (North America) Inc. | US | 100 | US$ | 1 | ||||||||||||
Converium Reinsurance (North America) Inc. | US | 100 | US$ | 3,500,000 | ||||||||||||
Converium Insurance (North America) Inc. | US | 100 | US$ | 5,000,000 | ||||||||||||
Converium Holding (UK) Ltd | UK | 100 | GBP | 101 | ||||||||||||
Converium Insurance (UK) Ltd | UK | 100 | GBP | 60,000,000 | ||||||||||||
Converium London Management Ltd | UK | 100 | GBP | 1,000 | ||||||||||||
Converium Underwriting Ltd | UK | 100 | GBP | 2 | ||||||||||||
Converium IP Management Ltd* | Bermuda | 100 | US$ | 12,000 | ||||||||||||
Converium Finance (Bermuda) Ltd* | Bermuda | 100 | US$ | 12,000 |
* | Converium has incorporated two new companies effective as of December 17, 2004. The scope of these companies is to effectively manage Converium’s brand. |
F-54
Table of Contents
Notes to the consolidated financial statements (continued)
(in US$ million, except per share information) | 2004 | 2003 | 2002 | |||||||||
For the years ended December 31 | (Restated) | (Restated) | (Restated) | |||||||||
Net (loss) income | (582.5 | ) | 177.9 | 35.8 | ||||||||
Average shares outstanding (millions) | 63.4 | 39.8 | 39.9 | |||||||||
Average diluted shares outstanding (millions) | 64.1 | 40.3 | 40.5 | |||||||||
Basic (loss) earnings per share | (9.19 | ) | 2.24 | 0.45 | ||||||||
Diluted (loss) earnings per share | (9.19 | ) | 2.23 | 0.45 |
statements of income
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2004 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Net premiums written | — | 2,683.4 | — | 1,042.7 | — | 3,726.1 | ||||||||||||||||||
Net premiums earned | — | 2,599.8 | — | 1,282.4 | — | 3,882.2 | ||||||||||||||||||
Net investment income | 13.4 | 189.4 | 13.4 | 123.2 | -26.7 | 312.7 | ||||||||||||||||||
Net realized capital gains (losses) | — | 12.6 | — | 33.9 | — | 46.5 | ||||||||||||||||||
Other income (loss) | 23.7 | -30.4 | 19.0 | -21.4 | — | -8.2 | ||||||||||||||||||
Total revenues | 37.1 | 2,771.4 | 32.4 | 1,418.1 | -26.7 | 4,233.3 | ||||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||||||
Losses, loss expenses and life benefits | — | -1,988.2 | — | -1,354.3 | — | -3,342.5 | ||||||||||||||||||
Acquisition costs | — | -650.0 | — | -261.5 | — | -912.4 | ||||||||||||||||||
Other operating and administration expenses | -11.7 | -105.0 | -0.1 | -103.0 | — | -219.8 | ||||||||||||||||||
Interest expense | -10.6 | -0.4 | -16.5 | -32.3 | 26.7 | -33.1 | ||||||||||||||||||
Impairment of goodwill | — | — | — | -94.0 | — | -94.0 | ||||||||||||||||||
Amortization of intangible assets | — | -9.9 | — | — | — | -9.9 | ||||||||||||||||||
Restructuring costs | — | -0.2 | — | -2.5 | — | -2.7 | ||||||||||||||||||
Total benefits, losses and expenses | -22.3 | -2,753.7 | -16.6 | -1,847.6 | 26.7 | -4,614.4 | ||||||||||||||||||
Income (loss) before taxes | 14.8 | 17.7 | 15.8 | -429.5 | — | -381.2 |
F-55
Table of Contents
Notes to the consolidated financial statements (continued)
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2004 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Income tax benefit (expense) | 2.5 | 6.6 | -0.1 | -210.3 | — | -201.3 | ||||||||||||||||||
Income (loss) before equity in | ||||||||||||||||||||||||
(loss) income of subsidiaries | 17.3 | 24.3 | 15.7 | -639.8 | — | -582.5 | ||||||||||||||||||
Equity in (loss) income of subsidiaries | -599.8 | -624.1 | — | — | 1,223.9 | — | ||||||||||||||||||
Net (loss) income | -582.5 | -599.8 | 15.7 | -639.8 | 1,223.9 | -582.5 |
F-56
Table of Contents
Notes to the consolidated financial statements (continued)
balance sheets
Non- | ||||||||||||||||||||||||
(US$ million) | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
December 31, 2004 (Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Invested assets | ||||||||||||||||||||||||
Fixed maturities | — | 2,956.6 | 14.8 | 2,713.8 | — | 5,685.2 | ||||||||||||||||||
Equity securities | — | 255.8 | — | 143.6 | — | 399.4 | ||||||||||||||||||
Investment in subsidiaries | 1,675.7 | 600.6 | — | — | -2,276.3 | — | ||||||||||||||||||
Notes receivable | 150.0 | — | 175.0 | — | -325.0 | — | ||||||||||||||||||
Short-term and other investments | 46.7 | 337.4 | — | 244.3 | -231.9 | 396.5 | ||||||||||||||||||
Total investments | 1,872.4 | 4,150.4 | 189.8 | 3,101.7 | -2,833.2 | 6,481.1 | ||||||||||||||||||
Funds Withheld Asset | — | 1,305.1 | — | — | — | 1,305.1 | ||||||||||||||||||
Total invested assets | 1,872.4 | 5,455.5 | 189.8 | 3,101.7 | -2,833.2 | 7,786.2 | ||||||||||||||||||
Other assets | ||||||||||||||||||||||||
Cash and cash equivalents | 2.1 | 345.1 | 4.2 | 329.5 | — | 680.9 | ||||||||||||||||||
Premiums receivable | — | 1,582.0 | — | 376.5 | -126.1 | 1,832.2 | ||||||||||||||||||
Reserves for unearned premiums, retro | — | 35.6 | — | 300.3 | -280.7 | 55.2 | ||||||||||||||||||
Reinsurance assets | — | 521.5 | — | 1,870.7 | -1,315.0 | 1,077.2 | ||||||||||||||||||
Funds held by reinsureds | — | 1,342.4 | — | 812.4 | -417.1 | 1,737.7 | ||||||||||||||||||
Deposit assets | — | 122.2 | — | 48.2 | — | 170.4 | ||||||||||||||||||
Deferred policy acquisition costs | — | 418.2 | — | 64.5 | — | 482.7 | ||||||||||||||||||
Deferred income taxes | — | 8.1 | — | 71.7 | — | 79.8 | ||||||||||||||||||
Other assets | 38.7 | 240.0 | 65.8 | 117.7 | -103.6 | 358.6 | ||||||||||||||||||
Total assets | 1,913.2 | 10,070.6 | 259.8 | 7,093.2 | -5,075.9 | 14,260.9 | ||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Reinsurance liabilities | — | 6,532.1 | — | 4,789.7 | -1,422.9 | 9,898.9 | ||||||||||||||||||
Reserves for unearned premiums, gross | — | 1,059.0 | — | 469.0 | -280.3 | 1,247.7 | ||||||||||||||||||
Other reinsurance liabilities | — | 43.9 | — | 52.2 | -25.3 | 70.8 | ||||||||||||||||||
Funds held under reinsurance contracts | — | 32.3 | — | 579.7 | -417.2 | 194.8 | ||||||||||||||||||
Deposit liabilities | — | 334.9 | — | 21.6 | — | 356.5 | ||||||||||||||||||
Deferred income taxes | — | 15.2 | — | 66.6 | — | 81.8 | ||||||||||||||||||
Accrued expenses and other liabilities | 24.2 | 377.5 | 1.4 | 206.1 | -324.7 | 284.5 | ||||||||||||||||||
Notes payable | 150.0 | — | — | 175.0 | -325.0 | — | ||||||||||||||||||
Debt | — | — | 193.6 | 197.5 | — | 391.1 | ||||||||||||||||||
Total liabilities | 174.2 | 8,394.9 | 195.0 | 6,557.4 | -2,795.4 | 12,526.1 | ||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||
Common stock and additional paid-in capital | 1,919.6 | 1,874.0 | — | 1,288.1 | -3,166.3 | 1,915.4 | ||||||||||||||||||
Treasury stock | -7.7 | — | — | — | — | -7.7 | ||||||||||||||||||
Unearned stock compensation | -7.5 | — | — | — | — | -7.5 | ||||||||||||||||||
Total accumulated comprehensive income (loss) | 288.7 | 259.8 | 9.4 | 53.6 | -322.8 | 288.7 | ||||||||||||||||||
Retained (deficit) earnings | -454.1 | -458.1 | 55.4 | -805.9 | 1,208.6 | -454.1 | ||||||||||||||||||
Total shareholders’ equity | 1,739.0 | 1,675.7 | 64.8 | 535.8 | -2,280.5 | 1,734.8 | ||||||||||||||||||
Total liabilities and shareholders’ equity | 1,913.2 | 10,070.6 | 259.8 | 7,093.2 | -5,075.9 | 14,260.9 |
F-57
Table of Contents
Notes to the consolidated financial statements (continued)
statements of cash flows
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2004 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Cash provided by (used in) operating activities | 41.6 | 698.9 | 2.1 | -383.9 | — | 358.7 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Purchases of fixed maturities held-to-maturity | — | -214.9 | — | -13.3 | — | -228.2 | ||||||||||||||||||
Proceeds from sales and maturities of fixed maturities | — | 936.3 | — | 3,179.7 | — | 4,116.0 | ||||||||||||||||||
Purchases of fixed maturities available-for-sale | — | -1,663.5 | — | -2,756.7 | — | -4,420.2 | ||||||||||||||||||
Proceeds from sales of equity securities | — | 279.6 | — | 703.5 | — | 983.1 | ||||||||||||||||||
Purchases of equity securities | — | -67.0 | — | -470.5 | — | -537.5 | ||||||||||||||||||
Net increase in short-term investments | — | — | — | -55.3 | — | -55.3 | ||||||||||||||||||
Proceeds from sales of other assets | — | 54.2 | — | 28.1 | — | 82.3 | ||||||||||||||||||
Purchase of other assets | — | -152.0 | — | 8.0 | — | -144.0 | ||||||||||||||||||
Net (increase) decrease in deposit assets | — | -73.3 | — | -38.3 | — | -111.6 | ||||||||||||||||||
Notes receivable | -46.7 | -49.2 | — | -135.9 | 231.8 | — | ||||||||||||||||||
Investment in subsidiaries | -355.1 | -108.7 | — | — | 463.8 | — | ||||||||||||||||||
Net cash (used in) provided by investing activities | -401.8 | -1,058.5 | — | 487.5 | 695.6 | -315.4 | ||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Capital contribution | — | 402.9 | — | 108.7 | -511.6 | — | ||||||||||||||||||
Issuance of notes payable | 22.0 | 182.6 | — | 27.2 | -231.8 | — | ||||||||||||||||||
Net purchases of common shares | -6.0 | — | — | — | — | -6.0 | ||||||||||||||||||
Dividends to shareholders | -47.8 | -47.8 | — | — | 47.8 | -47.8 | ||||||||||||||||||
Proceeds from Rights Offering | 428.4 | — | — | — | — | 428.4 | ||||||||||||||||||
Rights Offering issuance costs | -25.1 | — | — | — | — | -25.1 | ||||||||||||||||||
Net increase (decrease) in deposit liabilities | — | 29.7 | — | — | -31.4 | -1.7 | ||||||||||||||||||
Net cash provided by (used in) financing activities | 371.5 | 567.4 | — | 135.9 | -695.6 | 347.8 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | -10.4 | 15.4 | — | 4.0 | — | .9.0 | ||||||||||||||||||
Change in cash and cash equivalents | 0.9 | 223.2 | 2.1 | 173.8 | — | 400.1 | ||||||||||||||||||
Cash and cash equivalents as of January 1 | 1.2 | 121.9 | 2.1 | 155.6 | — | 280.8 | ||||||||||||||||||
Cash and cash equivalents as of December 31 | 2.1 | 345.1 | 4.2 | 329.4 | — | 680.9 |
F-58
Table of Contents
Notes to the consolidated financial statements (continued)
statements of income
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2003 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Net premiums written | — | 2,549.0 | — | 1,373.7 | — | 3,922.7 | ||||||||||||||||||
Net premiums earned | — | 2,454.0 | — | 1,313.8 | — | 3,767.8 | ||||||||||||||||||
Net investment income | 13.3 | 129.5 | 12.5 | 105.0 | -25.9 | 234.4 | ||||||||||||||||||
Net realized capital (losses) gains | — | -50.3 | 39.5 | 29.2 | — | 18.4 | ||||||||||||||||||
Other income (loss) | 33.1 | 14.3 | — | -29.9 | — | 17.5 | ||||||||||||||||||
Total revenues | 46.4 | 2,547.5 | 52.0 | 1,418.1 | -25.9 | 4,038.1 | ||||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||||||
Losses, loss expenses and life benefits | — | -1,667.5 | — | -1,092.6 | — | -2,760.1 | ||||||||||||||||||
Acquisition costs | — | -567.0 | — | -265.0 | — | -832.0 | ||||||||||||||||||
Other operating and administration expenses | -8.9 | -105.1 | 4.1 | -92.6 | — | -202.5 | ||||||||||||||||||
Interest expense | -10.5 | -0.1 | -16.5 | -29.8 | 25.9 | -31.0 | ||||||||||||||||||
Amortization of intangible assets | -1.8 | -1.8 | ||||||||||||||||||||||
Total benefits, losses and expenses | -19.4 | -2,341.5 | -12.4 | -1,480.0 | 25.9 | -3,827.4 | ||||||||||||||||||
Income (loss) before taxes | 27.0 | 206.0 | 39.6 | -61.9 | — | 210.7 | ||||||||||||||||||
Income tax (expense) benefit | -3.5 | -42.7 | — | 13.4 | — | -32.8 | ||||||||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | 23.5 | 163.3 | 39.6 | -48.5 | — | 177.9 | ||||||||||||||||||
Equity in income (loss) of subsidiaries | 154.4 | -8.9 | — | — | -145.5 | — | ||||||||||||||||||
Net income (loss) | 177.9 | 154.4 | 39.6 | -48.5 | -145.5 | 177.9 |
F-59
Table of Contents
Notes to the consolidated financial statements (continued)
balance sheets
Non- | ||||||||||||||||||||||||
(US$ million) | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
December 31, 2003 (Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Invested assets | ||||||||||||||||||||||||
Fixed maturities | — | 1,929.5 | 14.8 | 2,984.3 | — | 4,928.6 | ||||||||||||||||||
Equity securities | — | 436.4 | — | 398.5 | — | 834.9 | ||||||||||||||||||
Investment in subsidiaries | 1,850.7 | 1,105.3 | — | 7.5 | -2,963.5 | — | ||||||||||||||||||
Notes receivable | 150.0 | — | 175.0 | — | -325.0 | — | ||||||||||||||||||
Short-term and other investments | 44.7 | 166.1 | — | 41.8 | -44.7 | 207.9 | ||||||||||||||||||
Total investments | 2,045.4 | 3,637.3 | 189.8 | 3,432.1 | -3,333.2 | 5,971.4 | ||||||||||||||||||
Funds Withheld Asset | — | 1,530.6 | — | — | — | 1,530.6 | ||||||||||||||||||
Total invested assets | 2,045.4 | 5,167.9 | 189.8 | 3,432.1 | -3,333.2 | 7,502.0 | ||||||||||||||||||
Other assets | ||||||||||||||||||||||||
Cash and cash equivalents | 1.2 | 121.9 | 2.1 | 155.6 | — | 280.8 | ||||||||||||||||||
Premiums receivable | — | 1,167.4 | — | 865.6 | -378.9 | 1,654.1 | ||||||||||||||||||
Reserves for unearned premiums, retro | 81.4 | 412.8 | -384.9 | 109.3 | ||||||||||||||||||||
Reinsurance assets | — | 439.8 | — | 1,702.0 | -1,006.9 | 1,134.9 | ||||||||||||||||||
Funds held by reinsureds | — | 1,059.1 | — | 613.3 | -377.5 | 1,294.9 | ||||||||||||||||||
Deposit assets | 49.0 | 9.8 | 58.8 | |||||||||||||||||||||
Deferred policy acquisition costs | — | 293.6 | — | 85.7 | — | 379.3 | ||||||||||||||||||
Deferred income taxes | — | 68.2 | — | 296.5 | — | 364.7 | ||||||||||||||||||
Other assets | 43.5 | 157.4 | 46.1 | 241.2 | 13.4 | 501.6 | ||||||||||||||||||
Total assets | 2,090.1 | 8,605.7 | 238.0 | 7,814.6 | -5,468.1 | 13,280.4 | ||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Reinsurance liabilities | — | 5,184.6 | — | 4,342.0 | -1,098.0 | 8,428.6 | ||||||||||||||||||
Reserves for unearned premiums, gross | 984.1 | 815.3 | -384.4 | 1,415.0 | ||||||||||||||||||||
Other reinsurance liabilities | — | 42.2 | — | 328.0 | -266.0 | 104.2 | ||||||||||||||||||
Funds held under reinsurance contracts | — | 35.0 | — | 515.3 | -377.4 | 172.9 | ||||||||||||||||||
Deposit liabilities | 305.2 | 53.0 | 358.2 | |||||||||||||||||||||
Deferred income taxes | — | 87.6 | — | 86.6 | — | 174.2 | ||||||||||||||||||
Accrued expenses and other liabilities | 12.1 | 116.3 | 0.8 | 238.2 | -61.2 | 306.2 | ||||||||||||||||||
Notes payable | 150.0 | — | — | 175.0 | -325.0 | — | ||||||||||||||||||
Debt | — | — | 193.4 | 199.7 | — | 393.1 | ||||||||||||||||||
Total liabilities | 162.1 | 6,755.0 | 194.2 | 6,753.1 | -2,512.0 | 11,352.4 | ||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||
Common stock and additional paid-in capital | 1,509.6 | 1,476.5 | — | 1,177.9 | -2,654.4 | 1,509.6 | ||||||||||||||||||
Treasury stock | -10.0 | -10.0 | ||||||||||||||||||||||
Unearned stock compensation | -6.1 | — | — | — | — | -6.1 | ||||||||||||||||||
Total accumulated other comprehensive income | 254.4 | 232.5 | 4.2 | 49.9 | -286.6 | 254.4 | ||||||||||||||||||
Retained earnings (deficit) | 180.1 | 141.7 | 39.6 | -166.3 | -15.0 | 180.1 | ||||||||||||||||||
Total shareholders’ equity | 1,928.0 | 1,850.7 | 43.8 | 1,061.5 | -2,956.0 | 1,928.0 | ||||||||||||||||||
Total liabilities and shareholders’ equity | 2,090.1 | 8,605.7 | 238.0 | 7,814.6 | -5,468.0 | 13,280.4 |
F-60
Table of Contents
Notes to the consolidated financial statements (continued)
statements of cash flows
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2003 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Cash provided by (used in) operating activities | 3.3 | 878.8 | -1.1 | 35.3 | 0.9 | 917.2 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Purchases of fixed maturities held-to-maturity | — | -192.4 | — | — | — | -192.4 | ||||||||||||||||||
Proceeds from sales and maturities of fixed maturities available-for-sale | — | 904.9 | — | 2,908.5 | — | 3,813.4 | ||||||||||||||||||
Purchases of fixed maturities available-for-sale | — | -1,828.1 | -14.8 | -3,211.1 | — | -5,054.0 | ||||||||||||||||||
Proceeds from sales of equity securities | — | 47.8 | — | 46.5 | — | 94.3 | ||||||||||||||||||
Purchases of equity securities | — | -178.2 | — | -66.0 | — | -244.3 | ||||||||||||||||||
Net decrease (increase) in short-term investments | 3.6 | 256.6 | 42.7 | -25.8 | — | 277.2 | ||||||||||||||||||
Purchase of note receivable | — | — | -25.0 | — | 25.0 | — | ||||||||||||||||||
Investment in subsidiaries | 29.9 | -106.8 | — | — | 76.9 | — | ||||||||||||||||||
Net (increase) decrease in deposit assets | — | -27.2 | — | 14.1 | — | -13.1 | ||||||||||||||||||
All other investing activity | — | -10.5 | — | -4.9 | -0.9 | 4.7 | ||||||||||||||||||
Net cash provided by (used in) investing activities | 33.5 | -1,112.9 | 2.9 | -338.7 | 101.0 | -1,314.2 | ||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Capital contribution | — | — | — | 106.8 | -106.8 | — | ||||||||||||||||||
Issuance of notes payable | — | — | — | 25.0 | -25.0 | — | ||||||||||||||||||
Net purchases of common shares | -17.3 | — | — | — | — | -17.3 | ||||||||||||||||||
Dividends to shareholders | -29.9 | -29.9 | — | — | 29.9 | -29.9 | ||||||||||||||||||
Net increase (decrease) in deposit liabilities | — | 305.4 | — | -5.3 | — | 300.1 | ||||||||||||||||||
Net cash (used in) provided by financing activities | -47.2 | -275.5 | — | 126.5 | -101.9 | 252.9 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 10.8 | 13.4 | — | -0.5 | — | 23.7 | ||||||||||||||||||
Change in cash and cash equivalents | 0.4 | 54.8 | 1.8 | -177.4 | — | -120.4 | ||||||||||||||||||
Cash and cash equivalents as of January 1 | 0.8 | 67.1 | 0.3 | 333.0 | — | 401.2 | ||||||||||||||||||
Cash and cash equivalents as of December 31 | 1.2 | 121.9 | 2.1 | 155.6 | — | 280.8 |
F-61
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Notes to the consolidated financial statements (continued)
statements of income
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2002 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Net premiums written | — | 1,856.7 | — | 1,378.5 | — | 3,235.2 | ||||||||||||||||||
Net premiums earned | — | 1,648.3 | — | 1,429.2 | — | 3,077.5 | ||||||||||||||||||
Net investment income | 13.5 | 116.3 | 0.1 | 135.7 | -13.8 | 251.8 | ||||||||||||||||||
Net realized capital (losses) gains | — | -13.9 | — | 3.6 | — | -10.3 | ||||||||||||||||||
Other (loss) income | 23.6 | 28.5. | — | -11.1 | -9.4 | 31.6 | ||||||||||||||||||
Total revenues | 37.1 | 1,779.2 | 0.1 | 1,557.4 | -23.2 | 3,350.6 | ||||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||||||
Losses and loss expenses and life benefits | — | -1,253.7 | — | -1,237.4 | — | -2,491.1 | ||||||||||||||||||
Acquisition costs | — | -305.0 | — | -341.8 | — | -646.8 | ||||||||||||||||||
Other operating and administration expenses | -3.5 | -89.5 | 0.2 | -85.0 | -0.6 | -178.4 | ||||||||||||||||||
Interest expense | -10.7 | -1.2 | -0.3 | -28.0 | 23.8 | -16.4 | ||||||||||||||||||
Total benefits, losses and expenses | -14.2 | -1,649.4 | -0.1 | -1,692.2 | 23.2 | -3,332.7 | ||||||||||||||||||
Income (loss) before taxes | 22.9 | 129.8 | — | -134.8 | — | 17.9 | ||||||||||||||||||
Income tax (expense) benefit | -2.1 | 2.9 | — | 17.1 | — | 17.9 | ||||||||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | 20.8 | 132.7 | — | -117.7 | — | 35.8 | ||||||||||||||||||
Equity in income (loss) of subsidiaries | 15.0 | -117.7 | — | — | 102.7 | — | ||||||||||||||||||
Net income (loss) | 35.8 | 15.0 | — | -117.7 | 102.7 | 35.8 |
F-62
Table of Contents
Notes to the consolidated financial statements (continued)
statements of cash flows
(US$ million) | Non- | |||||||||||||||||||||||
Year ended December 31, 2002 | Converium | Converium | Converium | Guarantor | Consolidating | |||||||||||||||||||
(Restated) | Holding AG | AG | Finance S.A. | Entities | Adjustments | Consolidated | ||||||||||||||||||
Cash (used in) provided by operating activities | -17.0 | 679.5 | 1.1 | 205.0 | — | 868.6 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Purchases of fixed maturities available-for-sale | — | -1,054.1 | — | -4,321.2 | — | -5,375.3 | ||||||||||||||||||
Proceeds from sales and maturities of fixed maturities available-for-sale | — | 476.6 | — | 4,096.7 | — | 4,573.3 | ||||||||||||||||||
Proceeds from sales of equity securities | — | 144.1 | — | 455.1 | — | 599.2 | ||||||||||||||||||
Purchases of equity securities | — | -341.8 | — | -367.2 | — | -709.0 | ||||||||||||||||||
Net (increase) decrease in short-term investments | -3.6 | -264.6 | -42.7 | 58.4 | — | -252.5 | ||||||||||||||||||
Purchase of note receivable | — | — | -150.0 | — | 150.0 | — | ||||||||||||||||||
Investment in subsidiaries | — | -104.8 | — | — | 104.8 | — | ||||||||||||||||||
Net (increase) decrease in deposit assets | — | -5.8 | — | 12.7 | — | 6.9 | ||||||||||||||||||
All other investing activity | — | 43.2 | -1.8 | 5.8 | — | 47.2 | ||||||||||||||||||
Net cash (used in) provided by investing activities | -3.6 | -1,107.2 | -194.5 | -59.7 | 254.8 | -1,110.2 | ||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Issuance of guaranteed subordinated notes | — | — | 193.7 | — | — | 193.7 | ||||||||||||||||||
Issuance of note payable | — | 150.0 | — | — | -150.0 | — | ||||||||||||||||||
Capital contribution | — | — | — | 104.8 | -104.8 | — | ||||||||||||||||||
Net purchases of common shares | -14.7 | — | — | — | — | -14.7 | ||||||||||||||||||
Net (decrease) increase in deposit liabilities | — | -0.2 | — | 10.7 | — | 10.5 | ||||||||||||||||||
Net cash (used in) provided by financing activities | -14.7 | 149.8 | 193.7 | 115.5 | -254.8 | 189.5 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | -2.4 | — | -14.5 | — | -16.9 | ||||||||||||||||||
Change in cash and cash equivalents | -35.3 | -280.3 | 0.3 | 246.3 | — | -69.0 | ||||||||||||||||||
Cash and cash equivalents as of January 1 | 36.1 | 347.4 | — | 86.7 | — | 470.2 | ||||||||||||||||||
Cash and cash equivalents as of December 31 | 0.8 | 67.1 | 0.3 | 246.3 | — | 401.2 |
F-63
Table of Contents
Notes to the consolidated financial statements (continued)
F-64
Table of Contents
Notes to the consolidated financial statements (continued)
F-65
Table of Contents
Notes to the consolidated financial statements (continued)
F-66
Table of Contents
Andrew Hill | Martin Frei |
March 4, 2005 except as to Notes 3, 14b and 28 to the consolidated financial statements as to which the date is February 27, 2006.
S-1
Table of Contents
Amount at which | ||||||||||||
Cost or | shown in the | |||||||||||
amortized cost | Fair value | balance sheet | ||||||||||
($ millions) | ||||||||||||
Fixed maturities: | ||||||||||||
Bonds held-to-maturity: | ||||||||||||
US government | 584.3 | 573.7 | 584.3 | |||||||||
Other government | 266.1 | 270.3 | 266.1 | |||||||||
Total fixed maturities held-to-maturity | 850.4 | 844.0 | 850.4 | |||||||||
Bonds available-for-sale: | ||||||||||||
US government | 1,765.6 | 1,763.1 | 1,763.1 | |||||||||
Other government | 1,769.3 | 1,783.0 | 1,783.0 | |||||||||
Public utilities | 17.0 | 17.8 | 17.8 | |||||||||
Other corporate debt securities | 499.9 | 505.5 | 505.5 | |||||||||
Unit trust | 144.2 | 148.8 | 148.8 | |||||||||
Mortgage and asset-backed securities | 612.2 | 616.6 | 616.6 | |||||||||
Total fixed maturities available for sale | 4,808.2 | 4,834.8 | 4,834.8 | |||||||||
Total fixed maturities | 5,658.6 | 5,678.8 | 5,685.2 | |||||||||
Equity securities: | ||||||||||||
Common stocks: | ||||||||||||
Public utilities | 7.7 | 10.5 | 10.5 | |||||||||
Banks, trusts, and insurance companies | 37.1 | 47.3 | 47.3 | |||||||||
Industrial, miscellaneous and all other | 259.8 | 312.5 | 312.5 | |||||||||
Unit trust | 18.0 | 22.7 | 22.7 | |||||||||
Non-redeemable preferred stocks | 6.3 | 6.4 | 6.4 | |||||||||
Total equity securities | 328.9 | 399.4 | 399.4 | |||||||||
Real estate | 138.8 | 138.8 | 138.8 | |||||||||
Policyholder, collateral and other loans | 29.4 | 29.4 | 29.4 | |||||||||
Other investments | 108.5 | 111.0 | 111.0 | |||||||||
Short-term investments | 117.3 | 117.3 | 117.3 | |||||||||
Total investments | 6,381.5 | 6,474.7 | 6,481.1 | |||||||||
Funds Withheld Asset | 1,305.1 | 1,305.1 | 1,305.1 | |||||||||
Total invested assets | 7,686.6 | 7,779.8 | 7,786.2 |
S-2
Table of Contents
Year ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
($ millions) | (Restated) | (Restated) | (Restated) | |||||||||
Income | ||||||||||||
Net investment income | 13.4 | 13.3 | 13.5 | |||||||||
Other income | 23.7 | 33.1 | 23.6 | |||||||||
Total revenues | 37.1 | 46.4 | 37.1 | |||||||||
Expenses | ||||||||||||
Other operating and administration expenses | -11.7 | -8.9 | -3.5 | |||||||||
Interest expense | -10.6 | -10.5 | -10.7 | |||||||||
Total expenses | -22.3 | -19.4 | -14.2 | |||||||||
Income before taxes | 14.8 | 27.0 | 22.9 | |||||||||
Income tax benefit (expense) | 2.5 | -3.5 | -2.1 | |||||||||
Income before equity in income (loss) of subsidiaries | 17.3 | 23.5 | 20.8 | |||||||||
Equity in (loss) income of subsidiaries | -599.8 | 154.4 | 15.0 | |||||||||
Net (loss) income | -582.5 | 177.9 | 35.8 |
S-3
Table of Contents
December 31, | ||||||||
2004 | 2003 | |||||||
(Restated) | (Restated) | |||||||
Assets | ||||||||
Invested assets | ||||||||
Investment in subsidiaries | 1,675.7 | 1,850.7 | ||||||
Notes receivable | 150.0 | 150.0 | ||||||
Short-term and other investments | 46.7 | 44.7 | ||||||
Total invested assets | 1,872.4 | 2,045.4 | ||||||
Other assets | ||||||||
Cash and cash equivalents | 2.1 | 1.2 | ||||||
Other assets | 38.7 | 43.5 | ||||||
Total assets | 1,913.2 | 2,090.1 | ||||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Accrued expenses and other liabilities | 24.2 | 12.1 | ||||||
Notes payable | 150.0 | 150.0 | ||||||
Total liabilities | 174.2 | 162.1 | ||||||
Shareholders’ equity | ||||||||
Common stock | 554.9 | 253.0 | ||||||
Additional paid-in capital | 1,364.7 | 1,256.6 | ||||||
Treasury stock | -7.7 | -10.0 | ||||||
Unearned stock compensation | -7.5 | -6.1 | ||||||
Total accumulated other comprehensive income | 288.7 | 254.4 | ||||||
Retained (deficit) earnings | -454.1 | 180.1 | ||||||
Total shareholders’ equity | 1,739.0 | 1,928.0 | ||||||
Total liabilities and shareholders’ equity | 1,913.2 | 2,090.1 |
S-4
Table of Contents
Year ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
($ millions) | (Restated) | (Restated) | (Restated) | |||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) before equity in income (loss) of subsidiaries | 17.3 | 23.5 | 20.8 | |||||||||
Changes in other assets and liabilities | 24.3 | 20.0 | -37.8 | |||||||||
Cash provided by operating activities | 41.6 | 3.3 | -17.0 | |||||||||
Cash flows from investing activities | ||||||||||||
Issuance of note receivable | -46.7 | — | — | |||||||||
Investment in Converium AG | -355.1 | 29.9 | — | |||||||||
Net decrease (increase) in short-term investments | — | 3.6 | -3.6 | |||||||||
Net cash (used in) provided by investing activities | -401.8 | 33.5 | -3.6 | |||||||||
Cash flows from financing activities | ||||||||||||
Issuance of note payable | 22.0 | — | — | |||||||||
Net purchases of common shares | -6.0 | -17.3 | -14.7 | |||||||||
Dividends to shareholders | -47.8 | -29.9 | — | |||||||||
Proceeds from 2004 rights offering | 428.4 | — | — | |||||||||
2004 rights offering issuance costs | -25.1 | — | — | |||||||||
Net cash provided by (used in) financing activities | 371.5 | -47.2 | -14.7 | |||||||||
Effect of exchange rate changes in cash and cash equivalents | -10.4 | 10.8 | — | |||||||||
Change in cash and cash equivalents | 0.9 | 0.4 | -35.3 | |||||||||
Cash and cash equivalents, beginning of period | 1.2 | 0.8 | 36.1 | |||||||||
Cash and cash equivalents, end of period | 2.1 | 1.2 | 0.8 |
S-5
Table of Contents
($ millions) | Gross | Ceded to other | Assumed from other | % of amount | ||||||||||||||||
Reinsurance | Amount | Companies | Companies | Net Amount | assumed to net | |||||||||||||||
Insurance premiums and other considerations: | ||||||||||||||||||||
2004 (Restated) | $ | 490.9 | (258.2 | ) | $ | 3,493.4 | $ | 3,726.1 | 93.8 | % | ||||||||||
2003 (Restated) | $ | 561.4 | (387.2 | ) | $ | 3,748.5 | $ | 3,922.7 | 95.6 | % | ||||||||||
2002 (Restated) | $ | 88.1 | (146.6 | ) | $ | 3,293.7 | $ | 3,235.2 | 101.8 | % |
S-6
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Annuity | A contract that pays a periodic income benefit for the life of a person (the annuitant) or for a specified number of years, or a combination of the two, in return for a single premium payment. Immediate annuities provide income from the date the policy is taken out and deferred annuities provide income at a future specified date. | |
Cede; ceding insurer; cession | When an insurer reinsures its risk with another insurer (a “cession”), it “cedes” business and is referred to as the “ceding insurer”. | |
Co-insurance | Also referred to as original terms reinsurance, and refers to reinsurance contracts in which the reinsurer receives a portion of the premiums paid to the ceding company on the policies. Reinsurance premiums under a co-insurance contract will normally have the same premium arrangement as the original insurance policies, which may extend over several years. | |
Combined ratio | The sum of the loss ratio and the expense ratio for a non-life insurance company or a reinsurance company. A combined ratio below 100 generally indicates profitable underwriting. A combined ratio over 100 generally indicates unprofitable underwriting. An insurance company with a combined ratio over 100 may be profitable to the extent net investment results exceed underwriting losses. Expense ratio. The ratio of non-life insurance or reinsurance operating expenses (i.e., acquisition costs and profit participation net of reinsurance commissions) to net premiums earned plus administration expenses to net premiums written. | |
Facultative reinsurance | The reinsurance of part or all of the insurance provided by a single policy negotiated on a contract-by-contract basis. | |
Finite risk | Insurance and reinsurance policies under which the aggregate risk to the insurer or reinsurer is capped at a finite limit. Typically, such policies have maturities of several years and provide for sharing profits arising from the policy with the client at the policy maturity. The policy limit-to-premium ratio is frequently significantly lower than under traditional insurance and reinsurance policies. | |
Gross premiums written | Total premiums (whether or not earned) for insurance contracts written or assumed (including deposits for contracts with an insignificant amount of mortality or morbidity risk) during a specific period, without deduction for premiums ceded. | |
Incurred but not yet reported (“IBNR”)reserves | Reserves for estimated losses and LAE which have been incurred but not yet reported to the insurer or reinsurer, including future development of claims which have Incurred but not yet reported been reported to the insurer or reinsurer but where the established reserves may ultimately prove to be inadequate. | |
Lapse | Termination of a policy because of surrender, failure to pay a premium or lack of sufficient cash value to maintain in-force status. | |
Loss | An insured event that is the basis for submission or payment of a benefit under an insurance policy. Losses may be covered, limited or excluded from coverage, depending on the terms of the policy. |
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Loss expenses (“LAE”) | The expenses of investigating and settling claims, including certain legal and other fees, and the expenses of administering the claims adjustment process. | |
Loss ratio | The ratio of a non-life insurance or reinsurance company’s net incurred losses and LAE to net premiums earned. | |
Loss reserves | Reserves established by an insurer or reinsurer and reflected on its balance sheet to reflect the estimated cost of payments for claims for which the insurer or reinsurer ultimately will be required to indemnify insureds or reinsureds in the future in respect of losses occurring on or prior to the balance sheet date on insurance or reinsurance it has written and that has been earned. Loss reserves are composed of individual case reserves for reported claims and IBNR reserves. | |
National Association of Insurance Commissioners (“NAIC”) | An association of reinsurance regulatory officials of all 50 states and the District of Columbia organized to promote consistency of regulatory practice and statutory accounting standards throughout the United States. | |
Net premiums written | Gross premiums less premiums ceded for reinsurance. | |
Non-proportional reinsurance | Reinsurance under which the reinsurer’s participation in a claim depends on the size of the claim. Also known as “excess reinsurance”. | |
Premiums earned | That portion of gross premiums written in current and past periods applying to the expired portion of the policy period. | |
Proportional reinsurance | Arrangement whereby the insurer cedes to the reinsurer an agreed fixed percentage of premiums and claims and other liabilities for each policy covered on a pro rata basis. | |
Reinsurance | The practice whereby one insurer, called the reinsurer, in consideration for premiums received, agrees to indemnify the ceding insurer for all or a portion of the risk under a policy or policies of insurance issued by the ceding insurer. The legal rights of the insured generally are not affected by the reinsurance transaction, and the insurance enterprise issuing the insurance contract remains liable to the insured for payment of policy benefits. | |
Reserves | Liabilities established by insurers and reinsurers to reflect the estimated cost of claims payments, benefits payments and the related expenses that the insurer or reinsurer will ultimately be required to pay in accordance with the insurance or reinsurance it has written. | |
Retention | The amount or portion of risk which a ceding insurer retains for its own account. Losses and loss expenses paid by the ceding insurer in excess of the retention level are then reimbursed to the insurer by the reinsurer. In proportional insurance, the retention may be a percentage of the original policy’s limit. In non-proportional insurance, the retention is an amount of loss, a loss ratio or a percentage. |
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Retrocessional Reinsurance | An arrangement under which a reinsurer cedes to another reinsurer (the “retrocessionaire”) all or a portion of the insurance risks reinsured by the first reinsurer. Retrocessional reinsurance generally does not legally discharge the ceding reinsurer from its liability to the original ceding company. | |
Survival Ratio | An industry measure of the number of years it would take a company to exhaust its A&E reserves for losses and loss expenses based on that company’s current level of A&E claims payments. The ratio is derived by dividing the current ending losses and loss expense reserves by the average annual payments for the prior three years. The ratio is computed based on the ending reserves for losses and loss expenses over the respective claims settlements during the fiscal year. | |
Surrender | Many life insurance products permit the insured to withdraw a portion of the cash surrender value of the contract. Future benefits are reduced accordingly. | |
Tail | The period of time that elapses between the incurrence and settlement of losses under a policy. A “short-tail” insurance product is one where ultimate losses are known and settled comparatively quickly; ultimate losses under a “long-tail” insurance product are sometimes not known and settled for many years. | |
Treaty reinsurance | A type of reinsurance whereby the ceding company automatically cedes and the reinsurer automatically assumes a predetermined portion or category of specified risks underwritten by the ceding company. | |
Underwriting | The process whereby an insurer or reinsurer reviews applications submitted for insurance or reinsurance coverage and determines whether it will provide all or part of the coverage being requested for an agreed premium. | |
Underwriting results | The pre-tax profit or loss experienced by a non-life insurance company or reinsurance company after deducting incurred losses and loss expenses and operating expenses from premiums earned. This profit and loss calculation includes reinsurance assumed and ceded but excludes investment income. | |
Unit trust | Unit trusts can be invested in stocks, shares, government securities and other investment instruments. The fund is divided into units, which fluctuate in value, depending on the value of the overall fund. The unit trust is an open-ended fund which means it has a variable number of units in issue at any one time. Units are bought from and sold to the fund manager. |
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Name: Inga K. Beale
Title: Chief Executive Officer, Converium Holding AG
Name: Andreas Zdrenyk
Title: Chief Financial Officer, Converium Holding AG
Sig-1
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Exhibit | ||
Number | Description | |
1.1 | Articles of Incorporation of Converium Holding AG, adopted November 8, 2001.* | |
1.2 | Bylaws of Converium Holding AG, adopted November 16, 2001.* | |
1.3 | Articles of Incorporation of Converium Holding AG, revised October 12, 2004.\ | |
1.4 | Bylaws of Converium Holding AG, revised April 11, 2005.\ | |
2.1 | Form of Deposit Agreement among Converium Holding AG, The Bank of New York, as Depositary, and all owners and beneficial owners from time to time of ADSs issued thereunder (including the form of ADS), incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.* | |
2.2 | Indenture, dated as of October 20, 1993 between Zurich Reinsurance Centre Holdings, Inc. and The Bank of New York, as Trustee, relating to $200,000,000 principal amount of 7 1/8% Senior Notes due 2023 (and assumed by Converium Holdings (North America) Inc. pursuant to the Supplement Indenture included as Exhibit 2.3 hereto).* (Previously filed as Exhibit 3.1) | |
2.3 | First Supplemental Indenture among Zurich Reinsurance Centre Holdings, Inc., as Issuer, Converium Holdings (North America) Inc., as Guarantor, and The Bank of New York, as Trustee, dated as of November 20, 2001.* (Previously filed as Exhibit 3.2) | |
2.4 | Form of Indenture between Converium Finance, S.A., as Issuer, Converium AG and Converium Holding AG as Guarantors and JPMorgan Chase Bank as Trustee, Calculation Agent and Paying Agent.+ | |
2.5 | Form of the $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032 (included in Exhibit 2.4 hereto).+ | |
2.6 | Subordinated Guarantee by Converium Holding AG and Converium AG relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^ | |
2.7 | Indenture, dated December 23, 2002 between Converium Finance S.A., Converium Holding AG, Converium AG and JP Morgan Chase Bank, as trustee, relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^ | |
4.1 | Master Agreement by and among Zurich Financial Services and Converium Holding AG, dated December 1, 2001.* | |
4.2 | Stock Purchase Agreement between Zurich Reinsurance Centre Stock Purchase Agreement between Zurich Reinsurance Centre Holdings, Inc. and Converium Holdings (North America) Inc., dated as of October 1, 2001.* | |
4.3 | Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln) Aktiengesellschaft, dated September 28, 2001.* | |
4.4 | Quota Share Retrocession Agreement between Zurich Insurance Company (including its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1, 2001.* | |
4.5 | Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd. and Converium AG, dated October 1, (and effective as of July 1, 2001).* | |
4.6 | Asset purchase and Assumption of Liability Agreement between Zurich Insurance Company and Converium AG, dated September 28, 2001.* | |
4.7 | Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.8 | Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.9 | Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung (Köln) Aktiengesellschaft and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.10 | Partial Commutation Agreement between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.* | |
4.11 | Master Novation and Indemnity Reinsurance Agreement among Zurich Reinsurance (North America), Inc., Centre Insurance Company, Centre Solutions (U.S.) Limited and Zurich Insurance Company, Bermuda Branch, dated as of October 1, 2001.* | |
4.12 | Group Reinsurance Business Master Novation and Indemnity Reinsurance Agreement by and among Zurich Reinsurance (North America), Inc., Zurich Insurance Company and Zurich International (Bermuda) Ltd., dated as of October 1, 2001.* | |
4.13 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1991 through December 31, 1993) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.14 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1994 through December 31, 1994) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated |
Table of Contents
Exhibit | ||
Number | Description | |
as of October 1, 2001.* | ||
4.15 | Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.16 | Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective October 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.* | |
4.17 | Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective November 6, 1992) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.* | |
4.18 | Agreement Amending and Terminating Centre Reinsurance Dublin Affiliated Group Tax Allocation Agreement among Orange Stone Delaware Holdings Limited, Orange Stone Reinsurance, Centre Reinsurance Holdings (Delaware) Limited, Centre Reinsurance (U.S.) Limited, Zurich Reinsurance Centre Holdings, Inc., Zurich Reinsurance (North America), Inc., ZC Insurance Company, ZC Specialty Insurance Company, Centre Risk Advisors, Inc., Constellation Reinsurance Company, Centre Re Services, Inc., Zurich Global Assets LLC, formerly known as BDA/US Services Limited, ZC Management Corporation, ZC Resource LLC, ZC Property Management, Inc. and Claims Solutions Group, dated October 1, 2001.* | |
4.19 | Catastrophe Cover Retrocession Agreement by and between Converium AG and Zurich Insurance Company, dated December 1, 2001.* | |
4.20 | Stock Purchase Agreement between Zurich Reinsurance (North America), Inc. and Centre Strategic Investments Holdings Limited, dated August 23, 2001.* | |
4.21 | Run-off Services and Management Agreement between Zurich Insurance Company and Converium AG, dated December 3, 2001.* | |
4.22 | Tax Sharing and Indemnification Agreement among Zurich Reinsurance Centre Holdings, Inc., Orange Stone Delaware Holdings Limited, Converium Holdings (North America) Inc., Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001. * | |
4.23 | Tax Sharing and Indemnification Agreement between Zurich Financial Services, Zurich Insurance Company, Converium Holding AG and Converium AG dated December 3, 2001. * | |
4.24 | Form of Converium Standard Stock Option Plan for Non-US Employees. * | |
4.25 | Form of Converium Standard Stock Purchase Plan for Non-US Employees. * | |
4.26 | Omnibus Share Plan for US Employees. * | |
4.27 | Converium Employee Stock Purchase Plan for US Subsidiaries.* | |
4.28 | Form of Converium Annual Incentive Deferral Plan.* | |
4.29 | Lease, between Zurich Insurance Company and Converium AG, dated August 29, 2001.* | |
4.30 | Sublease Support Agreement among Zurich Reinsurance (North America), Inc., Global Asset Holdings Limited and Centre Insurance Company, dated as of October 1, 2001.* | |
4.31 | Sublease between ZC Resource LLC and Zurich Reinsurance (North America), Inc., dated as of June 20, 2001.* | |
4.32 | Form of Letter Agreement between Converium Holding AG and The Bank of New York, relating to the pre-release of the ADRs, incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.* | |
4.33 | Agreement dated September 2, 2002, between Converium AG and MDU Investments Ltd, regarding subscription of up to 20 million shares at £1 each. ^ | |
4.34 | Share Purchase Agreement dated November 27, 2002, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ | |
4.35 | Shareholder’s Agreement dated March 12, 2003, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ | |
4.36 | Sale and Purchase Agreement and Assignment between Converium AG and Converium Finance S.A. regarding the transfer of a $150 million loan granted to Converium Holding AG. ^ | |
4.37 | Amendment to Share Purchase Agreement dated November 27, 2002 between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^ | |
4.38 | Agreement dated December 30, 2003, for the sale and purchase of 5.1% of Royal and Sun Alliance Insurance PLC’s shareholding in Global Aerospace Underwriting Managers Limited (GAUM). # | |
4.39 | Agreement dated July 24, 2003 $900,000,000 Credit Facility for Converium AG, Zurich arranged by ABN Amro Bank N.V., Barclay’s Capital and Commerzbank Aktiengesellschaft. # | |
4.40 | Agreement dated November 29, 2004, USD 1,600,000,000 Credit Facility for Converium AG, arranged by ABN AMRO Bank N.V., Barclay’s Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan.\ | |
4.41 | Deed of Pledge, dated December 15, 2004, Converium Rückversicherung (Deutschland) AG as the Pledgor and ABN Amro Mellon Global Securities Services as the Account Bank and ABN Amro Bank N.V. as the Pledgee.\ | |
4.42 | Deed of Pledge, dated December 15, 2004, Converium AG, Zürich, as the Pledgor, and ABN Amro Bank N.V. as the Pledgee and ABN Amro Mello Global Securities Services as the Account Bank.\ | |
4.43 | Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Insurance (UK) Limited.\ |
Table of Contents
Exhibit | ||
Number | Description | |
4.44 | Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Rückversicherung (Deutschland) AG.\ | |
4.45 | Fronting and Administration Agreement relating to the Global Aerospace Underwriters Pool, dated January 7, 2005, between Global Aerospace Underwriting Managers Limited, Global Aerospace, Inc., Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, National Indemnity Company and Converium AG.\ | |
7.1 | Computation of ratio of earnings to fixed charges. | |
8.1 | Subsidiaries of the Registrant.\ | |
12.1 | 302 Certification of Chief Executive Officer. | |
12.2 | 302 Certification of Chief Financial Officer. | |
13.1 | 906 Certification of Chief Executive Officer. | |
13.2 | 906 Certification of Chief Financial Officer. | |
14.1 | Consent of PricewaterhouseCoopers Ltd, independent group auditors. |
* | Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 10, 2001. | |
+ | Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 18, 2002. | |
^ | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2002, filed on April 18, 2003. | |
# | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2003, filed on April 5, 2004. | |
\ | Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2004, filed on June 30, 2005. |