Converium to restructure North American operations

As part of its plan to tackle reserving challenges, Swiss reinsurer Converium AG says it will run-off one of its North American companies, shifting some business to its other brand here.
The company says Converium Reinsurance (North America) Inc. will be placed into run-off, but increase shareholders’ equity in Converium Insurance (North America) Inc. by US$350 million, with the insurance brand to become the issuing carrier for both insurance and reinsurance.
“These organizational changes reflect a series of painful lessons learned from prior year casualty underwriting in the United States,” says Converium CEO Dirk Lohmann. “A centralization of underwriting responsibilities for the long-tail specialty lines is expected to facilitate the implementation of rigorous and globally consistent underwriting standards.”
Along with these changes, Converium is planning a share issue to raise US$420 million in capital, and may add further to its reserves in the third quarter of this year. However, the company says a review by Tillinghast shows existing reserves to be within an adequate range. Converium announces it has also US$150 million in stop-loss cover against further adverse reserve development in its North American business from Berkshire Hathaway’s National Indemnity.