A.M. Best Affirms Ratings of Converium AG and Its Subsidiaries; Revises Outlook to Positive.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of B++ (Very Good) and the issuer credit rating (ICR) of "bbb+" of Converium AG (Switzerland) and its main subsidiaries (collectively referred to as Converium Group or Converium). The outlook for all ratings has been revised to positive from stable. (See below for a list of affected ratings.)

The rating action reflects Converium's improving risk-adjusted capitalisation, increasing net income and recovering business profile, as well as the election of several new directors to the board and the appointment of new executive management team members filling vacant positions, despite a remaining--albeit smaller--potential for reserve deficiencies.

Improving risk-adjusted capitalisation--Converium's risk-adjusted capitalisation is expected to continue to improve over the next two years due to its stronger net income, continued moderate dividend policy and the placing of its North American subsidiary (CRNA) into run-off in 2004. A.M. Best believes that despite Converium's actions and the large reduction in liabilities in North America due to the run-off of CRNA, there is still potential for adverse reserve development in the run-off business and the continuing professional liability business. However, the potential sale of CRNA, according to Converium's 2006 stated intentions, is expected to further support its capitalisation.

Recovering business profile--A.M. Best anticipates a continuing improvement of Converium's business profile with strong gross premium growth in 2007. The growth stems mainly from regaining property and casualty and, to a lesser extent, specialty business generated from clients that were lost in recent years following the downgrade of the company's rating. Converium will continue to benefit from strong revenue streams through its long-term relationships with the Medical Defense Union (MDU) and Global Aerospace Managers Limited (GAUM).

Increasing net income--A.M. Best expects Converium's net income to continue to strongly improve in 2006 and 2007. Converium continues to assume long-tail business with high combined ratios resulting in continuing negative underwriting results, which the group expects to be offset by investment returns. However, the combined ratio is expected to improve to approximately 102% in 2007 from 108% in 2006 due to the combined effect of strong underwriting returns from the regained business, continuing favorable rate development in the non-life market and significant scale effects.

Appointments to the senior management--In 2006, Converium appointed new members to its executive management team filling all vacant positions and elected several new directors to the board. The appointments and the subsequent communication of the strategic plans for Converium ended a period of uncertainty regarding the future strategic direction of the group.

The FSR of B++ (Very Good) and the ICR of "bbb+" have been affirmed and the outlook has been revised to positive from stable for the following companies:

--Converium AG

--Converium Rueckversicherung (Deutschland) AG

--Converium Insurance (UK) Limited

The ICR of "bb+"of Converium Finance S.A. has been affirmed.

The following debt rating of "bbb-" has been affirmed:

Converium Finance S.A. (guaranteed by Converium Holding AG and Converium AG)--

--USD 200 million 8.25% guaranteed subordinated notes, due December 2032

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.