Fitch Places Converium on Rating Watch Positive on North American Unit Sale.LONDON -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has today placed Swiss-based Converium AG's Insurer Financial Strength 'BBB-' (BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. minus) rating on Rating Watch Positive (RWP RWP - Remote Write Protocol ). The agency has also placed other ratings within the Converium group on RWP as listed below. The rating action follows Converium's recent announcement that it has agreed to sell its North American operations to the Berkshire Hathaway Group for USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 95 million in cash. In addition, Berkshire Hathaway will assume USD200 million of senior debt from the North American operation. Fitch will review additional information on the sale of Converium's North American operations as it becomes available and will resolve the group's Rating Watch status when the transaction closes. Upon closure, Converium's ratings will either be affirmed or upgraded. Any upgrade is likely to be up to two rating notches. The net result of the transaction is likely to reduce the group's shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of USD1,796 million reported at 30 June 2006 by USD135 million. The transaction remains subject to regulatory approvals and other closing conditions. Fitch views the proposed transaction positively as it will remove the threat of future adverse reserve development on this historically volatile portfolio of business. Significantly, Converium has not provided guarantees or indemnities relating to the reserves of the North American operations. In addition, management time will be freed up from the day-to-day administration of the run-off and the sale should improve the group's consolidated expense ratio. Converium group ratings are listed below: -- Converium AG's IFS 'BBB-' (BBB minus) on RWP; -- Converium AG's Issuer Default rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'BBB-' (BBB minus) on RWP; -- Converium Insurance (UK) Limited's IFS 'BBB-' (BBB minus) on RWP; -- Converium Ruckversicherungs (Deutschland) AG's IFS 'BBB-' (BBB minus) on RWP; -- Converium Holding AG's IDR 'BB' on RWP and -- Converium Finance S.A.'s USD 200 million subordinated debt due 2032 'BB+' on RWP. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure. |
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