Best Affirms Converium’s U.S. Subs ‘Fair’ Ratings

A.M. Best Co. has issued a separate bulletin detailing its rating actions on the U.S. subsidiaries of Swiss-based reinsurer Converium AG, which further explains the ratings actions on the parent company, as detailed in the International section.

Best affirmed the financial strength rating (FSR) of “B-” (Fair) and the issuer credit rating (ICR) of “bb-“of Converium Reinsurance (North America) Inc. (CRNA), based in Stamford, Conn. It also affirmed the FSR of “B” (Fair) and the ICR of “bb” of Converium Insurance (North America) Inc. (CINA) based in Fort Lee, NJ. Best also affirmed the ICR of “b-” and the debt rating of “b-” on $200 million 7.125 percent senior notes due 2023 for Converium Holdings (North America) Inc. (CHNA), which was originally issued by Zurich Reinsurance Centre Holdings Inc. The outlook for all ratings is negative.

The ratings reflect the parent Company’s decision to maintain CINA’s dormant operating status and continue the run-off of CRNA,” said Best. “Converium has indicated that CINA’s operations will be dormant for the foreseeable future, with no immediate plans of business activity. The ratings also reflect Converium’s intent to sell CRNA.”

Best further noted that “as a result of Converium’s decision to run-off CRNA’s operations and leave CINA’s operations dormant, CHNA is without an actively operating subsidiary to support required interest payments, as a result Converium has been providing the capital to service CHNA’s debt.” Best anticipates, however, that Converium will continue to service CHNA’s debt, until it concludes.”