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S&P affirms Converium

Standard & Poor’s (S&P) announced Thursday (3 June) it had affirmed Swiss reinsurer Converium’s ‘A’ long-term counterparty credit and insurer financial strength ratings after conducting a review.

The group’s US operation Converium Holdings (North America) also had its ‘BBB’ long-term counterparty credit rating affirmed. S&P credit analyst Marcus Rivaldi commented: "The ratings on Converium reflect the group's strong competitive position, strong medium-term earnings prospects, and conservative investment strategy."

However, against this are set the sectors’ low barriers to entry, ongoing volatility of US liability reserves, and risks connected with Converium’s development strategy.

The agency expects performance to be further hit by legacy reserve charges, but doesn’t anticipate further negative pressure from long-term annuity business after the group bought adverse reserve development cover last year.

But the key issue for the reinsurer is its ability to manage the down-cycle. "The main determinant of Converium's prospective operating performance will be the speed at which markets soften, in addition to the group's cycle management response," Rivaldi concluded.

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