S&P Comments on Converium’s Notes

In a bulletin from its London office Standard & Poor’s Ratings Services said it has “clarified its stance on its ‘BB+’ rating on the $200 million 7.125 percent senior notes issued by U.S.-based Converium Holdings (North America) Inc. (BB+/Stable/–), due Oct. 15, 2023.”

S&P said the rating reflects its view of “implied support to the senior notes from Switzerland-based intermediate parent company Converium AG (BBB+/Stable/–).” S&P noted that “Converium AG has consistently demonstrated its willingness to support the issue through its funding of issue interest payments, substituting for dividends from subsidiary Converium Reinsurance (North America) Inc. (CRNA; R/–/–).

“The upstreaming of funds from CRNA to Converium Holdings (North America) Inc. currently remains effectively blocked, any movement requiring regulatory approval due to: (1) CRNA’s present negative earned surplus position; and (2) features of CRNA’s Letter of Understanding with the Connecticut Insurance Department (recently extended to March 15, 2007).”