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Standard & Poor’s Ratings Services noted that its “BBB+” long-term counterparty credit and its insurer financial strength ratings on Converium AG, and “BBB+” long-term insurer financial strength ratings on guaranteed operating entities Converium Rückversicherung (Deutschland) AG and Converium Insurance (U.K.) Ltd., “remain on CreditWatch with positive implications, where they were placed on Oct. 17, 2006.”
S&P said the “CreditWatch update follows the Dec.14 announcement of the closing of National Indemnity Co.’s acquisition of the Converium group’s North American operations [See IJ web site Dec. 14], including Converium Holdings (North America) Inc. (‘BBB/Stable/–‘) and Converium Reinsurance (North America) Inc. (‘R/’).”
S&P did indicate that it “views the transaction favorably.” It described the sale as “clean-cut” in that it was concluded “without guarantees and seasoning agreements,” to a reputable buyer whose new ownership does not disadvantage policy- or debt holders of its former North American operations.
“As a result, the group has successfully removed one of the two obstacles to a possible upgrade,” S&P continued. “The remaining hurdle is the successful conclusion of regulatory investigations.” However S&P restated its “belief that there is now a higher probability that the group will in the short term successfully settle with regulators in respect of transactions subject to regulatory inquiries at a cost that is not material.”
“When the achievement of such a settlement becomes certain, we will raise our counterparty credit and insurer financial strength ratings on Converium AG and its guaranteed operating entities to ‘A-‘ and remove the ratings from CreditWatch,” stated S&P credit analyst Marcus Rivaldi.