ZUG, Switzerland, March 1, 2005 (PRIMEZONE) -- Converium Holding AG:
-- For the full year 2004 Converium reports a net loss of US$ 760.8
million, which primarily reflects a net adverse impact of US$
581.3 million on the technical result. This impact on the
technical result is largely due to the effect of (i) the
strengthening of prior years' loss reserves (US$ 578.1 million),
(ii) reductions of ultimate premium estimates after considering
associated loss and underwriting expenses (US$ 3.0 million),
(iii) reductions of retrocessional recoveries (US$ 12.0 million),
and (iv) commutation gains. In addition, Converium recorded
impairments of net deferred tax assets of US$ 269.8 million and
of goodwill of US$ 94.0 million related to its North American
reinsurance operations as well as a valuation allowance on the
net operating losses carried forward at Converium AG of US$
19.9 million. Losses arising from hurricanes, typhoons and the
South Asia tsunami of US$ 154.5 million had an additional
negative impact on the bottom line. For the full year,
Converium's non-life combined ratio was 118.2%. Adjusted for
reserve actions and natural catastrophes the non-life combined
ratio was 96.1%, which further supports the Company's views about
the profitability of recent underwriting years. Converium's
Board of Directors proposes to its shareholders not to pay out
a dividend for 2004 while remaining committed to pro-active
capital management.
-- For the full year 2004 Converium Tth quarter of 2004 was
characterized by a continuing strong performance of Converium's
underlying business from recent underwriting years, both for the
non-life segments as well as for the Life & Health Reinsurance
segment. The quarter's net loss of US$ 50.2 million, however, was
significantly affected by additional developments from the 3rd
quarter hurricanes and typhoons (US$ 36.0 million) as well as
losses arising from the South Asia tsunami (US$ 15.0 million).
Gross premium income for the quarter declined by 60.4%, mainly
reflective of clients exercising their rights of special
termination under various reinsurance contracts and reductions
of ultimate premium estimates primarily related to the
underwriting years 2001, 2002 and 2003. Furthermore, there was a
net adverse impact on the technical result of US$ 57.0 million
from prior years, primarily driven by reductions of ultimate
premium estimates (US$ 30.3 million), reductions of
retrocessional recoveries (US$ 12.0 million) and reserve
increases (US$ 11.3 million), which were partially offset by
commutation gains. Converium's overall prior-year reserve
position has proven stable in the 4th quarter.
-- As communicated on February 17, 2005, the January renewals were
in line with expectations. Against this backdrop, Converium's
Board of Directors reiterates its support of the Company
continuing as a stand-alone multi-line reinsurance company, based
on its current business model which has proven profitable outside
North America, and benefits from a strong capitalization and a
sound balance sheet.
-- An important prerequisite to successfully executing Converium's
strategy is a sustainable cost base. The Company therefore has
implemented a plan that is designed to cut budgeted annual
administrative expenses for its ongoing operations to a ratio of
approximately 6.5% of net premiums written in 2006.
Terry G. Clarke, Chief Executive Officer, said: "Converium's financial results for 2004 are clearly unsatisfactory. We recorded major net reserve strengthening and significant claims arising from natural catastrophes. We also took resolute measures to tidy up certain accounting processes. These steps are reflective of Converium's commitment to operational prudence and accuracy and will help us steer the Company back on a track of steady profitability. I also feel encouraged by the fact that Converium's overall reserve situation appears to have stabilized."
Full year 2004 highlights
-- Pre-tax operating result: US$ -362.5 million
-- Impact from prior years and
hurricanes/typhoons/tsunami: US$ -735.8 million
-- Net result: US$ -760.8 million
-- Gross premiums written: US$ 3,840.9 million
-- Non-life combined ratio: 118.2%
-- Impact from prior years and
hurricanes/typhoons/tsunami: 22.1%
-- Adjusted non-life combined ratio: 96.1%
-- Total investment income yield: 4.4%
-- Shareholders' equity: US$ 1,720.2 million
4th quarter 2004 highlights
-- Pre-tax operating result: US$ -14.3 million
-- Impact from prior years and
hurricanes/typhoons/tsunami: US$ -108.0 million
-- Net result: US$ -50.2 million
-- Gross premiums written: US$ 396.4 million
-- Non-life combined ratio: 124.9%
Overview of the 4th quarter's and full year's financial performance
For the year ended December 31, 2004, Converium reports a pre-tax operating loss of US$ 362.5 million and a net loss of US$ 760.8 million, which primarily reflects a net adverse impact of US$ 581.3 million on the technical result. This impact on the technical result is largely due to the effect of (i) the strengthening of prior years' loss reserves (US$ 578.1 million), (ii) reductions of ultimate premium estimates after considering associated loss and underwriting expenses (US$ 3.0 million), (iii) reductions of retrocessional recoveries (US$ 12.0 million), and (iv) commutation gains. In addition, Converium recorded impairments of net deferred tax assets of US$ 269.8 million and of goodwill of US$ 94.0 million related to its North American operations as well as a valuation allowance on the net operating losses carried forward at Converium AG of US$ 19.9 million. Losses arising from hurricanes, typhoons and the South Asia tsunami of US$ 154.5 million had an additional negative impact on the bottom-line.
For the year ended December 31, 2004, gross premiums written decreased 9.1%, net premiums written decreased 7.2% and net premiums earned increased by 0.2%. The reduction in gross and net premiums written largely resulted from clients exercising their rights of special termination under various reinsurance contracts, with an estimated negative impact on gross premiums written of US$ 114.5 million in the second half of 2004. In addition to the reductions related to special terminations, further decreases were caused by reductions of ultimate premium estimates in the amount of US$ 219.8 million. These reductions primarily relate to the underwriting years 2001, 2002 and 2003.
Based on the developments of 2004, Converium placed its U.S. reinsurance operations into run-off and started to implement and execute a commutation strategy. As of December 31, 2004, Converium agreed on commutations with primarily North American cedents regarding gross loss reserves of US$ 545.8 million. These commutations resulted in a cash outflow of US$ 526.8 million.
Converium reports a non-life combined ratio of 118.2% for the full year 2004, as compared to 97.9% for 2003. Adjusted for reserve actions, reductions of ultimate premium estimates and the losses from hurricanes, typhoons and the South Asia tsunami the non-life combined ratio was 96.1%, which is clear evidence of a continuing favorable performance of recent underwriting years.
Converium's Life & Health Reinsurance segment reports a segment income of US$ 15.4 million, an improvement of US$ 27.3 million compared with the year ended December 31, 2003, when the segment recorded an adverse development of its Guaranteed Minimum Death Benefits (GMDB) book. No further reserving actions were required for GMDB in 2004.
Development during the year ended December 31, 2004 caused impairments of net deferred tax assets of US$ 269.8 million and of goodwill of US$ 94.0 million related to Converium's North American reinsurance operations, as well as a valuation allowance on the net operating losses carried forward at Converium AG of US$ 19.9 million.
Converium's net investment income for 2004 was US$ 311.6 million, an increase of 33.7% as compared to 2003. This improvement largely resulted from growth in invested assets over 2003, particularly in Converium's fixed-maturities portfolio. The Company's total investment income yield (pre-tax) was 4.4% for the year ended December 31, 2004, as compared to 3.6% for 2003, reflecting increasing interest rates in 2004 and net realized capital gains arising from the sale of equity securities to de-risk Converium's balance sheet.
For the three months ended December 31, 2004, Converium reports a pre-tax operating loss of US$ 14.3 million and a net loss of US$ 50.2 million. Gross premiums written in the 4th quarter decreased by 60.4% to US$ 396.4 million, net premiums written declined by 56.6% to US$ 371.8 million, and net premiums earned decreased by US$ 292.8 million, a reduction of 30.5% as compared with the same period in 2003. These decreases in premiums are largely due to clients exercising their rights of special termination under various reinsurance contracts and reductions of ultimate premium estimates.
In addition, Converium reported a net adverse impact of US$ 57.0 million on the technical result from prior years that was primarily driven by reductions of ultimate premium estimates (US$ 30.3 million), reductions of retrocessional recoveries (US$ 12.0 million) and the effect of reserve increases (US$ 11.3 million), which are partially offset by commutation gains.
Converium's investment results were in line with respective benchmarks. The 4th quarter's average annualized net investment income yield (pre-tax) was 4.2% compared with 2.9% during the same period of the prior year.
Strategic direction going forward
Based on the January 1 renewal results, Converium's Board of Directors reiterates its determination to maintain the Company as an independent entity. The resilience of Converium's franchise in Europe, Asia and Latin America suggests that the pursuit of this option is the most promising way of maximizing shareholder value. This conclusion is in line with what the Company communicated to shareholders in late September 2004 before and at the Extraordinary General Meeting.
Converium will continue to concentrate on the European, Asian and Latin American markets, where the Company's financial performance since the IPO has met or exceeded targets. Converium is committed to remaining an international multi-line reinsurer, who also offers value-added services such as risk modeling. Furthermore, the Company will continue to pursue its strategy of building alliances, which provide access to business at its source. Such ventures include the Medical Defence Union (MDU), Global Aerospace Underwriting Managers Ltd. (GAUM) and Converium's Corporate Name at Lloyd's.
Corporate structure and cost management
As announced in September 2004 Converium will adjust its cost base to the expected, smaller business volume in order to remain cost-competitive. In light of the January 1 renewal results and the business projections for 2005 and 2006, the Board of Directors and the Global Executive Committee have agreed to implement a plan that is designed to cut budgeted annual administrative expenses for its ongoing operations to a ratio of approximately 6.5% of net premiums written in 2006. In order to achieve this goal redundancies in all major locations are unavoidable. The Company is committed to taking the necessary measures in a responsible way. In this context, Converium will also streamline its global network of subsidiaries, branches and representative offices. Initial measures include the use of third-party management services for the administration of the Company's Bermuda and Australia branches as of the end of the first quarter of 2005.
Business Development
The following are comments on the development of Converium's three main business segments and the Corporate Center. Reference is made to the tables attached to this press release.
Standard Property & Casualty Reinsurance represented approximately 40.9% of total net premiums written in 2004. For the full year 2004 and the 4th quarter 2004 the Standard Property & Casualty Reinsurance segment of Converium reported a segment loss of US$ 12.5 million and US$ 40.3 million, respectively, which is largely attributable to the impact from prior years, i.e. reserve strengthening, reductions of ultimate premium estimates, reductions of retrocessional recoveries and commutation gains, on the technical result (2004: US$ 132.0 million; 4Q2004: US$ 57.6 million) as well as the hurricanes in the U.S. and the Caribbean, the Japanese typhoons and the South Asia tsunami.
In 2004, the Standard Property & Casualty Reinsurance segment recorded an adverse impact due to the development of prior years' loss reserves on the technical results of US$ 97.9 million, primarily related to net reserve strengthening in general third party liability (US$ 116.3 million) and motor liability outside the United States (US$ 91.7 million). These reserve additions were partially offset by positive developments related to property (US$ 82.1 million) and miscellaneous liability (US$ 60.5 million).
For the 4th quarter of 2004, the Standard Property & Casualty Reinsurance segment recorded a net adverse impact from prior years on the technical result of US$ 57.6 million, primarily related to reductions of retrocessional recoveries (US$ 12.0 million) and reductions of ultimate premium estimates after reflecting accrued underwriting expenses and losses (US$ 24.5 million).
The natural catastrophes in the 3rd and 4th quarter impacted full-year results negatively by US$ 154.5 million and added 4.8 percentage points to the full year's combined ratio. The 4th quarter's net result was unfavorably affected by adverse developments on the 3rd quarter hurricanes and typhoons as well as by losses arising from the South Asia tsunami which, in total, amounted to US$ 51.0 million, adding 8.9 percentage points to the 4th quarter's combined ratio.
In 2004, gross premiums written in the Standard Property & Casualty Reinsurance segment decreased by 9.9% to US$ 1,617.6 million and net premiums written decreased by 11.6% to US$ 1,455.0 million. The impact of clients exercising their rights of special termination under various reinsurance contracts amounted to a reduction of estimated gross premiums written of US$ 57.6 million in the second half of 2004. In addition, reductions of ultimate premium estimates of US$ 119.3 million led to a further decline of net premiums written and earned.
For the year ended December 31, 2004, the reduction in net premiums written in the Standard Property & Casualty Reinsurance segment included motor business, which decreased by 0.8% or US$ 3.7 million to US$ 484.8 million, largely reflecting cedents in North America exercising special termination clauses. These decreases were, however, mostly offset by growth in Western Europe. Furthermore, property business dropped by 26.1% or US$ 205.3 million to US$ 581.7 million, again primarily due to special terminations. The decline in business was partially offset by an increase in net premiums written within the general third party liability line of business, which increased by 7.9% or US$ 26.4 million to US$ 361.4 million as a result of continuing rate increases and new business.
In the 4th quarter of 2004 gross premiums written decreased by 67.4% to US$ 134.1 million and net premiums written decreased by 71.2% to US$ 105.3 million, reflecting clients exercising their rights of special termination and reductions of ultimate premium estimates.
Specialty Lines represented approximately 46.7% of total net premiums written in 2004. For the full year 2004 and the 4th quarter 2004, the Specialty Lines segment of Converium reported a segment loss of US$ 245.2 million and a segment income of US$ 21.7 million, respectively. The full-year loss is largely reflective of the impact from prior years on the technical result.
In 2004, the Specialty Lines segment recorded a net adverse impact on the technical result of US$ 480.2 million due to the development of prior years' reserves. This effect is primarily related to net reserve strengthening in professional liability and other special liability business (US$ 449.3 million), particularly in excess & surplus lines and umbrella, workers' compensation (US$ 55.4 million), and engineering (US$ 12.9 million). The adverse impact on the technical result was partially offset by positive net reserve developments related to aviation & space (US$ 24.5 million). In total, the reserve actions taken added 28.7 percentage points to the segment's full-year combined ratio of 125.5%.
For the 4th quarter of 2004, the Specialty Lines segment recorded a net positive impact from prior years on the technical result of US$ 0.6 million (including benefits from commutations). This includes reserve strengthening of US$ 11.3 million.
In 2004 gross premiums written in the Specialty Lines segment decreased by 12.1% to US$ 1,777.3 million and net premiums written decreased by 8.5% to US$ 1,658.1 million. A reduction of estimated gross premiums written of US$ 50.5 million resulted from clients exercising their rights of special termination under various reinsurance contracts. Further decreases in net premiums written and earned of US$ 100.5 million were caused by reductions of ultimate premium estimates.
For the full year, increases in net premiums written were recorded, for example, in agribusiness (of 41.0% to US$ 126.9 million) and aviation & space (of 18.3% to US$ 404.5 million), primarily due to new business written and an increased retention in the business written by Global Aerospace Underwriting Managers Ltd. (GAUM). These increases were offset by a decrease of US$ 85.1 million in net premiums written in the workers' compensation line of business.
In the 4th quarter gross premiums written decreased by 59.2% to US$ 200.0 million and net premiums written decreased by 54.7% to US$ 184.2 million, reflecting clients exercising their rights of special termination and reductions of ultimate premium estimates.
Life & Health Reinsurance represented approximately 12.4% of total net premiums written in 2004. For the full year 2004 and the 4th quarter of 2004, the Life & Health Reinsurance segment of Converium reported a segment income of US$ 15.1 million and US$ 3.8 million, respectively. The segment reported a technical result for the full year 2004 and the 4th quarter of 2004 of US$ 14.7 million and US$ 0.9 million, respectively. This positive development reflects the absence of any further reserve actions regarding Converium's Guaranteed Minimum Death Benefits (GMDB) book of business.
In 2004 gross premiums written increased by 9.7% to US$ 446.0 million and net premiums written increased by 19.1% to US$ 439.9 million. This growth largely resulted from the expansion of existing financing reinsurance transactions in Continental Europe. In the 4th quarter gross premiums written decreased by 38.3% to US$ 62.3 million and net premiums written decreased by 1.3% to US$ 82.3 million which is also reflective of the commutations of Converium's North American accident & health book of business.
The Corporate Center carries certain administration expenses such as the costs of the Board of Directors, the Global Executive Committee, and other global functions. For the full year and the 4th quarter of 2004 other operating and administration expenses were US$ 38.0 million and US$ 12.9 million, respectively.
Three months ended Year ended
December 31 December 31
Financial highlights:
Income statement,
return on equity
2004 2003 2004 2003
In US$ million, unless
noted
Gross premiums written 396.4 1,001.8 3,840.9 4,223.9
- growth (%) -60.4% -9.1%
Net premiums written 371.8 855.7 3,553.0 3,827.0
- growth (%) -56.6% -7.2%
Net premiums earned 668.3 961.1 3,685.1 3,676.5
- growth (%) -30.5% +0.2%
Non-life loss ratio 79.1% 69.8% 90.3% 71.5%
- change in percentage +9.3pts +18.8pts
points
Non-life underwriting 30.8% 22.9% 22.9% 22.0%
expense ratio +7.9pts +0.9pts
- change in percentage
points
Non-life administration 15.0% 5.7% 5.0% 4.4%
expense ratio +9.3pts +0.6pts
- change in percentage
points
Non-life combined ratio 124.9% 98.4% 118.2% 97.9%
- change in percentage +26.5pts +20.3pts
points
Life & Health technical 0.9 0.8 14.7 -8.0
result +12.5% n.m.
- growth (%)
Net investment results 91.3 68.0 358.1 251.4
- growth (%) +34.3% +42.4%
Total investment income 4.4% 3.6% 4.4% 3.5%
yield +0.8pts +0.9pts
- change in percentage
points
Total investment return 5.5% 5.6% 4.1% 5.7%
- growth (%) -0.1pts -1.6pts
Pre-tax operating -14.3 61.3 -362.5 206.0
(loss) income n.m. n.m.
- change (%)
Net (loss) income -50.2 56.2 -760.8 185.1
- change (%) n.m. n.m.
Financial highlights: Three months ended Year ended
Income statement, December 31 December 31
return on equity
In US$ million, unless
noted 2004 2003 2004 2003
(Loss) earnings per -0.79 0.71 -12.00 2.33
share (US$) n.m. (restated) n.m. (restated)
- growth (%)
Return on equity -9.6% 11.6% -36.5% 10.7%
- change in percentage n.m. n.m.
points
Financial December September June 30, December
highlights: Balance 31, 30, 31,
sheet 2004 2004 2004 2003
In US$ million,
unless noted
Total invested 8,469.3 7,965.1 7,926.4 7,809.5
assets plus cash +6.3% +0.5% +1.5%
- growth (%)
Claims supporting 2,111.1 1,665.9 1,739.9 2,473.9
capital +26.7% -4.3% -29.7%
- growth (%)
Shareholders' equity 1,720.2 1,275.1 1,349.2 2,083.3
- growth (%) +34.9% -5.5% -35.2%
Book value per share 11.76 31.99 33.90 52.38
(US$) -63.2% -5.6% -35.3%
- growth (%)
Book value per share 13.37 39.95 42.45 65.21
(CHF) -66.5% -5.9% -34.9%
- growth (%)
Financial highlights: Three months ended Year ended
Investment results December 31, December 31,
In US$ million, unless
noted 2004 2003 2004 2003
Investment income - 55.0 28.8 201.3 121.0
Fixed maturities
Investment income - 1.3 1.9 11.5 11.4
Equity securities
Investment income - 17.6 21.3 75.1 85.6
Funds Withheld Asset
Other investment income, 12.9 3.8 23.7 15.0
net
Net investment income 86.8 55.8 311.6 233.0
Average annualized net 4.2% 2.9% 3.8% 3.3%
investment income yield
(pre-tax)
Net realized capital 4.5 12.2 46.5 18.4
gains (losses)
Total investment results 91.3 68.0 358.1 251.4
Average annualized total 4.4% 3.6% 4.4% 3.5%
investment income yield
(pre-tax)
Change in net unrealized 20.9 38.3 -25.1 154.2
gains (pre-tax)
Total investment return 112.2 106.3 333.0 405.6
(pre-tax)
Average annualized total 5.5% 5.6% 4.1% 5.7%
investment return
(pre-tax)
Average total invested 8,217.2 7,603.5 8,139.4 7,144.2
assets (including cash
and cash equivalents)
The company has made it a policy not to provide any quarterly or annual earnings guidance and it will not update any past outlook for full year earnings. It will however provide investors with perspectives on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment.
Financial Controls
Management and our external auditors informed the Audit Committee that they have identified certain matters that constituted material weaknesses in Converium's internal control environment as at 31 December 2004. The identified material weaknesses relate to (i) the need to train or recruit suitably qualified individuals to fill the knowledge and experience gaps within the financial accounting and reporting function; and (ii) the failure in the operation of internal key controls over the initiation of reinsurance and financial accounting data.
To address these weaknesses and to improve financial reporting processes generally, management is taking certain actions: (i) the Company is actively recruiting additional qualified staff, making reassignments of responsibilities and committed to further training of staff as ways of filling the knowledge and experience gaps within the financial accounting and reporting function; (ii) the Company is actively addressing the improvement of key controls over the initiation of reinsurance and financial accounting data, including the addition of third-party consulting resources. The Company's expectation is that it will successfully address these weaknesses before it becomes subject to Section 404 of the Sarbanes-Oxley Act.
Enquiries:
Michael Schiendorfer Zuzana Drozd Media Relations Manager Head of Investor Relations michael.schiendorfer@converium.com zuzana.drozd@converium.com Phone: +41 (0) 1 639 96 57 Phone: +41 (0) 1 639 91 20 Fax: +41 (0) 1 639 76 57 Fax: +41 (0) 1 639 71 20
About Converium
Converium is an independent international multi-line reinsurer known for its innovation, professionalism and service. Today Converium employs more than 700 people in 20 offices around the globe and is organized into three business segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance. Converium has a "BBB+" rating (outlook stable) from Standard & Poor's and a "B++" rating (outlook stable) from A.M. Best Company.
Important Disclaimer
This document contains forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. It contains forward-looking statements and information relating to the Company's financial condition, results of operations, business, strategy and plans, based on currently available information. These statements are often, but not always, made through the use of words or phrases such as "seek to", "expects", "should continue", "believes", "anticipates", "estimates" and "intends". The specific forward-looking statements cover, among other matters, the reinsurance market, the Company's operating results, the rating environment and the prospect for improving results. Such statements are inherently subject to certain risks and uncertainties. Actual future results and trends could differ materially from those set forth in such statements due to various factors. Such factors include general economic conditions, including in particular economic conditions; the frequency, severity and development of insured loss events arising out of catastrophes, as well as man-made disasters; the ability to exclude and to reinsure the risk of loss from terrorism; fluctuations in interest rates; returns on and fluctuations in the value of fixed-income investments, equity investments and properties; fluctuations in foreign currency exchange rates; rating agency actions; changes in laws and regulations and general competitive factors, and other risks and uncertainties, including those detailed in the Company's filings with the U.S. Securities and Exchange Commission and the SWX Swiss Exchange. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. www.converium.com
Consolidated Three months ended Change Year ended Change
statements of December 31, December 31,
income
In US$ million,
unless noted 2004 2003 (%) 2004 2003 (%)
Revenues
Gross premiums 396.4 1,001.8 -60.4% 3,840.9 4,223.9 -9.1%
written
Less ceded -24.6 -287.9
premiums -146.1 -83.2% -396.9 -27.5%
written
Net premiums 371.8 855.7 -56.6% 3,553.0 3,827.0 -7.2%
written
Net change in 296.5 132.1
unearned 105.4 +181.3% -150.5 n.m.
premiums
Net premiums 668.3 961.1 -30.5% 3,685.1 3,676.5 +0.2%
earned
Net investment 86.8 55.8 55.6% 311.6 233.0 +33.7%
income
Net realized 4.5 46.5
capital gains 12.2 n.m. 18.4 n.m.
(losses)
Other income 26.2 7.1 n.m. -2.6 2.7 n.m.
(loss)
Total revenues 785.8 1,036.2 -24.2% 4,040.6 3,930.6 +2.8%
Benefits, losses and expenses
Losses, loss
adjustment -524.2 -679.3 -22.8% -3,263.1 -2,674.2 +22.0%
expenses and
life benefits
Underwriting -200.1
acquisition -220.9 -9.4% -842.5 -803.2 +4.9%
costs
Other operating -63.0
and -55.4 +13.7% -217.9 -197.8 +10.2%
administration
expenses
Interest -8.3 -7.1 +16.9% -33.1 -31.0 +6.8%
expense
Impairment of - - n.m. -94.0 - n.m.
goodwill
Amortization of
intangible -9.9 - n.m. -9.9 - n.m.
assets
Restructuring 0.7 - n.m. -2.7 - n.m.
costs
Total benefits, -804.8
losses and -962.7 -16.4% -4,463.2 -3,706.2 +20.4%
expenses
(Loss) income -19.0 73.5 n.m. -422.6 224.4 n.m.
before taxes
(Loss) income -31.2 -17.3 +80.3% -338.2 -39.3 n.m.
tax expense
Net (loss) -50.2 56.2 n.m. -760.8 185.1 n.m.
income
Basic (loss) -0.79 0.71(rest) 2.33
earnings per n.m. -12.00 (rest) n.m.
share (US$)
Diluted (loss) 0.70(rest) 2.32
earnings per -0.79 n.m. -12.00 (rest) n.m.
share (US$)
December 31, December 31,
Consolidated balance sheets
In US$ million, unless noted 2004 2003
Invested assets
Held-to-maturity securities:
Fixed maturities 850.4 500.4
Available-for-sale securities:
Fixed maturities 4,834.8 4,428.2
Equity securities 408.5 840.2
Other investments 272.3 173.5
Short-term investments 133.3 55.8
Total investments 6,499.3 5,998.1
Funds Withheld Asset 1,305.1 1,530.6
Total invested assets 7,804.4 7,528.7
Other assets
Cash and cash equivalents 664.9 280.8
Premiums receivables:
Current 318.5 182.8
Accrued 1,859.5 1,825.5
Reinsurance assets:
Underwriting reserves 1,337.8 1,718.6
Insurance balances receivable, net 233.5 224.0
Funds held by reinsureds 1,721.3 1,374.0
Deferred policy acquisition costs 484.7 380.1
Deferred income taxes 78.3 345.1
Other assets 439.7 495.0
Total assets 14,942.6 14,354.6
Liabilities
Losses and loss adjustment 8,776.9 7,842.8
expenses, gross
Unearned premiums, gross 1,312.3 1,467.4
Future life benefits, gross 545.8 483.5
Other reinsurance liabilities 1,375.3 1,087.3
Funds held under reinsurance 379.3 529.8
contracts
Deferred income taxes 157.2 158.3
Accrued expenses and other 284.7 311.6
liabilities
Debt 390.9 390.6
Total liabilities 13,222.4 12,271.3
Equity
Common stock 554.9 253.0
Additional paid-in capital 1,430.6 1,326.7
Treasury stock -7.7 -10.0
Unearned stock compensation -7.5 -6.1
Accumulated other comprehensive
income:
Net unrealized gains on 116.7 145.3
investments, net of taxes
Cumulative translation adjustments 187.4 116.1
Total accumulated other 304.1 261.4
comprehensive income
Retained (deficit) earnings -554.2 258.3
Total equity 1,720.2 2,083.3
Total liabilities and equity 14,942.6 14,354.6
Consolidated statements of cash flows Year ended
December 31,
In US$ million, unless noted 2004 2003
Net (loss) income -760.8 185.1
Net realized capital gains (losses) on -46.5 -18.4
investments
Amortization of premium/discount 59.1 43.9
Depreciation and amortization 34.2 30.5
Impairment of goodwill and deferred tax 383.7 -
asset
Total adjustments 431.2 56.0
Deferred policy acquisition costs -82.0 -90.5
Reinsurance assets 443.2 13.6
Funds held by reinsureds -237.4 -307.8
Funds Withheld Asset 283.8 230.6
Premiums receivables -98.3 -162.2
Unearned premiums, gross -212.2 204.2
Losses and loss adjustment expenses, gross 622.1 603.7
Future life benefits, gross 40.7 85.0
Funds held under reinsurance contracts -177.4 72.7
Other reinsurance liabilities 227.1 329.0
Income taxes, net 29.1 40.3
Net change in all other operational assets -283.9 5.6
and liabilities
Total changes in operational assets and 554.8 1,024.2
liabilities
Cash provided by operating activities 224.5 1,265.3
Purchases of fixed maturities -228.2 -192.4
held-to-maturity
Proceeds from sales and maturities of fixed 4,116.0 3,813.4
maturities available-for-sale
Purchases of fixed maturities -4,420.2 -5,054.0
available-for-sale
Cash flows from investing activities (fixed -532.4 -1,433.0
maturities)
Proceeds from sales of equity securities 983.1 94.3
Purchases of equity securities -541.3 -244.2
Cash flows from investing activities 441.8 -149.9
(equity securities)
Net (increase) decrease in short-term -71.2 277.1
investments
Proceeds from sales of other assets 82.3 47.4
Purchases of other assets -115.8 -69.4
Cash flows from investing activities -104.7 255.1
(other)
Net cash used in investing activities -195.3 -1,327.8
Net purchases of common shares -6.0 -17.3
Dividends to shareholders -47.8 -29.9
Proceeds from Rights Offering 428.4 -
Rights Offering issuance costs -25.1 -
Net cash provided by (used in) financing 349.5 -47.2
activities
Effect of exchange rate changes on cash and 5.4 29.0
cash equivalents
Change in cash in cash and cash equivalents 384.1 -80.7
Cash and cash equivalents as of January 1 280.8 361.5
Cash and cash equivalents as of December 31 664.9 280.8
Three months
ended Year ended
Segments December 31, Change December 31, Change
In US$ million, 2004 2003 (%) 2004 2003 (%)
unless noted
Standard Property & Casualty Reinsurance
Gross premiums 134.1 411.1 -67.4% 1,617.6 1,795.4 -9.9%
written
Net premiums 105.3 366.0 -71.2% 1,455.0 1,645.6 -11.6%
written
Net premiums earned 269.7 419.8 -35.8% 1,552.0 1,629.9 -4.8%
Non-life loss ratio 88.3% 75.0% +13.3pts 80.3% 68.3% +12.0pts
Non-life 32.4% 21.4% +11.0pts 24.3% +2.0pts
underwriting 22.3%
expense ratio
Non-life 21.5% 5.5% +16.0pts 5.8% +1.5pts
administration 4.3%
expense ratio
Non-life combined 142.2% 101.9% +40.3pts 110.4% 94.9% +15.5pts
ratio
Total investment 38.1 28.4 +34.2% 142.3 101.5 +40.2%
results
Segment (loss) -40.3 23.1 n.m. -12.5 183.7 n.m.
income
Retention ratio 78.5% 89.0% -10.5pts 89.9% 91.7% -1.8pts
Specialty Lines
Gross premiums 200.0 489.7 -59.2% 1,777.3 2,022.0 -12.1%
written
Net premiums 184.2 406.3 -54.7% 1,658.1 1,811.9 -8.5%
written
Net premiums earned 304.0 431.9 -29.6% 1,699.2 1,663.6 +2.1%
Non-life loss ratio 70.9% 64.8% +6.1pts 99.4% 74.6% +24.8pts
Non-life 29.3% 21.7%
underwriting 24.4% +4.9pts 21.6% +0.1pts
expense ratio
Non-life 11.3% 4.4%
administration 5.8% +5.5pts 4.4% -
expense ratio
Non-life combined 111.5% 95.0% +16.5pts 125.5% 100.6% +24.9pts
ratio
Total investment 43.3 35.9 +20.6% 186.1 132.4 +40.6%
results
Segment (loss) 21.7 58.9 -63.2% -245.2 115.2 n.m.
income
Retention ratio 92.1% 83.0% +9.1pts 93.3% 89.6% +3.7pts
Life & Health Reinsurance
Gross premiums 62.3 101.0 -38.3% 446.0 406.5 +9.7%
written
Net premiums 82.3 83.4 -1.3% 439.9 369.5 +19.1%
written
Net premiums earned 94.6 109.4 -13.5% 433.9 383.0 +13.3%
Underwriting
expense ratio Life 24.8% 23.3% +1.5pts 22.5% 20.9% +1.6pts
& Health
Administration 8.0% 1.9% +6.1pts 5.2% 3.5% +1.7pts
expense ratio Life
& Health
Total investment 9.9 3.7 n.m. 29.7 17.5 +69.7%
results
Segment income 3.8 1.5 +153.3% 15.4 -11.9 n.m.
(loss)
Retention ratio n.m. 82.6% n.m. 98.6% 90.9% +7.7pts
Corporate Center
Operating and
administration -12.9 -10.0 +29.0% -38.0 -34.3 +10.8%
expenses
Please find here the press release as PDF: http://hugin.info/133486/R/982638/146129.pdf