Moody's lifts Converium note from junk

Moody's Investors Service said it upgraded Converium Finance SA's $200 million 8¼% guaranteed subordinated notes due 2032 to Baa2 from Ba1.

This concludes the review for possible upgrade begun on Oct. 17, and the outlook is stable.

The agency said the upgrade reflects the continued enhancement of Converium's financial profile - with further improvements, for example, in underlying return on equity and combined ratio - good capitalization, a resilient and improving franchise and the successful completion of the sale of Converium's North American operations to National Indemnity Co. in December, which has freed up management time to focus on steering the group's ongoing business and has led to a $20 million reduction in the group's financial debt.

The stable outlook reflects Moody's expectation that Converium will sustain its non-life combined ratio below 100%, that it will achieve a return on equity of around 10% for 2007 and that financial leverage will not exceed 30%. The agency said it also does not expect any settlement with regard to the current Securities and Exchange Commission investigation into the accounting treatment of some of Converium's reinsurance transactions or with regard to outstanding class action lawsuits to materially impact Converium's financial strength.

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