20-F

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 333-14106

CONVERIUM HOLDING AG

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Switzerland
(Jurisdiction of incorporation or organization)

Baarerstrasse 8
CH-6300 Zug
Switzerland
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each Exchange on which registered
American Depositary Shares (as evidenced by American Depositary Receipts), each representing one-half (½) of one registered share, nominal value CHF10 per share	New York Stock Exchange
Registered shares, nominal value CHF10 per share*	New York Stock Exchange
8.25% Guaranteed Subordinated Notes due 2032 issued by Converium Finance S.A.	New York Stock Exchange
Subordinated Guarantee of Subordinated Notes+	New York Stock Exchange

* Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

+ Not for trading, but only in connection with the listing of the Subordinated Notes, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)

     Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

     As of December 31, 2003, there were outstanding: 39,775,620 registered shares, nominal value CHF10 per share, including 5,764,442 American Depositary Shares (as evidenced by American Depositary Receipts), each representing one-half (1/2) of one registered share.

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x      No  o

     Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  o     Item 18  x

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TABLE OF CONTENTS

 Exhibit 4.38

 Exhibit 4.39

 Exhibit 7.1

 Exhibit 8.1

 Exhibit 12.1

 Exhibit 31.1

 Exhibit 31.2

 Exhibit 32.1

 Exhibit 32.2

PRESENTATION OF INFORMATION

     In this annual report on Form 20-F, unless the context otherwise requires, “Converium,” “we,” “us,” and “our” refer to Converium Holding AG and our consolidated entities. Please refer to the glossary beginning on page G-1 for definitions of selected insurance and reinsurance terms.

     We publish our financial statements in U.S. dollars, and unless we note otherwise, all amounts in this annual report are expressed in U.S. dollars. As used herein, references to “U.S. dollars,” “dollars” or “$” and “cents” are to U.S. currency, references to “Swiss francs” or “CHF” are to Swiss currency, references to “yen” or “Japanese yen” are to Japanese currency, references to “British pounds” or “£” are to British currency and references to “euro” or “€” are to the single European currency of the member states of the European Monetary Union at the relevant time.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This annual report contains certain forward-looking statements. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements.

     In particular, statements using words such as “expect,” “anticipate,” “intend,” “believe” or words of similar import generally involve forward-looking statements. This annual report includes a number of forward-looking statements, including the following:

• certain statements in “Item 4. — Information on the Company — B. Business Overview” with regard to strategy and management objectives, trends in market conditions, prices, market standing and product volumes, investment results, litigation and the effects of changes or prospective changes in regulation.

• certain statements in “Item 4. — Information on the Company — B. Business Overview — Regulation” with regard to the effects of changes or prospective changes in regulation.

• certain statements in “Item 5. — Operating and Financial Review and Prospects” with regard to trends in results, prices, volumes, operations, investment results, margins, overall market trends, risk management and exchange rates.

• certain statements in “Item 11. — Quantitative and Qualitative Disclosures About Market Risk” with regard to sensitivity analyses for invested assets.

     In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements should not be considered a representation by us that our objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially from those in the forward-looking statements, including factors set forth in “Item 3. - Key Information - D. Risk Factors” and the following:

• cyclicality of the reinsurance industry.

• uncertainties in our reserving process.

• the occurrence of natural and man-made catastrophic events with a frequency or severity exceeding our estimates.

• acts of terrorism and acts of war.

• changes in economic conditions, including interest and currency rate conditions that could affect our investment portfolio.

• actions of competitors, including industry consolidation and development of competing financial products.

• a decrease in the level of demand for our reinsurance or increased competition in our industries or markets.

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• the lowering or loss of one of the financial strength ratings of one or more of our subsidiaries.

• political risks in the countries in which we operate or in which we reinsure risks.

• the passage of additional legislation or the promulgation of new regulation in a jurisdiction in which we operate or where our subsidiaries are organized.

• changes in our investment results as a result of the changed composition of our invested assets or changes in our investment policy.

• failure of our retrocessional reinsurers to honor their obligations.

• failure to prevail in any current or future arbitration or litigation.

• risks associated with implementing our business strategies.

• extraordinary events affecting our clients, such as bankruptcies and liquidations.

     The factors listed above should not be construed as exhaustive. We cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those described in any forward-looking statements. Except as otherwise required by law, we undertake no obligation to publicly release any future revisions we may make to forward-looking statements to reflect subsequent events or circumstances or to reflect the occurrence of unanticipated events.

     The Company has made it a policy not to provide any quarterly or annual earning guidance and it will not update any past outlook for full year earnings. It will, however, provide investors with perspective on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

     We have prepared our financial statements included in this annual report in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The following financial data highlights selected information that is derived from our financial statements as of and for the years ended December 31, 2003, 2002, 2001, 2000 and 1999, which have been audited by PricewaterhouseCoopers Ltd, independent accountants.

     Converium was formed as a result of the divestiture of the former “Zurich Re” business of Zurich Financial Services in December 2001. For a description of the transactions that led to the divestiture, which we refer to herein as the “Formation Transactions,” see “Item 4. — Information on the Company — A. History and Development of the Company.” The financial statements are presented as if we had been a separate entity for all periods presented and include estimates related to the allocation to Converium of costs of Zurich Financial Services’ corporate infrastructure prior to the Formation Transactions. We believe that these allocations are reasonable. However, this financial information may not be indicative of our future performance and does not necessarily reflect what our financial position and results of operations would have been had we operated as a stand-alone entity during the periods covered.

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	Year ended December 31
	2003			2002			2001			2000			1999
	($ million, except per share information)
Income statement data:
Revenues:
Gross premiums written	$	4,223.9		$	3,535.8		$	2,881.2		$	2,565.8		$	1,928.7
Less ceded premiums written		(396.9	)		(213.6	)		(398.6	)		(569.8	)		(358.5	)
Net premiums written		3,827.0			3,322.2			2,482.6			1,996.0			1,570.2
Net change in unearned premiums		(150.5	)		(156.7	)		(187.4	)		(134.5	)		(168.7	)
Net premiums earned		3,676.5			3,165.5			2,295.2			1,861.5			1,401.5
Net investment income		233.0			251.8			228.7			176.0			214.0
Net realized capital gains (losses)		18.4			(10.3	)		(18.4	)		83.7			76.3
Other income (loss)		2.7			(1.2	)		(5.8	)		29.3			22.1
Total revenues		3,930.6			3,405.8			2,499.7			2,150.5			1,713.9
Benefits, losses and expenses:
Losses, loss adjustment expenses and life benefits		(2,674.2	)		(2,492.0	)		(2,300.5	)		(1,604.5	)		(1,138.7	)
Total costs and expenses		(1,032.0	)		(856.4	)		(678.7	)		(587.5	)		(470.6	)
Amortization of goodwill (1)		—			—			(7.8	)		(7.3	)		(6.2	)
Restructuring costs		—			—			(50.0	)		—			—
Total benefits, losses and expenses		(3,706.2	)		(3,348.4	)		(3,037.0	)		(2,199.3	)		(1,615.5	)
Income (loss) before taxes		224.4			57.4			(537.3	)		(48.8	)		98.4
Income tax (expense) benefit		(39.3	)		49.4			169.9			19.5			(40.6	)
Net income (loss)	$	185.1		$	106.8		$	(367.4	)	$	(29.3	)	$	57.8
Earnings (loss) per share:
Average number of shares (millions)(2)		39.8			39.9			40.0			40.0			40.0
Basic earnings (loss) per share	$	4.65		$	2.68		$	(9.18	)	$	(0.73	)	$	1.45
Diluted earnings (loss) per share		4.59			2.64			(9.18	)		(0.73	)		1.45

	Year ended December 31
	2003		2002		2001		2000		1999
	($ million, except per share information)
Balance sheet data:
Total invested assets	$	7,528.7	$	6,117.3	$	4,915.9	$	4,349.7	$	4,232.8
Total assets		14,354.6		12,051.0		9,706.5		8,321.3		6,916.0
Insurance liabilities		11,410.8		9,454.8		7,677.9		6,486.6		5,048.9
Debt		390.6		390.4		197.0		196.9		196.8
Total liabilities		12,271.3		10,313.0		8,135.7		7,232.9		5,694.6
Total equity		2,083.3		1,738.0		1,570.8		1,088.4		1,221.4
Book value per share (2)		52.38		43.55		39.27		27.21		30.54

	Year ended December 31
	2003			2002			2001			2000			1999
	($ million)
Other data:
Net premiums written by segment:
Standard Property & Casualty Reinsurance	$	1,645.6		$	1,452.2		$	1,280.0		$	993.4		$	673.6
Specialty Lines		1,811.9			1,555.3			968.4			818.2			757.5
Life & Health Reinsurance		369.5			314.7			234.2			184.4			139.1
Total net premiums written	$	3,827.0		$	3,322.2		$	2,482.6		$	1,996.0		$	1,570.2
Non-life combined ratio		97.9	%		103.7	%		129.3	%(3)		116.5	%		112.5	%
Ratio of earnings to fixed charges (4)		7.2			3.7			(5	)		(6	)		5.9

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(1)	For a discussion of goodwill and Converium’s compliance with SFAS 142, see Notes 2(k) and 7 to our consolidated financial statements.
(2)	Immediately following the Formation Transactions, we had 40,000,000 shares outstanding. Therefore, these shares are considered outstanding for all periods prior to December 11, 2001.
(3)	The impact on the non-life combined ratio of the September 11th terrorist attacks was 13.3%.
(4)	The ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges. Fixed charges consist of interest expense and the interest portion of rental expense.
(5)	Due to Converium’s loss in 2001 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $537.3 million to achieve coverage of 1:1.
(6)	Due to Converium’s loss in 2000 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $48.8 million to achieve coverage of 1:1.

Dividends

     For a discussion of our dividend policy, see “Item 8. — Financial Information — A. Consolidated Statements and Other Financial Information — Dividends and Dividend Policy.”

B. CAPITALIZATION AND INDEBTEDNESS

     Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not applicable.

D. RISK FACTORS

Cyclicality of the reinsurance industry may cause fluctuations in our results

     The insurance and reinsurance industries, particularly the non-life market, are cyclical. Historically, operating results of reinsurers have fluctuated significantly because of volatile and sometimes unpredictable developments, many of which are beyond their direct control. These developments include:

• price competition.

• frequency of occurrence or severity of both natural and man-made catastrophic events.

• levels of capacity and demand.

• general economic conditions.

• changes in legislation, case law and prevailing concepts of liability.

     As a result, the reinsurance business historically has been characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of underwriting capacity permitted attractive premium levels. We expect to continue to experience the effects of this cyclicality, which could have a material adverse effect on our financial condition, results of operations or cash flows.

Our loss reserves may not adequately cover future losses and benefits

     Our loss reserves may prove to be inadequate to cover our actual losses and benefits experience. To the extent loss reserves are insufficient to cover actual losses, loss adjustment expenses or future life benefits, we would have to add to these loss reserves and incur a charge to our earnings which could have a material adverse effect on our financial condition, results of operations or cash flows.

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     Loss reserves do not represent an exact calculation of liability, but rather are estimates of the expected cost of the ultimate settlement of losses. All of our loss reserve estimates are based on actuarial and statistical projections, at a given time, of facts and circumstances known at that time and estimates of trends in loss severity and other variable factors, including new concepts of liability and general economic conditions. Changes in these trends or other variable factors could result in claims in excess of our loss reserves.

     Unforeseen losses, the type or magnitude of which we cannot predict, may emerge in the future. These additional losses could arise from newly acquired lines of business, changes in the legal environment, extraordinary events affecting our clients such as reorganizations and liquidations or changes in general economic conditions. We continue to conduct pricing and loss reserving studies for many casualty lines of business, including those in which preliminary loss trends are noted. In 2003, there was $31.3 million net positive development on non-life prior years’ loss reserves. In the Standard Property & Casualty Reinsurance segment, net positive development of non-life prior years’ loss reserves on property lines of $113.5 million (primarily from the 2002 year) was partially offset by our recording provisions for additional losses on motor and general third party liability lines of $64.1 million (primarily from 2001 and prior years). In the Specialty Lines segment, adverse development on workers’ compensation and professional liability and other special liability lines of $120.3 million (primarily from 2000 and prior years) was largely offset by net positive development of non-life prior years’ loss reserves on aviation and space of $102.2 million (primarily from the 2002 year).

     In addition, because we, like other reinsurers, do not separately evaluate each of the individual risks assumed under reinsurance treaties, we are largely dependent on the original underwriting decisions made by ceding companies. We are subject to the risk that our ceding companies may not have adequately evaluated the risks to be reinsured and that the premiums ceded to us may not adequately compensate us for the risks we assume.

     We had $7,842.8 million of gross reserves and $6,457.4 million of net reserves for losses and loss adjustment expenses as of December 31, 2003. If we underestimated these net reserves by 5%, this would have resulted in an additional $322.9 million of incurred losses and loss adjustment expenses, before income taxes, for the year ended December 31, 2003.

Our exposure to catastrophic events, both natural and man-made, may cause unexpected large losses

     A catastrophic event or multiple catastrophic events may cause unexpected large losses and could have a material adverse effect on our financial condition, results of operations or cash flows. Natural catastrophic events to which we are exposed include windstorms, hurricanes, earthquakes, tornadoes, severe hail, severe winter weather, floods and fires, and are inherently unpredictable in terms of both their occurrence and severity. For example, in 1999 and 2002, the reinsurance industry suffered losses from windstorms and flooding in Europe. These events adversely affected our results.

     We are also exposed to man-made catastrophic events, such as the terrorist attacks of September 11, 2001, which are difficult to predict and may have a significant adverse impact on our industry and on us. It is possible that both the frequency and severity of man-made catastrophic events will increase.

     As a result, claims from natural or man-made catastrophic events could cause substantial volatility in our financial results for any period and adversely affect our financial condition or results of operations. Our ability to write new business could also be impacted. We believe that increases in the value and geographic concentration of insured property and the effects of inflation will increase the severity of claims from catastrophic events in the future.

     The extent of our losses from catastrophic occurrences is a function of the total insured amount of losses our clients incur, the number of our clients affected, the frequency of the events and the severity of the particular catastrophe. In addition, depending on the nature of the loss, the speed with which claims are made, and the terms of the policies affected, we may be required to make large claims payments upon short notice. We may be forced to fund these obligations by liquidating investments unexpectedly and in unfavorable market conditions, or raising funds at unfavorable costs, both of which could adversely affect the results of our operations.

     Our efforts to protect ourselves against catastrophic losses, such as the use of selective underwriting practices, the purchasing of reinsurance (which, when bought by a reinsurer such as Converium, is known as retrocessional reinsurance) and the monitoring of risk accumulations, including on a geographic basis, may not prevent such occurrences from adversely affecting our profitability or financial condition.

     The majority of the natural catastrophe reinsurance we write relates to exposures within the United States, Europe and Japan. Accordingly, we are exposed to natural catastrophic events which affect these regions, such as U.S. hurricane, California earthquake, European windstorm and Japanese earthquake events. Our estimated potential losses on a probable maximum loss (PML) basis, before giving effect to our retrocessional protection, are currently managed to a self-imposed maximum gross event limit of $500 million for a 250- year return period loss. See “Item 4. — Information on the Company —

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B. Business Overview — Catastrophe Risk Management.”

Terrorist attacks and national security threats could result in the payment of material insurance claims and may have an enduring negative effect on our business

     We believe that the terrorist attacks of September 11, 2001 represent the largest loss event in the insurance industry’s history. As of December 31, 2003, we have estimated and recorded gross losses and loss adjustment expenses for claims arising in connection with the terrorist attacks of $674.2 million. Our recorded net losses and loss adjustment expenses were $289.2 million, net of retrocessional reinsurance recoveries. Losses from our aviation and property businesses represented the majority of the net loss. The remainder of the losses were from our workers’ compensation, life and general third-party liability lines of business. It is still early in the claims process, and our gross estimates are subject to revision as claims are received from insurers and our claims to our retrocessionaires are identified and processed.

     We cannot assess the long-term effects of terrorist attacks and continuing threats to national security on our businesses at this time. The September 11th terrorist attacks, threats of further terrorist attacks and the military initiatives and political unrest in Iraq, Afghanistan and the Middle East have had and may continue to have a significant adverse effect on general economic, market and political conditions, increasing many of the risks in our businesses. Although Zurich Financial Services, through its subsidiaries, has agreed to arrangements that cap our exposure for losses and loss adjustment expenses arising out of the September 11th terrorist attacks at $289.2 million, net of retrocessional reinsurance recoveries, terrorist attacks and other man-made catastrophic events may have an enduring negative effect on our business, financial condition and results of operations.

     For additional discussion of the impact of the September 11th terrorist attacks on our business, see Note 8 to our consolidated financial statements.

If we are unable to achieve our investment objectives, our financial condition may be adversely affected

     Investment returns are an important part of our overall profitability, and fluctuations in the fixed income or equity markets could have a material adverse effect on our financial condition, results of operations or cash flows. In 2003, net investment income and net realized capital gains accounted for 6.4% of our revenues. Accordingly, our capital levels, ability to pay catastrophic claims and our operating results substantially depend on our ability to achieve our investment objectives, which may be affected by general political and economic conditions that are beyond our control.

     As with any institutional investor, with a cash and investments portfolio of approximately $7.8 billion at the end of 2003, Converium is exposed to the financial markets; in particular, declining equity markets and an increase in interest rates would adversely impact our net income and shareholders’ equity.

     Fluctuations in interest rates affect our returns on fixed income investments, as well as the market values of, and corresponding levels of capital gains or losses on, the fixed income securities in our investment portfolio. Generally, investment income will be reduced during sustained periods of lower interest rates as higher yielding fixed income securities are called, mature or are sold and the proceeds reinvested at lower rates. During periods of rising interest rates, prices of fixed income securities tend to fall and realized gains upon their sale are reduced. General economic conditions can adversely affect the markets for interest-rate-sensitive securities, including the extent and timing of investor participation in such markets, the level and volatility of interest rates and, consequently, the value of fixed income securities. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control.

We invest a portion of our assets globally in equity securities, which are generally subject to greater risks and more volatility than fixed income securities. General economic conditions, stock market conditions and many other factors beyond our control can adversely affect the equity markets and, consequently, the value of the equity securities we own. See “Item 11. — Quantitative and Qualitative Disclosures About Market Risk.”

Competitive conditions in the reinsurance industry could adversely impact our results

     The reinsurance industry is highly competitive. Since Converium has only entered the market under its own brand name in 2001, some competitors have greater name and brand recognition. Some of our competitors may have greater financial or operating resources or offer a broader range of products or more competitive pricing than we do. Our competitive position is based on many factors, including our overall financial strength, geographic scope of business, client relationships, premiums charged, contract terms and conditions, products and services offered, speed of claims payment, reputation, experience and qualifications of employees and local presence. We compete for reinsurance business in U.S., European and other

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international reinsurance markets with numerous reinsurance and insurance companies, some of which have greater financial or other resources and higher financial strength ratings. We believe that our largest competitors include:

• Munich Reinsurance Company

• Swiss Reinsurance Company

• General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.

• Employers Reinsurance Corporation, a subsidiary of General Electric Company

• Hannover Re Group, which is 51.2% owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie

• Lloyd’s syndicates active in the London market

• Everest Reinsurance Company

• Transatlantic Reinsurance Company

• SCOR

• companies active in the Bermuda Market, including the Partner Re Group, XL Capital Ltd., Ace Ltd. and RenaissanceRe Holdings Ltd.

     In addition, new companies have entered the reinsurance market and existing companies have raised additional capital to increase their underwriting capacity. Other financial institutions, such as banks, are now able to offer services similar to our own. In addition, we have recently seen the creation of alternative products from capital market participants that are intended to compete with reinsurance products. Moreover, following the September 11th terrorist events, a number of new reinsurers and other entities have been formed to compete in or with our industry, and a number of existing market participants have raised new capital, which may enhance their ability to compete. We are unable to predict the extent to which these new, proposed or potential initiatives may affect the demand for our products or the supply and terms of risks that may be available for us to consider underwriting.

Consolidation in the insurance industry could lead to lower margins for us and less demand for our reinsurance products and services

     The insurance industry overall is undergoing a process of consolidation as industry participants seek to enhance their product and geographic reach, client base, operating efficiency and general market power through merger and acquisition activities. These larger entities may seek to use the benefits of consolidation to, among other things, implement price reductions for the products and services they purchase. If competitive pressures compel us to reduce our prices, our operating margins would decrease.

     As the insurance industry consolidates, competition for customers may become more intense and the importance of acquiring and properly servicing each customer will become greater. We could incur greater expenses relating to customer acquisition and retention, which could reduce our operating margins. In addition, insurance companies that merge may be able to enhance their negotiating position when buying reinsurance and may be able to spread their risks across a larger capital base so that they require less reinsurance.

The loss of key executive officers could adversely affect us

     Our ability to execute our business strategy is dependent on our ability to attract, develop and retain a staff of qualified underwriters and other personnel. Our management team includes a number of key personnel whose skills, experience and knowledge of the reinsurance industry constitute important elements of Converium’s competitive strengths. If some or all of these managers leave their positions at Converium, even if we were able to find persons with suitable skills to replace them, our operations could be adversely affected.

A downgrade in our ratings may adversely affect our relationships with clients and brokers and negatively impact sales of our products

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     Claims-paying ability and financial strength ratings are a factor in establishing the competitive position of reinsurers. The claims-paying ability ratings assigned by rating agencies to reinsurance or insurance companies are based upon factors relevant to policyholders and are not directed toward the protection of investors.

     A ratings downgrade, or the potential for such a downgrade, among other things, could adversely affect our relationships with clients, brokers, agents, wholesalers and other distributors of our products and services, negatively impact new sales and adversely affect our ability to compete in our markets. Standard & Poor’s Corporation has rated Converium “A” (Strong), stable outlook, and A.M. Best Company, Inc has rated Converium “A” (Excellent), stable outlook. Our ratings may not satisfy the criteria required by some of our clients and brokers. Accordingly, we may suffer a loss of business as a result. Any reduction in our ratings could result in our reinsurance operations being removed from the approved lists of some brokers or clients and may adversely affect our ability to write business through such brokers or to such clients.

     Over time the rating agencies could reexamine the ratings affecting our industry generally, including us.

Regulatory or legal changes could adversely affect our business

     Insurance laws, regulations and policies currently governing us and our clients may change at any time in ways which may adversely affect our business. Furthermore, we cannot predict the timing or form of any future regulatory initiatives. We are subject to applicable government regulation in each of the jurisdictions in which we conduct business, particularly in Switzerland, the United States, the United Kingdom and Germany. Regulatory agencies have broad administrative power over many aspects of the insurance and reinsurance industries. Government regulators are concerned primarily with the protection of policyholders rather than shareholders or creditors.

     Recently, the insurance and reinsurance regulatory framework has been subject to increased scrutiny in many jurisdictions. Changes in current insurance regulation may include increased governmental involvement in the insurance industry, initiatives aimed at premium controls, requirements for participation in guaranty associations or other industry pools and other changes which could adversely affect the reinsurance business and economic environment. Such changes could impose new financial obligations on us, require us to make unplanned modifications of our products and services, or result in delays or cancellations of sales of our products and services.

     The reinsurance industry is also affected by political, judicial and other legal developments, which have at times in the past resulted in new or expanded theories of liability. We cannot predict the future impact of changing law or regulation on our operations and any changes could have a material adverse effect on our financial condition, results of operations or cash flows. See “Item 4. — Information on the Company — B. Business Overview — Regulation.”

We purchase retrocessional reinsurance, which subjects us to credit risk and may become unavailable on acceptable terms

     In order to limit the effect on our financial condition of large and multiple losses, we buy reinsurance for our own account. This type of insurance is known as “retrocessional reinsurance.” From time to time, market conditions have limited, and in some cases have prevented, insurers and reinsurers from obtaining the types and amounts of reinsurance which they consider adequate for their business needs. There can be no assurance that we will be able to obtain our desired amounts of retrocessional reinsurance. There is also no assurance that, if we are able to obtain such retrocessional reinsurance, we will be able to negotiate terms as favorable to us as in prior years.

     A retrocessionaire’s insolvency or its inability or unwillingness to make payments under the terms of its reinsurance treaty with us could have a material adverse effect on us. Therefore, our retrocessions subject us to credit risk because the ceding of risk to retrocessionaires does not relieve us of our liability to our ceding companies. See “Item 4. — Information on the Company — B. Business Overview — Retrocessional Reinsurance.”

Because we depend on reinsurance brokers for a large portion of our revenue, loss of business written through them could adversely affect us

     We market our reinsurance products worldwide in substantial part through reinsurance brokers. In some markets, such as the London market and the United States, we principally write through reinsurance brokers. In 2003, two reinsurance intermediaries produced approximately 11.0% and 12.0% of our gross premiums written. Loss of all or a substantial portion of the business written through brokers could have a material adverse effect on us.

Our reliance on reinsurance brokers exposes us to their credit risk

     In 2003, approximately 58.0% of our gross premiums written were written through brokers. In accordance with industry practice, we frequently pay amounts owed on claims under our policies to reinsurance brokers, and these brokers, in turn, pay

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these amounts over to the insurers that have reinsured a portion of their liabilities with us. We refer to these insurers as ceding insurers. In some jurisdictions, or pursuant to some contractual arrangements, if a broker fails to make such a payment, we may remain liable to the ceding insurer for the deficiency. Conversely, in certain jurisdictions, when the ceding insurer pays premiums for these policies to reinsurance brokers for payment over to us, these premiums are considered to have been paid and the ceding insurer will no longer be liable to us for those amounts, whether or not we have actually received the premiums. Consequently, in connection with the settlement of reinsurance balances, we assume a degree of credit risk associated with reinsurance brokers around the world.

Foreign exchange rate fluctuations may impact our results

     We publish our financial statements in U.S. dollars. Therefore, fluctuations in exchange rates used to translate other currencies, particularly European currencies including the Euro, British pound and Swiss franc, into U.S. dollars will impact our reported financial condition, results of operations and cash flows from year to year. These fluctuations in exchange rates will also impact the U.S. dollar value of our investments and the return on our investments. For 2003, approximately:

• 48% of our net premiums written

• 29% of our net investment income

• 42% of our losses, loss adjustment expenses and life benefits, and

• 61% of our operating expenses

were denominated in currencies other than the U.S. dollar. For a discussion of the impact of material changes in foreign exchange rates on our shareholders’ equity, see “Item 11. — Quantitative and Qualitative Disclosures About Market Risk.”

We may be adversely affected if Zurich Financial Services or its subsidiaries fail to honor their obligations to us or our clients

     As part of the Formation Transactions, we entered into a number of contractual agreements with Zurich Financial Services and its affiliates including the Master Agreement, the Quota Share Retrocession Agreement, the Master Novation and Indemnity Reinsurance Agreement, service agreements, lease agreements and certain indemnity agreements. Among other things, under the Quota Share Retrocession Agreement, Zurich Financial Services, through its subsidiaries, provides us with a substantial amount of our investment returns. Additionally, Zurich Financial Services, through its subsidiaries, has agreed to arrangements that cap our exposure, net of retrocessional reinsurance recoveries, for losses and loss adjustment expenses arising out of the September 11th terrorist attacks at $289.2 million, the amount of loss and loss adjustment expenses we recorded as of September 30, 2001. In addition, subsidiaries of Zurich Financial Services have provided us with retrocessional reinsurance protection, provided coverage for certain workers’ compensation exposure, indemnified us for specified taxes and other matters and agreed to lease or sublease office space to us. See “Item 4. — Information on the Company — A. History and Development of the Company” and “Item 10. — Additional Information — C. Material Contracts.” Therefore, we are exposed to credit risk from Zurich Financial Services with respect to these obligations.

     In addition, Zurich Financial Services subsidiaries remain the legal counterparty for many of our assumed reinsurance contracts. Although we do not have credit risk exposure with respect to these contracts, if these Zurich Financial Services subsidiaries do not honor their commitments efficiently and effectively to these clients, we might bear reputational risk.

The financial and investment return information included in this annual report may not be indicative of our future financial performance

     For periods ended December 31, 2001 and earlier, we derived the financial information included in this annual report from historical financial statements of Zurich Financial Services. These financial statements present the financial condition, results of operations and cash flows of the businesses, which prior to the Formation Transactions, were owned by Zurich Financial Services and now comprise Converium. Accordingly, these financial statements may not necessarily reflect the results Converium would have achieved had it been a separate, stand-alone entity during the periods presented, or the financial position, results of operations and cash flows of Converium in the future.

     Historically, a significant portion of our invested assets were managed by Zurich Financial Services pursuant to the Zurich Financing Agreement. Since the Zurich Financing Agreement was terminated effective July 1, 2001, and replaced by the Funds Withheld Asset, our historical investment results are not indicative of the investment results we may achieve in the future.

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     In addition, under the Quota Share Retrocession Agreement, the Funds Withheld Asset may be prepaid to us, in whole or in part, as of the end of any calendar quarter. In the event that the Funds Withheld Asset is prepaid, we would have to reinvest these assets in investments and we may not be able to invest them at yields comparable to those payable under the Quota Share Retrocession Agreement. To the extent we are not able to invest these funds at comparable yields, our investment income could be adversely affected. See “Item 5. — Operating and Financial Review and Prospects.”

We may be restricted from disposing of assets and may suffer negative tax consequences in the case of a change of control

     Certain tax considerations and contractual arrangements with Zurich Financial Services may make an acquisition of Converium less likely and limit our ability to dispose of assets or enter into new lines of business. Because of the qualification of the Formation Transactions under Swiss tax law as partially exempt from the Swiss Share Issuance Tax to Converium, we may be restricted from certain disposals of assets, and may further face adverse tax consequences if the ownership of one third or more of our registered shares comes to be held by one shareholder or a group of related shareholders. See “Item 10. — Additional Information — C. Material Contracts — Swiss Tax Consequences to Converium of the Formation Transactions.”

Future European Commission directives may disadvantage companies like us which are not established within the European Union

     In October 2002, the European Commission, or EC, released a draft Proposal for a Directive of the European Parliament and of the Council concerning reinsurance and retrocession, which has been subject to a consultation process in the interim. The proposed Directive, when adopted will essentially establish the principles applicable to the taking-up of the business of reinsurance in a Member State as well as rules regarding technical provisions and the solvency requirements applicable to reinsurance companies. The Directive is based largely on solvency related concepts stipulated in the prior Directive adopted by the EU for insurance companies. The proposed Directive does not currently provide for any discrimination of non-EU based reinsurance companies. However, if the final adopted Directive should include such discriminatory regulations, this could be a disadvantage for Converium AG in its doing business in the EU, as Converium AG derives a substantial proportion of its revenues within the EU and any competitive disadvantage we face there could have an adverse effect on our result of operations.

ITEM 4. INFORMATION ON THE COMPANY

     Converium Holding AG was incorporated in Switzerland on June 19, 2001 as a joint stock company as defined in article 620 et seq. of the Swiss Code of Obligations. We were registered on June 21, 2001 in the Commercial Register of the Canton of Zug with registered number CH-170.3.024.827-8. Our registered office is Baarerstrasse 8, CH-6300 Zug, Switzerland.

A. HISTORY AND DEVELOPMENT OF THE COMPANY

     On March 22, 2001, Zurich Financial Services announced its intention to divest substantially all of its third-party reinsurance business historically operated under the “Zurich Re” brand name. This business had been managed and operated as a global operation since 1998. We refer to the Formation Transactions and the global offering described below in this annual report as the “Formation Transactions.” As part of the Formation Transactions, ownership of this business was consolidated under Converium Holding AG, a newly incorporated Swiss company. The financial statements included in this annual report reflect this business.

     The Formation Transactions consisted of the following principal steps:

• the transfer to us of the Zurich reinsurance business now conducted by Converium AG, through a series of steps including:

• our reinsurance of this business through quota share retrocession agreements with two units of Zurich Financial Services, which we refer to collectively as the Quota Share Retrocession Agreement

• the establishment of “funds withheld” balances in our favor by the applicable units of Zurich Financial Services, which we refer to collectively as the Funds Withheld Asset, on which we will be paid investment returns by the Zurich Financial Services units

• the transfer of assets including cash, marketable securities and participations by Zurich Financial Services and its subsidiaries to Converium, together with the assumption of liabilities

• the acquisition of the Cologne reinsurance business through the transfer by a subsidiary of Zurich Financial Services to Converium AG of its 98.63% interest in Zürich Rückversicherung (Köln) AG, which was renamed Converium

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	Rückversicherung (Deutschland) AG. Converium’s interest in Converium Rückversicherung (Deutschland) AG increased to 100% in January 2003
•	the acquisition of the North American reinsurance business through the transfer by a subsidiary of Zurich Financial Services of all of the voting securities of Zurich Reinsurance (North America) Inc. to Converium Holdings (North America) Inc., a wholly owned subsidiary of Converium AG. In conjunction with this transfer, Converium Holdings (North America) Inc. assumed $200 million of public debt from a subsidiary of Zurich Financial Services, and Zurich Reinsurance (North America), Inc. was renamed Converium Reinsurance (North America) Inc.
•	the sale of 35,000,000 of our registered shares to the public by Zurich Financial Services on December 11, 2001 in a global offering and the subsequent sale of 5,000,000 of our registered shares to the public by Zurich Financial Services on January 9, 2002 as a result of the underwriters’ exercise of their over-allotment option, which sales resulted in the public owning 100% of our shares

     As part of the Formation Transactions, Zurich Financial Services and its subsidiaries transferred cash and other assets and liabilities to Converium. The assets transferred to us included:

• the shareholders’ equity of the legal entities comprising our operating businesses

• the operating assets of the Zurich reinsurance business

• the balance of the assets transferred to us consisted of investments and cash, of which approximately $140 million was used by Converium AG to acquire residential and commercial rental properties located in Switzerland from subsidiaries of Zurich Financial Services

     For a description of the agreements and transactions involved in the Formation Transactions and our divestiture from Zurich Financial Services, including certain ongoing contractual arrangements with Zurich Financial Services, see “Item 10. — Additional Information — C. Material Contracts.”

     Converium Finance S.A. is a company incorporated for unlimited duration under the laws of Luxembourg on October 7, 2002. It has authorized share capital of €31,000 divided into 3,100 shares with a par value of €10 per share, 3,099 of which are owned by Converium AG and one of which is held by BAC Management S.a.r.l., a director of Converium Finance S.A., and all of which are fully paid. Converium Finance S.A.’s registered office is 54, boulevard Napoleon Ier, L-2210 Luxembourg. The objective of Converium Finance S.A., as stated in its Articles of Incorporation, is the acquisition, the management, the enhancement and the disposal of participations in whichever form in domestic and foreign companies.

B. BUSINESS OVERVIEW

Overview

     Converium is a leading global reinsurer whose business operations are recognized for innovation, professionalism and service. We believe we are accepted as a professional lead reinsurer for all major lines of non-life and life reinsurance. We actively seek to create innovative and efficient reinsurance solutions to complement our clients’ business plans and needs. We focus on core underwriting skills and on developing close client relationships while honoring ours and our clients’ relationships with brokers. We have the ability to cover risks globally and to provide meaningful capacity worldwide. Based on calendar year 2002 third-party net premiums written, we rank among the ten largest global professional reinsurers.

     Converium was formed through the restructuring and integration of the third-party reinsurance business of Zurich Financial Services. We believe that our separation from Zurich Financial Services presents significant opportunities and benefits for us. We believe we have benefited from our status as an independently managed, publicly traded company.

     In October 2003, Converium implemented changes to its organizational and financial reporting structures. At the time of its Initial Public Offering (“IPO”) in December 2001, Converium adopted an organizational model based on geography. This was largely driven by the historical development of its then parent, Zurich Financial Services. Over its first two years as an independent reinsurer, Converium has become more globally integrated and has seen its business strategy evolve. As a result, the issues of legal entity and geography have become less relevant criteria when evaluating business strategy and capital and resource allocation.

     Converium’s business is now organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance, which are based principally on global lines of business. In addition to the

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three segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions.

     We offer a full range of traditional non-life and life reinsurance products as well as innovative “non-traditional” solutions to help our clients manage capital and risk. Our principal lines of non-life reinsurance include general third party liability, motor, personal accident, property, agribusiness, aviation and space, credit and surety, engineering, marine and energy, professional liability and other special liability and workers’ compensation. The principal life reinsurance products are ordinary life and disability reinsurance, including quota share, surplus coverage and financing contracts, and accident and health.

     We underwrite reinsurance both directly with ceding companies and through brokers, giving us the flexibility to pursue business in accordance with our ceding companies’ preferred reinsurance purchasing method. Globally, approximately 42.0% of our 2003 gross premiums written were written on a direct basis and approximately 58.0% were written through brokers.

     We believe that one of our competitive strengths is our ability to work closely with our clients while honoring ours and our clients’ relationships with brokers. A key component of this competitive strength is our strong focus on client relationship management. We believe it is imperative that we fully understand our clients’ businesses in order to provide better solutions to our clients and enhance our own profitability. Direct communication with our clients enables us to obtain the in-depth details required for the proper analysis and understanding of our clients’ exposures. We seek to establish and maintain contacts with key decision makers in the organizations of our clients, particularly with their chief executive officers, chief financial officers and actuarial and underwriting managers.

     As a component of our strategy of getting closer to our clients and enhancing our understanding of the risks and other financial aspects of their business, we aligned our organizational structure to better serve our clients and enhance knowledge sharing among our underwriters, actuaries, client relationship managers and other personnel. This structure brings together professionals with treaty expertise and facultative specialists, focusing them around lines of business. We believe the combination of the two disciplines yields a stronger risk analysis and ultimately more profitable business opportunities for us, by allowing us to utilize the detailed knowledge of individual risks possessed by our facultative professionals in underwriting treaty business. For example, in North America, our facultative offices now report to persons with line of business responsibility. In Europe, we have established client relationship managers, supported by underwriters with both treaty and facultative expertise in all major lines of business. These client relationship managers are able to call upon our expertise from wherever it may be located within our global organization and establish multi-disciplinary client teams to address our clients’ needs. These teams seek to provide additional services to our clients, such as advice on balance sheet and operating risk management, underwriting audits and assistance with risk capital allocation.

     As a reflection of our financial strength and stability, Standard & Poor’s Corporation has rated Converium “A” (Strong), stable outlook, and A.M. Best Company Inc. has rated Converium “A” (Excellent), stable outlook. These ratings are based upon factors of concern to reinsurance clients and are not a measure of protection afforded to investors. These ratings may be revised, suspended or withdrawn at any time by the relevant rating agency. See “— Ratings.”

Our Strategy

     We believe we are an enduring leader of the global reinsurance industry, driving the evolution of the sector with forward-thinking and innovative solutions that enable our clients to efficiently manage their risk. We believe we are an agile, credible and interactive organization that provides the model for a new generation of reinsurers.

     We are a global multi-line reinsurer that satisfies its clients’ business needs by analyzing, assuming and managing risks. In an ethical and responsible manner, we believe we provide:

• Sustainable value growth for our shareholders

• Excellent service for our customers and intermediaries

• A fulfilling work environment for our employees

• A spirit of shared responsibility within our community

     We have a fiduciary mandate from our shareholders to invest their equity in the reinsurance business. Our core business is to analyze, assume and manage portfolios of insurance risks, and to invest the assets which support assumed insurance risks. All of our business aspirations remain within the boundaries of this defined field of activity. In achieving some of these, we will also transact direct insurance business; from an economic perspective, these exceptions remain within the bounds of our core business.

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     Guiding principles to develop our business

     The five guiding principles for the development of our core business portfolio of assumed reinsurance risks across the reinsurance cycle are:

• Our lead objective is to maximize our economic value. Our metrics include net after-tax operating income and Performance Excess

• To optimize our overall risk profile, our business portfolio is diversified in three key ways: by line of business, by region and by duration

• All contracts we underwrite should be profitable in expectation (i.e., a Performance Excess target of at least equal to zero). For every individual client relationship, Performance Excess must be greater than or equal to zero at every renewal

• We seek growing relationships with our target clients, but sustainable profitability is a prerequisite

• Assumed retrocession, financial guarantees, underwriting authorities for assumed reinsurance, and fronting are outside of our strategic scope

     *Performance Excess provides the basis for value-based management at Converium. It represents the economic value added attached to all reinsurance contracts in our portfolio. It takes into account all expected benefits and costs emanating from a contract or group of contracts, including expected premiums, expected losses and all other internal and external costs including risk-based cost of capital. Performance Excess is the expected net present value created for shareholders, in excess of the normal returns that they can expect from holding reinsurance company shares, such as Converium’s. We have chosen to make Performance Excess our key internal metric for measuring underwriting performance.

     The following are the guiding principles of our investment policy, capital management and retention management.

     Investment policy. We will continue to allocate our capital primarily to support underwriting risks. Strategic asset allocation will continue to be based on the capital allocated to support investment risks and on an integral asset and liability management approach. Within these boundaries, we strive to optimize the after-tax risk-return characteristics of the investment portfolio. Asset allocation will continue to focus on core portfolios of high-quality bonds and equities, generally managed passively. Further diversification will be achieved through complementary portfolios in other asset classes, such as real estate, credit portfolios, mortgage-backed securities, non-traditional or alternative investments. These portfolios will generally be actively managed. The acquisition of minority stakes in insurance or reinsurance companies remains outside of our strategic scope.

     Capital management. We manage our capital base so as to keep it strong enough to ensure that clients and brokers deem the company to be a credible reinsurer for short- and long-tail business. At the same time, we remain committed to returning capital to shareholders if such capital cannot be fully deployed to support reinsurance underwriting at adequate returns. Our cost of capital will continue to be competitive, and we will follow a sustainable dividend policy.

     Retention management. We will continue to effectively manage our gross and net risk position on a legal entity and on a group-wide basis, through global risk pooling and the limited purchase of retrocession.

     Global roles

     Our global strategy is set by our Board of Directors. The Board has delegated the implementation of our global strategy to the Global Executive Committee. Under our strategy, a specific global role has been outlined for each segment and function within the organization. These “job descriptions” for our various operating units clarify the contribution that each makes to the execution of the strategy — and, by doing so, the roles explain our strategy and provide information on the plan for its execution.

     The global roles assigned to our segments are as follows:

     Standard Property & Casualty Reinsurance

     The Standard Property & Casualty Reinsurance segment’s role in the current market environment and at the present stage of our development is to continue to position us as a core player in the global reinsurance marketplace. In so doing, it yields the market presence necessary to gain access to new and profitable business, to establish further geographical diversification of assumed risks, and to continue to contribute to earnings and cash flows.

     Specialty Lines

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     The Specialty Lines segment’s role is to develop several core specialty businesses in which we can position ourselves clearly as a market leader and can effectively leverage our intellectual assets in risk analysis, structuring, product design and risk modeling. The focus on specialty lines of businesses is based upon the belief that Converium, with its intellectual and structural assets, can offer unique service propositions to its chosen clients that will allow for superior profit generation over the reinsurance cycle. The Specialty Lines segment seeks to develop preferred access to business opportunities through joint ventures or participations in entities that enjoy a unique position in the minds of clients. Additionally, the Specialty Lines segment should capitalize on relationships developed through the Standard Property & Casualty Reinsurance segment. In so doing, the segment offers added value and additional service to clients, which may in turn yield more business for the Standard Property & Casualty Reinsurance segment.

     Due to the long-tail nature of much of the specialty lines of business, the emergence of accounting profit (on the basis of U.S. GAAP) will come with a certain time lag. Therefore, the Specialty Lines segment in its early growth phases will be the generator of substantial operating cash flows and future investment income, which will provide the platform for future earnings. The high levels of carried reserves necessary for the specialty lines underwritten by the segment will be capital consumptive during periods of strong growth in written premium and may pose a constraint on the amount of growth and business mix of the segment. Converium’s challenge will be to generate acceptable combined ratios in today’s low interest rate environment, so as to not distort published calendar year earnings.

     Life & Health Reinsurance

     The business underwritten by the Life & Health Reinsurance segment increases the stability of our income, because traditional life reinsurance has a low correlation to property and casualty risk, and can therefore improve risk diversification. This segment is to provide current earnings through life and health underwriting, and in addition will yield future earnings through life reinsurance.

     The global roles assigned to our functions are as follows:

     Functions reporting to the Chief Technical Officer

     All functions reporting to the Chief Technical Officer (CTO) – Underwriting Controlling, Global Risk Pooling and Retention Management, Strategic Planning and Cycle Management, the Strategic Project Office and Global Claims – have the common objective of ensuring a consistent and profit-optimizing approach to global underwriting results. This entails monitoring of adherence to common underwriting and claims standards and best practices, including peer reviews and client audit capabilities.

     Actuarial and Risk Management

     It is the Actuarial and Risk Management functions’ responsibility to measure and monitor our overall risk/return profile, and thus to enable management to take informed decisions consistent with our strategy. This includes the assessment of past and expected future profitability on the underwriting side, and the allocation of risk-based capital to support the organization most efficiently. The Actuarial and Risk Management functions ensure consistency and risk assessment best practice for underwriting risk through pricing and reserving analysis, asset risks (including investments) and strategic and operational risks. They provide comprehensive, timely and reliable information to all stakeholders in order to support decision-making processes.

     Finance

     The Finance function provides the financial data necessary both to measure our actual and expected future profitability in a way that is consistent throughout the organization, and to comply with external financial reporting requirements. In both cases, data is formatted according to the requirements of those who need the information. In addition, the Investment and Treasury functions optimize the risk/return ratio of invested assets based on our asset and liability management approach and on the capital attributed to investment risks. Finance actively manages our claims-supporting capital, ensuring that we have an appropriate level of capitalization and financial leverage to offer clients and rating agencies an adequate degree of security, while allowing for satisfactory returns for shareholders. To achieve an efficient balance between the need for an appropriate rating and the need to provide sustainable returns, the Finance function takes a lead role in the management of our relationships with key shareholders, financial analysts and rating agencies.

     Information Technology

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     The Information Technology (IT) function efficiently supports the whole organization by providing stable global core applications and IT infrastructure that is driven by user requirements. The IT function enables data to be globally consistent and easily accessible.

     Legal

     The Legal function provides the efficient legal support necessary for our business and corporate development. It provides management with its independent assessment of the critical legal issues pertinent to our business and ensures the proper legal governance of the organization.

     Human Resources

     As a strategic partner of all functions in the organization, Human Resources enables us to attract, develop and retain the talent needed to achieve our business goals.

     Corporate Communications

     The Corporate Communications function plays an instrumental role in providing timely, truthful, comprehensive and relevant information to all of our stakeholders and the public in general. This function also provides internal consultancy services, and assists in shaping Converium’s branding and messaging content to ensure that all stakeholders have easy access to all relevant information about Converium.

Our Business

     We are a leading global professional reinsurer, which offers a full range of traditional non-life and life reinsurance products as well as innovative “non-traditional” solutions to help our clients manage capital and risk. Our principal lines of non-life reinsurance include general third party liability, motor, personal accident, property, agribusiness, aviation and space, credit and surety, engineering, marine and energy, professional liability and other special liability and workers’ compensation. The principal life reinsurance products are ordinary life and disability reinsurance, including quota share, surplus coverage and financing contracts, and accident and health.

     In addition to our offices in Cologne, New York, Zug and Zurich, we have branch offices in Bermuda, Labuan, London, Milan, Paris, Singapore and Sydney, as well as marketing offices in Atlanta, Buenos Aires, Chicago, Kuala Lumpur, London, Mexico City, Mission Viejo, San Francisco, Sao Paulo and Tokyo. In addition, we have administrative offices in Stamford, Connecticut. We have a sub-holding company in London and another company in Luxembourg.

     Converium’s business is now organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance, which are based principally on global lines of business. In addition to the three segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions. To measure the financial performance of our operating segments, we define segment income as income before other income (loss), interest expense, and income taxes. The 2001 results also exclude the amortization of goodwill and restructuring costs.

The table below presents, by segment, the distribution of our premiums written and income for the year ended December 31, 2003. For additional information regarding the results of our operating segments, see “Item 5 — Operating and Financial Review and Prospects — A. Operating Results” and the Schedule of Segment Data on pages F-7 and F-8 of the financial statements.

	Year Ended December 31, 2003
											Segment
											income
	Gross premiums written					Net premiums written					(loss)
	$ millions		% of total			$ millions		% of total			$ millions
Business Segment:
Standard Property & Casualty Reinsurance	$	1,795.4		42.5	%	$	1,645.6		43.0	%	$	183.7
Specialty Lines		2,022.0		47.9			1,811.9		47.3			115.2
Life & Health Reinsurance		406.5		9.6			369.5		9.7			(11.9	)
Corporate Center		—		—			—		—			(34.3	)
Total	$	4,223.9		100.0	%	$	3,827.0		100.0	%		252.7
Other income												2.7
Interest expense												(31.0	)
Income tax expense												(39.3	)
Net income											$	185.1

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     The table below presents the geographic distribution of our gross premiums written for the years ended December 31, 2003, 2002 and 2001, based on the location of the ceding companies.

	Year Ended December 31,
	2003					2002					2001
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
United Kingdom*	$	1,083.0		25.6	%	$	910.4		25.8	%	$	560.1		19.4	%
Germany		286.9		6.8			176.1		5.0			179.4		6.2
France		160.5		3.8			106.9		3.0			89.8		3.1
Italy		131.2		3.1			84.0		2.4			62.7		2.2
Rest of Europe		338.8		8.0			224.0		6.3			199.5		6.9
Far East		266.4		6.3			191.9		5.4			113.7		4.0
Near and Middle East		134.3		3.2			124.3		3.5			99.8		3.5
North America		1,671.1		39.6			1,553.2		43.9			1,431.5		49.7
Latin America		151.7		3.6			165.0		4.7			144.7		5.0
Total	$	4,223.9		100.0	%	$	3,535.8		100.0	%	$	2,881.2		100.0	%

* Premiums from the United Kingdom include business assumed through Global Aerospace Underwriting Managers Limited and Lloyds’ syndicates for such lines of business as aviation and space as well as marine, where the exposures are worldwide in nature. Therefore, geographic location of the ceding company may not necessarily be indicative of the location of risk

     The table below presents the distribution of our net premiums written by line of business for the years ended December 31, 2003, 2002 and 2001.

	Year Ended December 31,
	2003					2002					2001
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Standard Property & Casualty Reinsurance
General third party liability	$	335.0		8.8	%	$	337.7		10.2	%	$	271.6		10.9	%
Motor		488.5		12.8			453.5		13.7			436.9		17.6
Personal accident (assumed from non-life insurers)		35.1		0.9			35.0		1.1			21.1		0.8
Property		787.0		20.5			626.0		18.7			550.4		22.3
Total standard property & casualty reinsurance		1,645.6		43.0			1,452.2		43.7			1,280.0		51.6
Specialty Lines
Agribusiness		90.0		2.4			22.0		0.7			32.0		1.3
Aviation & space		341.8		8.9			365.3		11.0			182.8		7.4
Credit & surety		236.0		6.2			200.1		6.0			178.5		7.2
Engineering		139.9		3.7			116.1		3.5			81.5		3.3
Marine & energy		95.3		2.5			94.3		2.8			73.6		3.0
Professional liability and other special liability		598.0		15.5			536.9		16.2			241.2		9.6
Workers’ compensation		310.9		8.1			220.6		6.6			178.8		7.2
Total specialty lines		1,811.9		47.3			1,555.3		46.8			968.4		39.0
Total non-life reinsurance		3,457.5		90.3			3,007.5		90.5			2,248.4		90.6
Life & Health Reinsurance
Life and disability		162.1		4.2			154.7		4.7			136.4		5.5
Accident and health		207.4		5.5			160.0		4.8			97.8		3.9
Total life & health reinsurance		369.5		9.7			314.7		9.5			234.2		9.4
Total	$	3,827.0		100.0	%	$	3,322.2		100.0	%	$	2,482.6		100.0	%

Types of Reinsurance

     Both non-life reinsurance and life reinsurance can be written on either a proportional basis or a non-proportional basis. Proportional reinsurance is also known as pro rata reinsurance. Quota share reinsurance and surplus reinsurance are types of proportional reinsurance. Some non-proportional reinsurance takes the form of excess of loss reinsurance in which the reinsurer’s obligations are only triggered after covered losses exceed a specified attachment point. In the case of proportional reinsurance, the reinsurer assumes a predetermined portion of the ceding company’s risks under the covered insurance contract or contracts. In the case of non-proportional reinsurance, the reinsurer assumes all or a specified portion of the ceding company’s risks in excess of a specified amount, known as the ceding company’s retention or the reinsurer’s attachment point, subject to a negotiated reinsurance contract limit.

     Premiums that the ceding company pays to a reinsurer for proportional reinsurance are a predetermined portion of the premiums that the ceding company receives from its insured, consistent with the proportional sharing of risk. In addition, in proportional reinsurance, the reinsurer generally pays the ceding company a ceding commission. The ceding commission is usually based on the ceding company’s cost of generating the business being reinsured, which includes commissions,

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premium taxes, assessments and miscellaneous administrative expenses and a profit participation for originating the business, the amount of which is based on the claims experience. The ceding commission may also be affected by competitive factors. Premiums that the ceding company pays to a reinsurer for non-proportional reinsurance are not directly proportional to the premiums that the ceding company receives. This is because the reinsurer does not assume a direct proportion of the ceding company’s risk. The frequency of claims under a proportional reinsurance contract is usually greater than under a non-proportional contract, and therefore the claims experience with proportional reinsurance contracts is generally more predictable.

     Non-proportional non-life reinsurance is often written in layers. One or a group of reinsurers accepts the risk just above the ceding company’s retention up to a specified amount, at which point another reinsurer or a group of reinsurers accepts the excess liability up to an additional specified limit or the excess liability reverts to the ceding company. The reinsurer taking on the risk just above the ceding company’s retention is typically said to write lower layer excess reinsurance. A claim that reaches just beyond the ceding company’s retention will create a claims payment for the lower layer reinsurer, but not for the reinsurers of any higher layers. Claims activity in lower layer reinsurance tends to be more predictable than in higher layers due to greater frequency and availability of historical data, and therefore, like proportional reinsurance, better enables underwriters and actuaries to more accurately price the underlying risks. In a limited number of cases, reinsurance is also written on an aggregate stop-loss basis to protect the ceding company’s total portfolio from extraordinary losses resulting from the aggregation of individual risks.

     Both non-life reinsurance and life reinsurance can be written either through treaty or facultative reinsurance arrangements. In treaty reinsurance, the ceding company cedes, and the reinsurer assumes, a specified portion of a type or category of risks insured by the ceding company. Generally in the industry, treaty reinsurers do not separately evaluate each of the individual risks assumed under their treaties and are largely dependent on the original risk underwriting decisions made by the ceding company’s underwriters. This dependence subjects reinsurers to the possibility that the ceding company has not adequately evaluated the risks to be reinsured and, therefore, that the premiums ceded to the reinsurer may not adequately compensate the reinsurer for the risk assumed. Accordingly, the reinsurer’s evaluation of the ceding company’s risk management and underwriting practices, as well as claims settlement practices and procedures, will usually impact the pricing of the treaty.

     Generally, reinsurers who provide facultative reinsurance do so separately from their treaty operations. In facultative reinsurance, the ceding company cedes, and the reinsurer assumes, all or part of a specific risk or risks. Facultative reinsurance normally is purchased by ceding companies for risks not covered by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for unusual and complex risks. In addition, facultative risks often provide coverages for relatively severe exposures, which results in greater volatility. The ability to evaluate separately each risk reinsured, however, increases the probability that the reinsurance underwriter can price the contract to reflect more accurately the risks involved. Because of the transactional nature of the business and the greater risks generally involved, margins on facultative business are usually higher than on treaty business. However, reinsurers who provide facultative coverage solely, or through distinct operations, experience relatively high underwriting expenses and, in particular, personnel costs, because each risk is individually underwritten and administered.

     Non-traditional reinsurance involves structured reinsurance solutions tailored to meet individual client strategic and financial objectives. Both non-life reinsurance and life reinsurance can be written on a structured/finite basis. Often these reinsurance solutions provide reinsurance protection across a company’s entire insurance portfolio. For instance, a whole account aggregate stop loss, whether single year or multi-year in design, provides protection for a company from deterioration in their accident year results. Another common solution is a loss portfolio transfer, which can take many forms, and which is frequently used to assist companies in efficiently and effectively exiting lines of business or facilitating insurance entity sales transactions. With increasing frequency, non-traditional reinsurance has been utilized in various ways to assist companies in managing property catastrophe exposures and other loss exposures from single or multiple events which, in the aggregate, could be significant. Because of the constantly changing industry and regulatory framework, as well as the changing market demands facing insurance companies, the approaches utilized in structured/finite programs are constantly evolving and will continue to do so.

     We underwrite our product lines on a non-proportional and proportional basis, as well as on a structured/finite basis. As part of our management organization, we integrate our facultative specialists with our underwriting professionals with treaty expertise, organizing them as focused teams around client relationship management and lines of business. We do not distinguish between treaty and facultative reinsurance, but rather between proportional and non-proportional underwriting and lines of business.

     In 2003, $2.6 billion or approximately 62% of our gross premiums written were written on a proportional treaty basis, $1.2 billion or approximately 27% of our gross premiums written were written on a non-proportional basis, and $458.7 million or approximately 11% of our net premiums written were written on a structured/finite basis.

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     The table below presents the distribution of our gross premiums written by type of reinsurance for the years ended December 31, 2003, 2002 and 2001.

	Year Ended December 31,
	2003					2002					2001
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Proportional	$	2,609.6		61.8	%	$	2,107.2		59.6	%	$	1,757.2		61.0	%
Non-proportional		1,155.5		27.3			925.2		26.2			798.6		27.7
Structured/finite		458.8		10.9			503.4		14.2			325.4		11.3
Total	$	4,223.9		100.0	%	$	3,535.8		100.0	%	$	2,881.2		100.0	%

Proportional and Non-proportional

     We offer traditional reinsurance products on both a proportional and non-proportional basis in all our lines of business. Our non-proportional business includes property, motor, aviation and space and professional liability and other special lines, to complement our established market position in non-proportional liability. The growth in our proportional business has been mainly due to an increase in proportional property, aviation and space and motor as well as opportunities in proportional agribusiness.

     We believe that clients and brokers actively seek our input in the evaluation and structuring of businesses with unique or difficult risk characteristics. We believe this is a result of our innovative approach, organizational resources and financial strength. We have developed integrated teams of professionals with significant treaty and individual risk, or facultative, expertise at our three principal underwriting centers in Zurich, New York and Cologne, which support the professionals we have in our branch network. We offer facultative products in almost every line on a proportional and non-proportional basis. We deploy our global specialty lines experts and local specialists to design solutions to address our clients’ risk management needs.

Structured/Finite

     Structured/finite reinsurance solutions are marketed and underwritten by the Risk Strategies divisions of our Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance segments. These divisions focus on servicing the needs of the reinsurance market that may not be met efficiently through traditional reinsurance products. With primary operating locations in Zurich, New York and Cologne, our structured/finite specialists focus on providing clients with innovative financial solutions for their risk management and other financial needs, primarily through reinsurance products. Whether working directly with the client or through a broker, we seek to develop client-specific solutions after spending time with the client to understand its business needs.

     We believe that to succeed in providing our clients with the solutions they need, we must take a comprehensive, iterative approach in our analysis. To accomplish this goal, our Risk Strategies divisions comprise a team of underwriting, tax, accounting, actuarial and banking experts who can effectively address all aspects of the solution. We believe this multi-disciplinary approach distinguishes us from our peers and enables us to craft solutions that are both creative and viable in light of the specific needs of the ceding company. Furthermore, our Risk Strategies personnel draw upon our global capabilities to marshal the necessary expertise and resources in any market.

     Our customers use structured/finite products principally to mitigate volatility as well as to transfer insurance risks. The more widely used structured/finite products have similar features but differing terms and limits, depending on the customer’s requirements. The three main types of structured/finite products that we offer are described below.

• Multi-year aggregate excess of loss reinsurance contracts have become a well-established structured/finite reinsurance product in the North American market. These reinsurance contracts provide coverage when the ceding company’s applicable block of policies reports losses at or above a specific loss ratio. This type of product will often charge an up-front premium plus additional premiums, which are dependent on the magnitude of losses claimed by the ceding company under the contract. The ceding company generally also participates in a profit sharing arrangement under these types of reinsurance contracts if the business covered does not generate excessive losses.

• Loss portfolio transfer and adverse loss development contracts are sold by all of our business segments. These products are considered retroactive reinsurance as they cover past periods for which the loss events have already occurred, but where all claims have not yet been made or paid. Retroactive structured/finite reinsurance products remain an attractive solution for certain clients, who may, for example, wish to exit a particular line of business, facilitate a business acquisition or stabilize statutory capital. Typically, a loss portfolio transfer will transfer to the reinsurer all risks underwritten, subject to an aggregate loss limit established in the contract. Adverse loss development products provide

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reinsurance coverage for losses in excess of the carried loss reserves of the ceding company at the transaction date, or in some cases at a mutually agreed attachment point, in excess of existing loss reserves.

•

Modified co-insurance contracts are offered by our Life & Health Reinsurance segment. This product is used by our life insurance clients principally to relieve the strain on statutory surplus caused by the statutory accounting requirement to expense all new business acquisition costs in the year incurred. Clients that are growing rapidly can encounter severe capital constraints as a result of this requirement. The reinsurance contract is a co-insurance contract (which means the reinsurer assumes a percentage of the same risks as the life insurer), modified to allow the ceding company to retain the investments which support the liabilities for future policy benefits applicable to the reinsured portfolio of business. We pay a ceding commission to our client, who accounts for it as statutory income and thus replenishes the surplus previously consumed by new business acquisition costs.

Non-Life Operations

Overview

     We operate our non-life reinsurance business through our two non-life segments: Standard Property & Casualty Reinsurance and Specialty Lines. Our non-life operations had gross premiums written of $3,817.4 million for the year ended December 31, 2003, representing 90.4% of our total gross premiums written.

     The following table sets forth our non-life reinsurance gross premiums written by type and line of business for the years ended December 31, 2003, 2002 and 2001:

	Year Ended December 31,
	2003					2002					2001
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Proportional
General third party liability	$	217.9		9.7	%	$	194.5		11.0	%	$	251.2		16.8	%
Motor		373.6		16.6			251.2		14.2			345.6		23.2
Personal accident (assumed from non-life insurers)		27.3		1.2			31.9		1.8			19.6		1.3
Property		503.0		22.4			423.5		24.0			288.5		19.3
Agribusiness		83.6		3.7			3.5		0.2			11.4		0.8
Aviation & space		417.7		18.6			310.8		17.6			176.3		11.8
Credit & surety		181.8		8.1			133.7		7.6			114.0		7.6
Engineering		141.5		6.3			118.8		6.7			82.8		5.6
Marine & energy		78.5		3.5			81.5		4.6			56.3		3.8
Professional liability and other special liability		193.6		8.6			194.7		11.0			111.6		7.5
Workers’ compensation		29.3		1.3			22.6		1.3			34.0		2.3
Total Proportional	$	2,247.8		100.0	%	$	1,766.7		100.0	%	$	1,491.3		100.0	%
Non-Proportional
General third party liability	$	137.9		12.6	%	$	136.0		15.0	%	$	115.8		14.7	%
Motor		138.5		12.7			123.3		13.6			106.9		13.5
Personal accident (assumed from non-life insurers)		7.7		0.7			3.1		0.3			1.3		0.2
Property		354.6		32.4			248.2		27.6			274.8		34.6
Agribusiness		14.9		1.4			18.5		2.0			20.7		2.6
Aviation & space		67.8		6.2			97.4		10.7			49.6		6.3
Credit & surety		39.9		3.7			35.6		3.9			17.6		2.2
Engineering		3.4		0.3			2.1		0.2			2.9		0.4
Marine & energy		22.4		2.1			18.8		2.1			22.6		2.9
Professional liability and other special liability		278.9		25.5			213.5		23.5			147.4		18.7
Workers’ compensation		25.9		2.4			10.1		1.1			30.5		3.9
Total Non-Proportional	$	1,091.9		100.0	%	$	906.6		100.0	%	$	790.1		100.0	%
Structured/Finite
General third party liability	$	33.2		6.9	%	$	28.0		5.4	%	$	69.6		20.3	%
Motor		—		—			100.2		19.3			4.1		1.2
Personal accident (assumed from non-life insurers)		—		—			—		—			—		—
Property		1.6		0.3			2.5		0.5			18.2		5.3
Agribusiness		—		—			—		—			—		—
Aviation & space		-0.2		—			—		—			1.4		0.4
Credit & surety		39.6		8.3			46.8		9.0			59.7		17.4
Engineering		—		—			—		—			—		—
Marine & energy		—		—			—		—			—		—
Professional liability and other special liability		149.7		31.3			160.0		30.8			13.1		3.8
Workers’ compensation		253.8		53.2			181.8		35.0			177.3		51.6
Total Structured/Finite	$	477.7		100.0	%	$	519.3		100.0	%	$	343.4		100.0	%
Total
General third party liability	$	389.0		10.2	%	$	358.5		11.2	%	$	436.6		16.6	%
Motor		512.1		13.4			474.7		14.9			456.6		17.3
Personal accident (assumed from non-life insurers)		35.0		1.0			35.0		1.1			20.9		0.8
Property		859.2		22.5			674.2		21.1			581.5		22.2
Agribusiness		98.5		2.6			22.0		0.7			32.1		1.2
Aviation & Space		485.3		12.7			408.2		12.8			227.3		8.7
Credit & surety		261.3		6.8			216.1		6.8			191.3		7.3
Engineering		144.9		3.8			120.9		3.8			85.7		3.3
Marine & energy		100.9		2.6			100.3		3.1			78.9		3.0
Professional liability and other special liability		622.2		16.3			568.2		17.8			272.1		10.4
Workers’ compensation		309.0		8.1			214.5		6.7			241.8		9.2
Total	$	3,817.4		100.0	%	$	3,192.6		100.0	%	$	2,624.8		100.0	%

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     The table below presents the loss, underwriting expense and combined ratios of our non-life reinsurance business both by line of business and type of reinsurance for the years ended December 31, 2003, 2002 and 2001. This table represents an aggregation of line of business ratios for our two non-life segments. Subsequent tables present ratios for each non-life segment by line of business and type of reinsurance. Any prior underwriting year development (positive or negative) will affect the ratios of the calendar year in which the activity is recorded.

Loss, Expense and Combined Ratios
Year Ended December 31,

	2003									2002									2001
				U/W									U/W									U/W
	Loss			Expense			Combined			Loss			Expense			Combined			Loss			Expense			Combined
	Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)
	%			%			%			%			%			%			%			%			%
General third party liability		92.1	%		22.1	%		114.2	%		109.4	%		19.0	%		128.4	%		132.8	%		20.0	%		152.8	%
Motor		86.3			18.4			104.7			84.8			22.8			107.6			83.2			21.8			105.0
Personal accident (assumed from non-life insurers)		68.9			23.1			92.0			69.4			18.1			87.5			94.6			11.2			105.8
Property		46.2			24.8			71.0			52.3			23.8			76.1			84.8			18.1			102.9
Agribusiness		87.0			8.6			95.6			100.9			4.8			105.7			57.0			8.3			65.3
Aviation & space		44.3			15.4			59.7			69.9			13.0			82.9			179.9			21.8			201.7
Credit & surety		59.8			30.2			90.0			64.8			28.8			93.6			113.3			34.2			147.5
Engineering		64.7			29.7			94.4			81.7			21.9			103.6			97.8			24.2			122.0
Marine & energy		73.5			18.6			92.1			86.3			23.3			109.6			99.6			23.0			122.6
Professional liability and other special liability		79.2			26.5			105.7			101.0			19.5			120.5			106.8			31.7			138.5
Workers’ compensation		114.3			13.0			127.3			61.1			24.3			85.4			73.4			34.3			107.7
Proportional		65.0			25.1			90.1			75.7			24.3			100.0			82.0			31.8			113.8
Non-Proportional		84.3			13.1			97.4			80.8			15.6			96.4			121.6			16.4			138.0
Structured/Finite		74.4			27.4			101.8			82.5			19.2			101.7			136.7			-1.6			135.1
Total		71.5			22.0			93.5			78.2			21.1			99.3			99.9			23.4			123.3

(1) The combined ratios presented in this table exclude administration expenses.

For an explanation of ratio calculations, please refer to the Schedule of Segment Data on pages F-7 and F-8 of the financial statements.

For an explanation of significant loss activity, see “Item 5 — Operating and Financial Review and Prospects — A. Operating Results”.

Standard Property & Casualty Reinsurance

     The Standard Property & Casualty Reinsurance segment’s role in the current market environment and at the present stage of our development is to continue to position us as a core player in the global reinsurance marketplace. In so doing, it yields the market presence necessary to gain access to new and profitable business, to establish further geographical diversification of assumed risks, and to continue to contribute to earnings and cash flows. The lines of business of the Standard Property & Casualty Reinsurance segment are as follows:

     General third party liability. We provide a broad range of coverage for reinsurance of industrial, manufacturer, operational, environmental, product and general third-party liability. We provide liability coverage on both a proportional and non-proportional basis.

     Motor. We reinsure liability risks, collision damage and accident risks of motor vehicles. Motor insurance can include coverage in three major areas - liability, physical damage and accident benefits. Liability insurance provides coverage payment for injuries and for property damage to third parties. Physical damage provides for payment of damages to an insured automobile arising from a collision with another object or from other risks such as fire or theft. Accident benefits provide coverage for loss of income and medical and rehabilitation expenses for insured persons who are injured in an automobile accident, regardless of fault.

     Personal accident (assumed from non-life insurers). We provide accident coverages for various business lines, including personal accident and travel accident.

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     Property. We reinsure liability for physical damage caused by fire and allied perils such as explosion, lightning, storm, flood, earthquake and costs of debris removal, as well as coverage of business interruption and loss of rent as a result of an insured loss. Other sub-lines of property reinsurance include cover for hail, burglary, water damage and glass breakage.

     The following table presents the distribution of net premiums written by our Standard Property & Casualty Reinsurance segment for the years ended December 31, 2003, 2002 and 2001.

	Year ended December 31
	2003					2002					2001
	$					$					$
	millions		% of total			millions		% of total			millions		% of total
Standard Property & Casualty Reinsurance:
General third party liability	$	335.0		20.4	%	$	337.7		23.2	%	$	271.6		21.2	%
Motor		488.5		29.7			453.5		31.2			436.9		34.1
Personal accident (assumed from non-life insurers)		35.1		2.1			35.0		2.4			21.1		1.6
Property		787.0		47.8			626.0		43.2			550.4		43.1
Total standard property & casualty reinsurance	$	1,645.6		100.0	%	$	1,452.2		100.0	%	$	1,280.0		100.0	%

     The following table presents the loss, underwriting expense and combined ratios of our Standard Property & Casualty Reinsurance segment by line of business and type of reinsurance for the years ended December 31, 2003, 2002 and 2001.

Loss, Expense and Combined Ratios
Year Ended December 31,

	2003									2002									2001
				U/W									U/W									U/W
	Loss			Expense			Combined			Loss			Expense			Combined			Loss			Expense			Combined
	Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)
	%			%			%			%			%			%			%			%			%
General third party liability		92.1	%		22.1	%		114.2	%		109.4	%		19.0	%		128.4	%		132.8	%		20.0	%		152.8	%
Motor		86.3			18.4			104.7			84.8			22.8			107.6			83.2			21.8			105.0
Personal accident (assumed from non-life insurers)		68.9			23.1			92.0			69.4			18.1			87.5			94.6			11.2			105.8
Property		46.2			24.8			71.0			52.3			23.8			76.1			84.8			18.1			102.9
Proportional		55.7			26.0			81.7			77.9			27.7			105.6			54.0			35.2			89.2
Non-Proportional		85.8			13.7			99.5			76.8			10.6			87.4			135.6			7.9			143.5
Structured/Finite		188.2			40.2			228.4			64.0			29.9			93.9			202.5			-47.1			155.4
Total		68.3			22.3			90.6			76.3			22.2			98.5			93.2			19.6			112.8

(1) The combined ratios presented in this table exclude administration expenses.

For an explanation of ratio calculations, please refer to the Schedule of Segment Data on pages F-7 and F-8 of the financial statements.

For an explanation of significant loss activity, see “Item 5 — Operating and Financial Review and Prospects — A. Operating Results”.

Specialty Lines

Overview

     The Specialty Lines segment’s role is to develop several core specialty lines of businesses in which we can position ourselves clearly as a market leader and can effectively leverage our intellectual assets in risk analysis, structuring, product design and risk modelling. The focus on specialty lines of business is based upon the belief that Converium, with its intellectual and structural assets, can offer unique service propositions to its chosen clients that will allow for profit generation over the reinsurance cycle. The Specialty Lines segment will try to capitalize on relationships developed through the Standard Property & Casualty Reinsurance segment. In so doing, the segment offers added value and additional service to clients, which may in turn yield more business for the Standard Property & Casualty Reinsurance segment.

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     Due to the long-tail nature of much of the specialty lines of business, the emergence of accounting profit (on the basis of U.S. GAAP) will come with a certain time lag. Therefore, the Specialty Lines segment in its early growth phases will be the generator of substantial operating cash flows and future investment income, which will provide the platform for future earnings. The high levels of carried reserves necessary for the specialty lines of business underwritten by the segment will be capital consumptive during periods of strong growth in written premium and may pose a constraint on the amount of growth and business mix of the segment. Converium’s challenge will be to generate acceptable combined ratios in today’s low interest rate environment, so as to not distort published calendar year earnings.

     The lines of business of the Specialty Lines segment are as follows:

     Agribusiness.We provide covers for specific named perils, traditional crop hail, and bundled risks. These covers can apply to almost any product in the food and fiber chain: commodity crops, specialty crops and animal crops.

     Aviation & Space. We are a leading provider of reinsurance of personal accident and liability risks and hull damage, in connection with the operation of aircraft and the coverage of satellites during launch and in orbit.

     Credit & Surety. Our credit coverages provide reinsurance for financial losses sustained through the failure for commercial reasons of an insured’s customers to pay for goods or services supplied to them. Our surety business relates to the reinsurance of risks associated with performance bonds and other forms of sureties or guarantees issued to third parties for the fulfilment of contractual obligations.

     Engineering. We write all lines of engineering risks including project risks (construction all risk and erection all risk) and annual covers such as for machinery and electronic equipment, as well as consequential loss resulting from both project and annual risk.

     Marine & Energy. We provide reinsurance relating to the property and liability coverage of goods in transit (cargo insurance) and the means of their conveyance (hull insurance).

     Professional liability and other special liability. We offer specialized underwriting, actuarial and claims expertise for all lines of professional liability, including medical malpractice, directors and officers, architects and engineers, accountants and lawyers liability. We also provide errors and omissions reinsurance coverage for specialized and other lines of business, such as insurance agents and real estate agents. Our professional liability operations also actively develop and reinsure emerging coverages for exposures such as tax opinions, representations and warranties, and e-commerce risk liability.

     Workers’ compensation. Our workers’ compensation coverages are flexible solutions that can help our clients manage their global workers’ compensation risks. Our products include reinsurance for statutory workers’ compensation programs, as well as individual risk excess workers’ compensation. Our workers’ compensation reinsurance offerings range from complete coverage of a full workers’ compensation program to specific carve-out coverages that address a client’s targeted concerns.

     Converium aims at being an acknowledged reinsurance market leader in the professional indemnity line of business in Europe. We intend to be among the top reinsurance companies in credit and surety lines of business in the future and expect to maintain our market position in aviation and space lines of business. The importance of the agribusiness line of business in the global portfolio will continue to increase. Outside the United States, in countries where government social security schemes are expected to break down and private sector solutions to grow in importance, the workers’ compensation line of business is anticipated to become a more important market. The marine and energy line of business is anticipated to remain a significant area.

     The following table presents the distribution of net premiums written by our Specialty Lines segment for the years ended December 31, 2003, 2002 and 2001.

	Year ended December 31
	2003					2002					2001
	$					$					$
	millions		% of total			millions		% of total			millions		% of total
Specialty Lines:
Agribusiness	$	90.0		5.0	%	$	22.0		1.4	%	$	32.0		3.3	%
Aviation & space		341.8		18.8			365.3		23.4			182.8		18.9
Credit & surety		236.0		13.0			200.1		12.9			178.5		18.4
Engineering		139.9		7.7			116.1		7.5			81.5		8.4
Marine & energy		95.3		5.3			94.3		6.1			73.6		7.6
Professional liability and other special liability		598.0		33.0			536.9		34.5			241.2		24.9
Workers’ compensation		310.9		17.2			220.6		14.2			178.8		18.5
Total specialty lines	$	1,811.9		100.0	%	$	1,555.3		100.0	%	$	968.4		100.0	%

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     The following table presents the loss, underwriting expense and combined ratios of our Specialty Lines segment by line of business and type of reinsurance for the years ended December 31, 2003, 2002 and 2001.

Loss, Expense and Combined Ratios
Year Ended December 31,

	2003									2002									2001
				U/W									U/W									U/W
	Loss			Expense			Combined			Loss			Expense			Combined			Loss			Expense			Combined
	Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)			Ratio			Ratio			Ratio(1)
	%			%			%			%			%			%			%			%			%
Agribusiness		87.0	%		8.6	%		95.6	%		100.9	%		4.8	%		105.7	%		57.0	%		8.3	%		65.3	%
Aviation & space		44.3			15.4			59.7			69.9			13.0			82.9			179.9			21.8			201.7
Credit & surety		59.8			30.2			90.0			64.8			28.8			93.6			113.3			34.2			147.5
Engineering		64.7			29.7			94.4			81.7			21.9			103.6			97.8			24.2			122.0
Marine & energy		73.5			18.6			92.1			86.3			23.3			109.6			99.6			23.0			122.6
Professional liability and other special liability		79.2			26.5			105.7			101.0			19.5			120.5			106.8			31.7			138.5
Workers’ compensation		114.3			13.0			127.3			61.1			24.3			85.4			73.4			34.3			107.7
Proportional		75.6			24.1			99.7			73.5			20.9			94.4			120.1			27.2			147.3
Non-Proportional		82.3			12.4			94.7			86.7			22.9			109.6			89.6			35.7			125.3
Structured/Finite		62.5			26.0			88.5			89.4			15.2			104.6			97.0			25.9			122.8
Total		74.6			21.6			96.2			80.0			20.0			100.0			109.5			28.8			138.3

(1) The combined ratios presented in this table exclude administration expenses.

For an explanation of ratio calculations, please refer to the Schedule of Segment Data on pages F-7 and F-8 of the financial statements.

For an explanation of significant loss activity, see “Item 5 — Operating and Financial Review and Prospects — A. Operating Results”.

Life & Health Reinsurance

Overview

     The Life & Health Reinsurance segment contains the following lines of business:

• Life and disability

• Accident and health

     We offer these lines of business on a global scale. We primarily conduct our life and disability reinsurance business from Cologne, Germany whereas a substantial block of our accident and health business is written in North America. In September 1999, we implemented a strategy to substantially grow our life reinsurance business. In 2000, we started our accident and health business operations in North America. In addition, we have established branch offices in Milan and Paris, and maintain life representatives in our Buenos Aires office to locally serve the Latin American markets. We also utilize our non-life offices in many parts of the world to facilitate direct contacts with our life and health reinsurance clients.

     As a result of these initiatives, our life and disability lines in Continental Europe and accident and health business in North America have grown significantly in recent years, with our net premiums written increasing from $234.2 million in 2001 to $369.5 million in 2003.

     Our primary goal is to write Life & Health Reinsurance business that generates an attractive expected return. Our strategy focuses on:

• maintaining underwriting discipline and pursuing business that is attractive on a risk-adjusted basis

• pursuing growth in markets we believe offer attractive opportunities, such as Germany, the United States, Italy, France, the Middle East, and Latin America

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• maintaining a low expense ratio

• selectively providing services in certain target markets to build loyalty and attract premiums

• providing structured/finite solutions

• leveraging our capital markets expertise which, among other things, provides us with additional capacity to write business

     We are seeking to grow our Life & Health business operations significantly while not compromising our underwriting standards. We believe that Life & Health reinsurance will represent an increasing percentage of our business in the near future.

     We are focusing on the life reinsurance business because, among other reasons, we believe that the market for life reinsurance is growing. In addition, life reinsurance business tends to be less cyclical than non-life reinsurance due to more predictable claims experience.

     We also believe that our health business will positively contribute to the overall profitability of this segment. However, we have to carefully apply our cycle management approach for the North American market because we write this business in relatively large blocks with a small number of clients as compared to our European market. In addition, we believe that we have acceptable risk diversification. It is important to monitor the market development to be able to recognize early indications of turning market conditions.

     We expect that the demand from life insurers for financial support and reinsurance services will continue to increase, particularly in Europe. We believe our capital markets and other non-traditional expertise will help us bring additional innovative solutions to our clients and further enhance the market position of our life operations.

     In addition to the growth in our life insurance markets described above, we believe that the following factors will also contribute to increased demand for life reinsurance:

• demutualizations of life insurance companies

• the increasing importance of non-traditional and more sophisticated life products

• aging of the population

• privatization of benefits that used to be provided by governments

• deregulation and increased competition among primary insurance companies from new entrants, such as banks and other financial services companies

• the increasing need for products that reduce the volatility of earnings following the increasing adoption of international accounting standards in many of the markets we serve

Competition

     The reinsurance business is competitive and, except for regulatory considerations, there are relatively few barriers to entry. We compete with other reinsurers based on many factors, primarily:

• expertise, reputation, experience and qualifications of employees

• local presence

• client relationships

• products and services offered

• premium levels

• financial strength

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• contract terms and conditions

     As a direct writer of reinsurance, we compete with a number of major direct marketers of reinsurance both in local markets and internationally. We also compete with a number of major reinsurers who write business through reinsurance brokers, and with Lloyd’s of London. We believe that our largest competitors, both locally and internationally, are:

• Munich Reinsurance Company

• Swiss Reinsurance Company

• General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.

• Employers Reinsurance Corporation, a subsidiary of General Electric Company

• Hannover Re Group, which is 51.2% owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie

• Lloyd’s syndicates active in the London market

• Everest Reinsurance Company

• Transatlantic Reinsurance Company

• SCOR

• companies active in the Bermuda Market, including the Partner Re Group, XL Capital Ltd., Ace Ltd. and RenaissanceRe Holdings Ltd.

Non-Life Underwriting, Pricing/Structuring and Accumulation Control

     We regard underwriting and pricing as a core skill. Underwriting is the process by which we identify desirable clients and lines of business, cultivate profitable opportunities, and assess and manage our exposure, claims settlement and reserving risk for any particular exposure. In our view, underwriting requires a deep understanding of the client, their business and the market in which the client operates. In evaluating business opportunities, we rely heavily on a collaborative underwriting process that emphasizes communication and information sharing among our underwriting, actuarial/modeling, claims, legal and finance personnel. We bring together all of those disciplines to properly understand, assess, price and execute policies in a manner appropriate to the nature of the risk.

     Our underwriters coordinate globally to access our expertise and balance sheet capabilities to optimize solutions for our clients’ business needs. We have underwriting specialists throughout our worldwide organization, covering a wide range of disciplines that help us assess our global risk exposures. In an effort to better serve our reinsurance clients, we combine our underwriters and actuaries in client management teams. Specifically, we have access, on a global basis, to significant internal actuarial expertise, which we deploy to assess our non-life pricing and reserve adequacy and to develop associated capital allocation approaches and risk models. Additionally, our underwriting process draws upon our multidisciplinary specialists, who include engineers, meteorologists, environmental scientists, economists, geologists, seismologists and mathematicians. These specialists and actuaries are based around the world and work together to ensure and facilitate the application of best practices and the consideration of the most recent scientific developments. Moreover, we actively utilize and develop risk models and other sophisticated tools, many of which are proprietary.

     In developing underwriting guidelines, we assess market conditions, quality of risks, past experience, and expectations about future exposure. Where appropriate, we seek to limit our capacity on a per claim, per event and per year basis, and employ aggregate annual limits and index clauses, which reset retention in the event of claims inflation. The overall objective of these procedures is to achieve an appropriate expected return on equity while safeguarding our solvency and creditworthiness. In particular, we seek to maintain a sufficient level of overall capital to retain a strong financial strength rating under normal circumstances and a strong investment grade rating in the event of a significant loss.

     During the underwriting process, we carefully seek to ensure that we employ coherent and consistent structures, pricing and wording such that all of our contracts and commitments are in line with our underwriting guidelines. Compliance with

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these rules is regularly reviewed by our senior management, which may effect adjustments as deemed appropriate. For non-standard transactions, our legal staff is involved both in transaction structuring and contract wording throughout the process.

     Additionally, during the underwriting process, we assess and seek to control the amount and concentration of risk underwritten for various areas by analyzing aggregates and accumulation by region, peril or line of business, such as property catastrophe, aviation, marine, agribusiness and credit and surety. We normally use proprietary as well as commercially available tools to monitor our accumulations and relate them to our overall risk appetite. Aggregates are revised regularly and adapted in line with our current strategy and risk-bearing willingness and ability, and transformed into rules and parameters for underwriting decisions.

     In pricing business, we analyze various aspects of a prospective non-life reinsured’s business including, but not limited to, historical and projected loss and exposure data, future loss costs, financial stability and history, classes and nature of underlying business and policy forms, underwriting and claims guidelines, aggregation of loss potential (between contracts), the dependence of risk factors relevant to the proposed policy with those relevant to the rest of our portfolio, existing reinsurance programs (including potential uncollectible reinsurance), and the quality and experience of management.

     Our core pricing approach is to estimate the underlying frequency and severity of distributions so that we can develop an aggregate probability distribution of ultimate loss. In order to understand the cash flows, we estimate premium collection and loss payout patterns. Taking into account the transaction structure, we then create an aggregate probability distribution of the profit function of the contract and reflect investment income generated by the cash flows as well as all expenses and taxes. From this, we estimate the expected performance excess of the profit expectation of the contract as well as the risk capital required by the contract. The risk capital is a function of the potential for loss from the contract, the duration of the liabilities and the correlation of the risk factors with the remainder of our book of business. The contract’s expected performance excess of the profit is compared to its risk based capital to determine its profitability level. We also consider other items such as client and line of business desirability and associated business opportunities. We develop or enhance additional tools to assess non-traditional contracts where necessary or appropriate. For specialized lines, such as aviation, agribusiness and credit and surety, we have developed and continue to enhance pricing models that specify a particular pricing based on a number of risk factors including, for instance, financial risks such as interest rate volatility and stock or commodity market returns. Our comprehensive approach to risk modeling, and our integration of analytical expertise in client-focused teams, allows us to quantify the potential financial impact of these measurable risks.

     Our models give us the capability to easily and quickly analyze a contract under numerous structures. This in turn allows us to be creative, innovative and responsive in seeking to create a structure that satisfies our profit goals and risk appetite while simultaneously satisfying our clients’ objectives. Due to our modeling expertise and development of very fast algorithms and simulations, we are able to price different structures promptly. We are able to access our pricing system and database online and from anywhere around the world via telecommunication.

     In order to fully realize the value of this ability, we seek to gain a deep and thorough understanding of the subject business being covered. For most of our business, including all large and complex contracts, actuaries and other technical experts are part of the transaction team. They visit the client, build the models, and jointly with the underwriters price and structure the transaction. For the remainder of our business, internal actuaries or other experts including engineers, meteorologists, environmental scientists, economists, geologists, seismologists and mathematicians provide the analytic tools for the underwriters’ use.

     In order to provide maximum feedback to our underwriting teams, we have developed management information systems that track the profitability of each contract from the time it is written until the last dollar is paid. We compare ultimate loss ratios with our original expectations. This information then populates our database. We then have the ability to extract information from our database and analyze the relationships between historic profitability and such variables as size of contract, production source, structure of transaction and size of client.

Non-Life Claims Management

     Individual claims reported to our non-life operating units are monitored and managed by the claims departments at each unit depending on their respective thresholds. At this level, claims administration includes reviewing initial loss reports, monitoring claims handling activities of clients, requesting additional information where appropriate, establishing initial case reserves and approving payment of individual claims. Authority for payment and establishing reserves is always established in levels, depending upon rank and experience in the company.

     In addition to managing reported claims and conferring with ceding companies on claims matters, our claims departments conduct periodic audits of specific claims and the overall claims procedures of our clients at the offices of ceding companies. We rely on our ability to effectively monitor the claims handling and claims reserving practices of ceding companies in order

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to establish the proper reinsurance premium for reinsurance agreements and to establish proper loss reserves. Moreover, prior to accepting certain risks, our claims departments are often requested by underwriters to conduct pre-underwriting claims audits of prospective ceding companies.

     We attempt to evaluate the ceding company’s claims-handling practices, including the organization of their claims departments, their fact-finding and investigation techniques, their loss notifications, the adequacy of their reserves, their negotiation and settlement practices and their adherence to claims-handling guidelines. Following these audits, the claims departments provide feedback to the ceding company, including an assessment of the claims operation and, if appropriate, recommendations regarding procedures, processing and personnel.

     Our three main hubs work together to coordinate global issues in a cooperative effort involving claims services, actuarial, risk modeling and underwriting functions. For example, our claims services personnel help coordinate the establishment of proper reserving and risk assessment functions across our global organization.

     The claims departments are available to provide value-added services to customers, e.g., assessment, consultation, hosting professional seminars, issuing publications, including surveys on topics of interest, as well as maintaining a claims-related website.

     Our North American unit has developed Converium Claim, a website which facilitates our North American claims management functions. Through Converium Claim, our clients have convenient and secure access to our claims payment database to inquire about the status of payments due on proof of loss claims.

Life Operations Underwriting and Claims

     We have developed underwriting guidelines, policies and procedures with the objective of controlling the quality and pricing of the life reinsurance business we write. Our life reinsurance underwriting process emphasizes close collaboration among our underwriting, actuarial, administration and claims departments. We determine whether to write reinsurance business by considering many factors, including the type of risks to be covered, ceding company retention and binding authority, product and pricing assumptions and the ceding company’s underwriting standards, financial strength and distribution systems.

     We believe that one of our strengths is our expertise in medical underwriting. We seek to work closely with our clients and, as a value-added service, share this expertise in order to build client loyalty and better understand their risks. Additionally, we maintain a website for the German market that provides information on medical underwriting-related topics which may be accessed and utilized by our ceding companies.

     We generally do not assume 100% of a life reinsurance risk and require the ceding company to retain at least 20% of every reinsured risk. We regularly update our underwriting policies, procedures and standards to take into account changing industry conditions, market developments and changes in medical technology. We also endeavor to ensure that the underwriting standards and procedures of our ceding client entities are compatible with ours. Toward this end, we conduct periodic reviews of our ceding companies’ underwriting and claims procedures.

     Life, accident and disability claims generally are reported on an individual basis by the ceding company. In case of large, difficult or doubtful claims, cedents provide us with all supporting documents. We also investigate claims generally for evidence of misrepresentation in the policy application and approval process. In addition to reviewing and paying claims, we monitor both specific claims and overall claims handling procedures of ceding companies.

     We monitor the loss development of our life reinsurance treaties and compare them to our expected returns on a regular basis. In the case of significant deviations, we may seek to negotiate alternative contract provisions, including increased premiums or higher retentions.

     For our life reinsurance business, the interaction between our actuaries and underwriters is very close, as most of our underwriters are also mathematicians. We use commercial as well as proprietary tools to assess the profitability of the business. Our life underwriting seeks to ensure that our expected stream of distributable profits will earn an adequate risk-adjusted return. Our analysis also includes sensitivity measures to control the risk exposure of our global portfolio.

Catastrophe Risk Management

     Natural peril and man-made catastrophe risk management is an essential part of our overall corporate risk management plan. To help us globally measure and monitor our exposure to natural catastrophic events, we have established a Global Catastrophe Group comprised of senior management members with underwriting, actuarial, risk management and other

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specialized expertise. This group meets on a quarterly basis to review relevant aspects of our catastrophe underwriting and risk management.

     An integral part of our Global Catastrophe Group is our Natural Hazards Team, located in Zurich. This specialized team provides services and support to our underwriters and pricing actuaries in our offices around the world. Natural Hazards Team members are integrated with our actuarial and risk modeling staff. We believe that centralizing key catastrophe risk functions in our Natural Hazards Team helps produce a consistent catastrophe exposure analysis across our global operations. For example, our catastrophe risk specialists design, maintain and support state-of-the-art risk modeling software to which our underwriters have direct access.

     In addition, we have adopted a central monitoring system (our Global Cat Data Platform), which helps us to manage our worldwide accumulations of catastrophe risk by peril and region. In our global analyses we focus on key zones where we face a geographic concentration or peak exposures, such as U.S. hurricane risk. This centralized analysis is essential for a global reinsurer such as Converium, since we may write business for the same peril or region from more than one of our worldwide offices. Also, we endeavor to monitor clash potential, both from lines other than property catastrophe as well as between certain perils and regions.

     A major component of our natural catastrophe risk management approach is to employ global portfolio optimization and geographic diversification. Utilizing careful risk selection, pricing, and modeling of portfolio additions, we seek to diversify our exposures while optimizing available capacity and maximizing our expected return on equity. This approach helps us to fully capitalize on the natural catastrophe reinsurance premiums our global balance sheet will support, while reducing the expected net impact of catastrophe losses. We believe this strategy leaves us well positioned to write additional business during periods of improving market conditions.

     The principal goals of our natural hazard risk management procedures include:

• Measuring, monitoring and managing natural hazard exposures: For measuring natural hazard exposures, we use specially developed software and techniques. For example, we use third-party models developed by specialized consultants to assist with catastrophe underwriting and accumulation control. We also compare models for certain perils or regions where our models indicate higher variability. In addition, we have developed fully proprietary probabilistic tools to enhance the utility of our models.

• Supporting risk mitigation measures: Our global monitoring system helps us to measure our accumulation of individual risks by peril and region. During renewal season, we seek to perform these functions on a continuous basis. In addition, we conduct a combined analysis for our worldwide portfolio at least on a quarterly basis. We believe that this centralized, global review helps us to monitor and manage our natural catastrophe loss potential and to take remedial action if our accumulations reach unacceptable levels. In addition, our monitoring system serves as the basis for structuring our own reinsurance protection.

• Assisting with optimal capacity utilization: We use return on risk based capital considerations to help us to optimize expected profits from our catastrophe portfolio and to seek to improve its performance. We do this by dynamically adjusting capacity allocation during renewal periods as business is written, thereby optimizing our worldwide capacity and exploiting our diversification potential. We also review pricing levels in several markets prior to renewal, in order to incorporate this information in our business strategy.

• Supporting clients in all elements of natural hazards risk management: The expertise developed by our catastrophe risk specialists in understanding and managing catastrophe risk allows us to assist our clients in assessing their own loss potential and in designing efficient risk transfer mechanisms. Further, we utilize our expertise to influence property catastrophe exposure reporting in the industry. For example, we led the enhancement of the market standard for the exchange of exposure data (CRESTA plus) between primary and reinsurance companies, thereby assisting market participants to adopt common reporting and better understand their natural catastrophe exposures. The data format is easy and flexible to use. It allows an efficient exposure and loss data exchange between insurance and reinsurance companies. We believe that the use of CRESTA plus improves data quality, will enable more accurate risk assessment, and helps save time and reduce costs.

• Following post-disaster loss developments: Our catastrophe risk specialists produce estimates of our expected losses promptly after a catastrophe event. This rapid review helps us assess our liquidity needs and determine whether we need to take any remedial action. In addition, we regularly study catastrophe developments to improve our probabilistic models.

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     The majority of the natural catastrophe reinsurance we write relates to exposures within the United States, Europe and Japan. Accordingly, we are exposed to natural catastrophic events which affect these regions, such as U.S. hurricane, California earthquake, European windstorm and Japanese earthquake events. Our estimated potential losses on a probable maximum loss (PML) basis, before giving effect to our retrocessional protection, are currently managed to a self-imposed maximum gross event limit of $500 million for a 250-year return period loss.

     We use retrocessional reinsurance protection to assist our efforts to ensure that our risk tolerance is not exceeded on a per event or aggregate basis. We actively seek to combine traditional reinsurance protection with capital market solutions, in order to diversify our sources of risk bearing capital and, in particular, to provide us with additional protection in our higher retrocessional layers for up to approximately a 250-year event.

     We have developed substantial capital markets expertise, which we can use both to provide additional capacity to our clients and to improve our own results and risk profile. The key business reasons for using a capital markets-based solution rather than traditional reinsurance are as follows:

• The lack of availability of high credit quality reinsurance protection at competitive prices for California earthquakes, U.S. hurricanes and European windstorms

• The ability to achieve protection at stable prices for a multi-year period

• To obtain better post-event liquidity relief compared to traditional retrocessionaires’ practices

• To diversify sources of risk bearing capacity from more traditional reinsurance products

     For example, we have entered into a catastrophe agreement with Zurich Insurance Company (“ZIC”) based on ZIC’s transaction with TRINOM Ltd. to reduce our net retained loss for large catastrophe events that produce losses greater than what is referred to in the industry as a “once in 100 years” magnitude. Perils covered by TRINOM and our catastrophe agreement with ZIC, which we refer to as the Catastrophe Agreement, include U.S. hurricane, U.S. earthquake, and European windstorm losses that occur before June 13, 2004. See “— Catastrophe Protection.”

     Lastly, as respects man-made catastrophes such as acts of terrorism, we have recently introduced a conservative monitoring and accumulation approach. We utilize a matrix system to track for each contract the level of exclusion (absolute or partial, sub limit or other) and its level of exposure. This allows us to assess and estimate our current portfolio-wide terrorism aggregates by adding contract exposure and taking into account its level of exclusion. While our methodology is being further developed and refined, it enables a conservative monitoring of our current exposure.

Retrocessional Reinsurance

     We purchase retrocessional reinsurance to better manage risk exposures, protect against catastrophic losses, access additional underwriting capacity and to stabilize financial ratios. The insurance or indemnification of reinsurance is called a retrocession, and a reinsurer of a reinsurer is called a retrocessionaire. We aggregate our ceded risk across our operations to achieve superior terms and pricing for our retrocessional coverage and to help us better assess our overall portfolio risk. Additionally, we incorporate the use of retrocessional coverage as a component of our underwriting process.

     The major types of retrocessional coverage we purchase include the following:

• specific coverage for certain property, engineering, marine, aviation, satellite, motor and liability exposures

• catastrophe coverage for property business

• casualty clash coverage for potential accumulation of liability from treaties and facultative agreements covering losses arising from the same event or occurrence

• aggregate stop loss protections

     We have established a control procedure whereby our Chief Executive Officer and Chief Technical Officer, along with the other members of our senior executive team, reviews the business purpose for all reinsurance purchases. Our senior executive team, generally our Chief Technical Officer, approves all purchases before they are bound.

     Prior to entering into a retrocessional agreement, we analyze the financial strength and rating of each retrocessionaire.

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Afterwards, the financial performance and rating status of all material retrocessionaires is monitored.

     Retrocessional reinsurance arrangements generally do not relieve us from our direct obligations to our reinsureds. Thus, a credit exposure exists with respect to reinsurance ceded to the extent that any retrocessionaire is unable or unwilling to meet the obligations assumed under the retrocessional agreements. At December 31, 2003, we held $635.3 million in collateral as security under related retrocessional agreements in the form of deposits, securities and/or letters of credit. We are able to access outside capacity for both traditional and non-traditional coverage and therefore are not dependent upon any single retrocessional market.

     In the event our retrocessionaires are not able or willing to fulfill their obligations under our reinsurance agreements with them, we will not be able to realize the full value of the reinsurance recoverable balance. We record a reserve to the extent that reinsurance recoverables are believed to be uncollectible. The reserve is based on an evaluation of each retrocessionaire’s individual balances and an estimation of their uncollectible balances. Allowances of $35.4 million and $17.4 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2003 and 2002, respectively.

     The following table sets forth Converium’s ten largest retrocessionaires as of December 31, 2003, based on 2003 ceded premiums written, and their respective Standard & Poor’s or A.M. Best financial strength rating.

	Retrocessionaire	Amount ceded					S&P/A.M. Best
Retrocessionaire	Group	$ millions		% of total			Rating
PartnerRe U.S. Group	PartnerRe Group	$	57.7		14.6	%	AA-/A+
National Indemnity Company	Berkshire Hathaway Insurance Group		41.9		10.6		AAA/A++
Interpolis Reinsurance Services Ltd	Rabobank		32.0		8.1		NR
Manulife Europe	Manulife Europe		23.9		6.0		NR
Helvetia Patria Versicherung	Helvetia		23.1		5.8		BBBpi/NR
Inter-Ocean Reinsurance Co. Ltd	Inter-Ocean Holdings		20.2		5.1		A/A
Folksamerica Reinsurance Company	White Mountains Insurance Group		18.2		4.6		A-/A
PXRE Reinsurance Company	PXRE Group		13.3		3.3		A/A
Royal & Sun Alliance	Royal & Sun Alliance Insurance Group		12.5		3.1		A-/A-
DR Swiss	Deutsche Rück		10.0		2.5		Api/NR
Total provided by top ten retrocessionaires, and percentage of total retrocessional reinsurance		$	252.7		63.7	%
Total retrocessional reinsurance		$	396.9		100.0	%

     As a consequence of the Formation Transactions, Converium AG has assumed both the benefits and the financial risks relating to third-party reinsurance recoverables under the Quota Share Retrocession Agreement. We manage all third-party retrocessions related to the business reinsured by Converium AG under the Quota Share Retrocession Agreement. ZIC and Zurich International Bermuda Ltd (“ZIB”) are obligated under the Quota Share Retrocession Agreement, during its term, to maintain in force, renew or purchase third-party retrocessions covering the business covered by the Quota Share Retrocession Agreement at the sole discretion of Converium.

     In addition, Zurich Financial Services, through its subsidiaries, provided us with a degree of retrocessional reinsurance coverage following the Formation Transactions. In particular, Zurich Financial Services, through its subsidiaries, has agreed to arrangements that cap our net exposure for losses and loss adjustment expenses arising out of the September 11th terrorist attacks at $289.2 million, the amount of loss and loss adjustment expenses we recorded as of September 30, 2001. As part of these arrangements, subsidiaries of Zurich Financial Services have agreed to take responsibility for non-payment by the retrocessionaires of Converium AG and Converium Rückversicherung (Deutschland) AG with regard to losses arising out of the September 11th attacks. While the cap does not cover non-payment by the retrocessionaires of Converium Reinsurance (North America) Inc., our only retrocessionaire for this business is a unit of Zurich Financial Services. Therefore, we are not exposed to potential non-payments by retrocessionaires for this event in excess of the $289.2 million cap, although we will be exposed to the risk of non-payment of Zurich Financial Services units and we will be exposed to credit risk from these subsidiaries of Zurich Financial Services.

Catastrophe Protection

     As of December 31, 2003, Converium has entered into agreements for coverage of losses related to certain catastrophic loss events. These agreements include both traditional reinsurance as well as a catastrophe agreement described more fully below. The traditional reinsurance agreements cover losses from a first event in excess of $75.0 million.

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     In June 2001, ZIC entered into a transaction with Trinom Ltd, a Bermuda company that ultimately provides ZIC with specific high limit catastrophe protection. Trinom is a special purpose entity (“SPE”) established by ZIC in Bermuda, which issued all of its common shares to a Bermuda trust. Trinom’s business consists solely of issuing three-year catastrophe securities to third-party qualified investors in the form of preference shares and two classes of notes. Simultaneous with the offering of these securities, Trinom entered into a counterparty contract with ZIC whereby Trinom will make payments to ZIC from its funds to cover defined catastrophic losses in the United States and Europe. ZIC is required to make payments to Trinom based on the balance of Trinom’s funds and the magnitude of its losses. The owners of the securities are entitled to receive their original investment, plus interest on the notes or dividends on the preference shares, both paid quarterly, less any loss payments made to ZIC.

     Additionally, as part of the Formation Transactions, ZIC and Converium AG have entered into a catastrophe derivative agreement (the “Catastrophe Agreement”) in the form of a purchased option whereby Converium AG receives protection from ZIC under terms similar to ZIC’s protection under the Trinom transaction. Converium AG will pay ZIC amounts at least equal to the payments made by ZIC to Trinom. Similarly, Converium AG is entitled to receive payments from ZIC that are similar to those that ZIC is entitled to receive from Trinom. However, there is no contractual relationship between Converium AG and Trinom as only ZIC is the legal counterparty to the Trinom transaction. This Catastrophe Agreement is effective as of June 18, 2001, and will remain in effect for the same period as ZIC’s agreement with Trinom, including any extension thereto.

     The coverage ZIC and ultimately Converium AG have obtained from the Trinom transaction and the related Catastrophe Agreement is expected to reduce Converium AG’s net retained loss for large catastrophe events that produce insured losses greater than what is referred to in the industry as “once in 100 years” magnitude. Perils covered by the Trinom transaction and the Catastrophe Agreement include only U.S. hurricane, California earthquake, and European windstorm losses that occur before June 13, 2004. Discussions are currently underway to obtain reinsurance protection for catastrophic losses upon the expiration of the Trinom transaction and the related Catastrophe Agreement in June 2004.

     Payments from Trinom to ZIC, and similarly from ZIC to Converium AG, are based on modeled reinsurance losses for ZIC and ultimately Converium AG’s exposures at the time of the Trinom transaction. In a modeled loss contract, the covered party’s aggregate exposure to each geographical region and type of catastrophe, by line of business, is compared to industry-wide data in order to produce the covered party’s market share of particular loss events by line of business using commercially available natural catastrophe loss simulation modeling software. The software simulates a catastrophe, at various levels of severity, by generating certain probabilistic loss distributions, in order to calculate industry-wide losses and the corresponding losses for the covered party on a “ground-up basis”, by line of business. These losses are then compared to the modeled loss contracts to determine the amount of the covered party’s recovery in respect of such an event.

     Because the Trinom transaction is in two tranches, Converium AG’s coverage under the Catastrophe Agreement is also effectively in two tranches. The first tranche provides first event coverages of approximately $65.0 million on 68% of losses that exceed a modeled range of losses from $209.0 million to $227.0 million; and the second tranche provides $97.0 million of coverage on 100% of second and subsequent event losses that exceed a modeled range of losses from $100.0 million to $133.0 million. The amount of losses that must be incurred before coverage applies relates to the type of loss event, e.g. earthquake, hurricane or windstorm. The expected annual cost of the Catastrophe Agreement to Converium AG is approximately $9.4 million. However, if Converium collects amounts as a result of a loss event that is protected by the Catastrophe Agreement, Converium will be required to pay higher amounts for the remainder of the Catastrophe Agreement’s term, and to reduce the recovery by these higher amounts.

Loss and Loss Adjustment Expense Reserves

Establishment of Loss and Loss Adjustment Expense Reserves

     We are required by applicable insurance laws and regulations and U.S. GAAP to establish reserves for payment of losses and loss adjustment expenses that arise from our products. These reserves are balance sheet liabilities representing estimates of future amounts required to pay losses and loss adjustment expenses for insured claims which have occurred at or before the balance sheet date, whether already known to us or not yet reported. Significant periods of time can elapse between the occurrence of an insured claim, its reporting by the insured to the primary insurance company and from the insurance company to its reinsurance company. Loss reserves fall into two categories: reserves for reported losses and loss adjustment expenses, and reserves for incurred but not reported, or IBNR, losses and loss adjustment expenses.

     Upon receipt of a notice of claim from a ceding company, we establish a case reserve for the estimated amount of the ultimate settlement. Case reserves are usually based upon the amount of reserves reported by the primary insurance company and may subsequently be supplemented or reduced as deemed necessary by our claims departments. We also establish reserves for loss amounts that have been incurred but not yet reported, including expected development of reported claims.

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     These IBNR reserves include estimated legal and other loss adjustment expenses. We calculate IBNR reserves by using generally accepted actuarial techniques. We utilize actuarial tools that rely on historical and pricing information and statistical models as well as our pricing analyses. We revise these reserves for losses and loss adjustment expenses as additional information becomes available and as claims are reported and paid.

     Our estimates of reserves from reported and unreported losses and related reinsurance recoverable assets are reviewed and updated. Adjustments resulting from this process are reflected in current income. The analysis relies upon the basic assumption that past experience, adjusted for the effect of current developments and likely trends, is an appropriate basis to estimate our current loss and loss adjustment expense liabilities. Because estimation of loss reserves is an inherently uncertain process, quantitative techniques frequently have to be supplemented by professional and managerial judgment. In addition, trends that have affected development of reserves in the past may not necessarily occur or affect reserve development to the same degree in the future.

     The uncertainty inherent in loss estimation is particularly pronounced for long-tail lines such as umbrella, general and professional liability and motor liability, where information, such as required medical treatment and costs for bodily injury claims, will only emerge over time. In the overall reserve setting process, provisions for economic inflation and changes in the social and legal environment are considered. The uncertainty inherent in the reserving process for primary insurance companies is even greater for the reinsurer. This is because of, but not limited to, the time lag inherent in reporting information from the insurer to the reinsurer and differing reserving practices among ceding companies. As a result, actual losses and loss adjustment expenses may deviate, perhaps materially, from expected ultimate costs reflected in our current reserves.

     In setting reserves, we utilize the same integrated, multi-disciplinary approach we use to establish our reinsurance prices. After an initial analysis by members of our actuarial staff, preliminary results are shared with appropriate underwriters, pricing actuaries, claims and finance professionals and senior management. Final actuarial recommendations incorporate feedback from these professionals.

     We have developed a proprietary global loss reserve estimation system, which we refer to as FRAME. It applies a number of standard actuarial reserving methods on a contract-by-contract basis. This allows us to calculate estimates of IBNR for each transaction based on its own characteristics.

FRAME Reserving Methodology

Expected Loss/Expected Loss Ratio

     Reinsurance contracts are typically priced using proprietary pricing models. The expected loss ratio for each reinsurance contract is normally the expected loss ratio derived at the pricing of the reinsurance contract and may be subject to adjustments based on re-pricing of the reinsurance contract.

     All reserve indications are conducted at the reinsurance contract level typically on a gross and retro basis; net loss and allocated loss adjustment expense reserve indications are typically derived by netting gross and retro loss and allocated loss adjustment expense reserve indications. Unallocated loss adjustments expense reserve provisions are derived at the business segment level.

     Every reinsurance contract is assigned to a reserving group referred to as a Reserve Equity Cell or REC. Each REC typically contains reinsurance contracts with identical or similar characteristics in respect to:

• underlying risk (e.g. line of business), geographic region or treaty type (i.e. proportional or non-proportional); and

• the time period at which losses are expected to be paid and reported (i.e. expected paid loss development factors and expected reported loss development factors).

     For each REC, expected paid loss development factors and expected reported loss development factors are derived from either:

• statistics developed by pricing actuaries, or

• actual paid loss and reported loss (of the reinsurance contracts assigned to a given REC) aggregated into underwriting year triangles.

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It is our policy to review regularly expected paid loss development factors and expected reported loss development factors for each REC.

     For each REC and underwriting year, ultimate losses are projected using the following five standard actuarial methods:

• Expected Loss Method (normally derived from pricing as described above)

• Paid Loss Bornhuetter Ferguson Method

• Incurred Loss Bornhuetter Ferguson Method

• Paid Loss Development Method

• Incurred Loss Development Method

     For each reinsurance contract within a given REC and underwriting year, one reserving method is selected based on professional actuarial judgment. Standard practice is to select the expected loss method for a relatively immature underwriting year (i.e. underwriting year and REC for which the expected reported loss as at the valuation period (e.g., December 31, 2003) is less than 50% of the ultimate loss that will eventually be reported) when the actual loss experience is not yet deemed credible. In addition, actual reported losses and expected reported losses are compared and in cases where the actual versus expected are materially different, the reserving actuary may (especially if the actual losses reported are higher than expected) either:

• select a different actuarial method (i.e. to be more responsive to actual loss experience)

• revise the expected loss (see expected loss / expected loss ratio above)

• revise the expected paid loss and / or expected reporting loss patterns

     The indicated ultimate loss is intended to represent the expected ultimate loss for the full exposure of each contract at the reserving date (e.g. December 31, 2003). Additional reserve provisions can be added for known losses (notified) that have not been recorded yet in our system.

     Typically the indicated ultimate loss for each contract is then adjusted by the ratio of base earned premium to ultimate base premium in order to calculate a reserve provision (IBNR) only to the exposed / expired portion of the reinsurance contract as of the reserving date. A base premium is a premium which excludes loss sensitive premium adjustments.

     In essence, for each REC and underwriting year we select best estimate of ultimate losses within a reasonable range. The range estimates are done at the REC level and are not aggregated to the business segment or consolidated level.

     In addition to these bottom-up approaches we utilize standard top down analyses. For these methods we aggregate the majority of our business into a limited number of homogeneous classes and apply standard actuarial reserving techniques. This provides an alternative view that is less dependent on pricing information.

     In accordance with U.S. GAAP, we do not establish contingency reserves for future catastrophic losses in advance of the event’s occurrence. As a result, a catastrophe event may cause material volatility in our incurred losses and reserves and a material impact on our reported income, subject to the effects of our retrocessional reinsurance. For further details on our catastrophe risk and reinsurance programs, see “— Catastrophe Risk Management” and “— Retrocessional Reinsurance.”

Adequacy of Reserves

     Given the inherent uncertainty of the loss estimation process described above, we employ a number of methods to develop a range of estimates. On the basis of our actuarial reviews, we believe our liability for gross losses and loss adjustment expenses, referred to as gross reserves, and our gross reserves less reinsurance recoverables for losses and loss adjustment expenses ceded, referred to as net reserves, at the end of all periods presented in our financial statements were determined in accordance with our established policies and were reasonable estimates based on the information known at the time our estimates were made. These analyses were based on, among other things, original pricing analyses as well as our experience with similar lines of business, and historical trends, such as reserving patterns, exposure growth, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions. However, since the establishment of

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loss reserves is an inherently uncertain process, the ultimate cost of settling claims may exceed our existing loss and loss adjustment expense reserves, perhaps materially. Any adjustments that result from changes in reserve estimates are reflected in our results of operations.

     Unforeseen losses, the type or magnitude of which we cannot predict, may emerge in the future. These additional losses could arise from newly acquired lines of business, changes in the legal environment, extraordinary events affecting our clients such as reorganizations and liquidations or changes in general economic conditions. We continue to conduct pricing and loss reserving studies for many casualty lines of business, including those in which preliminary loss trends are noted. In 2003, there was $31.3 million net positive development on prior years’ loss reserves, consisting of positive development of $49.4 million in the Standard Property & Casualty Reinsurance segment, offset by $18.1 million of adverse development in the Specialty Lines segment. Risk diversification is a basic risk management tool in the insurance and reinsurance industry; as a multi-line reinsurer there are always likely to be reserve adjustments at the line of business level. Our book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

     The reserve strengthening of $148.5 million in 2002 and $123.6 million in 2001 as described below in the “ — Loss Reserve Development” section was determined in accordance with our loss reserving policies as described in “— Establishment of Loss and Loss Adjustment Expense Reserves”, and was recorded in accordance with our established accounting policies as described in Note 2(c) of our financial statements. Under these policies, we review and update our reserves as experience develops and new information becomes known, and we bring our reserves to a reasonable level within a range of reserve estimates by recording an adjustment in the period when the new information confirms the need for an adjustment.

Effects of Currency Fluctuations

     A significant factor affecting movements in our net reserve balances has been currency exchange rate fluctuations. These fluctuations affect our reserves because we report our results in U.S. dollars. As of December 31, 2003, approximately 39% of our non-life reinsurance reserves are for liabilities that will be paid in a currency other than the U.S. dollar. We establish these reserves in original currency, and then, during our consolidation process, translate them to U.S. dollars using the exchange rates as of the balance sheet date. Any increase or decrease in reserves resulting from this translation process is recorded directly to shareholders’ equity and has no impact on current earnings. When new losses are incurred or adjustments to prior years’ reserve estimates are made, these amounts are reflected in the current year net income at the average exchange rates for the period.

Loss Reserve Development

     The first table below presents changes in the historical non-life loss and loss adjustment expense reserves that we established in 1994 and subsequent years. The top lines of the tables show the estimated loss and loss adjustment reserves, gross and net of reinsurance, for unpaid losses and loss adjustment expenses as of each balance sheet date, which represent the estimated amount of future payments for all losses occurring prior to that date. The upper, or paid, portion of the first table presents the cumulative amount of payments of the loss and loss adjustment expense amounts through each subsequent year in respect of the reserves established at each initial year-end. Losses paid in currencies other than the U.S. dollar are translated at consolidation into U.S. dollars using the average foreign exchange rates for periods in which they are paid. The lower, or reserve re-estimated portion, gross and net of reinsurance, of the first table shows the re-estimate of the initially recorded loss and loss adjustment expense reserve as of each succeeding period-end, including claims paid, but recalculated using the foreign exchange rates for each subsequent period-end. The reserve estimates change as more information becomes known about the actual losses for which the initial reserves were established. The cumulative redundancy/(deficiency) lines at the bottom of the table are equal to the initial reserves less the liability re-estimated as of December 31, 2003.

     Conditions and trends that have affected the development of our reserves for losses and loss adjustment expenses in the past may or may not necessarily occur in the future, and accordingly, our future results may or may not be similar to the information presented in the tables below.

     Zurich Financial Services and its subsidiaries, including the entities then operating under the “Zurich Re” brand name, retroactively adopted International Accounting Standards, or IAS, as of January 1, 1995. As a consequence, consolidated loss development data for Converium entities is not available on a consistent accounting basis prior to December 31, 1994 and is therefore not presented in this annual report. The inconsistencies prior to December 31, 1994 principally arise from Converium entities having used different reserving methodologies on a country-by-country basis as was allowed under generally accepted accounting principles in Switzerland. As an example, some European reserving practices have historically tended to be highly conservative, and therefore not consistent with IAS and U.S. GAAP “best estimate” practices. Accordingly, we have only been able to provide a consolidated loss development table commencing with December 31, 1994. As of December 31, 2003, net reserves for losses and loss adjustment expenses included approximately $181.1 million of reserves related to losses from accident years 1994 and prior, or 2.8% of net reserves as of December 31, 2003.

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     The table below presents our loss and loss adjustment expense reserve development as of the dates indicated.

	As of December 31,
	1994			1995			1996			1997			1998			1999			2000			2001			2002			2003
	($ in millions)
Gross reserves for losses and loss adjustment expenses	$	1,468.9		$	1,891.4		$	2,245.3		$	2,636.4		$	2,988.1		$	3,545.7		$	4,546.0		$	5,710.5		$	6,821.3		$	7,842.8
Reinsurance recoverable		59.6			102.9			106.9			290.1			457.3			704.9			1,212.2			1,545.0			1,459.8			1,385.4
Initial net reserves for losses and loss adjustment expenses	$	1,409.3		$	1,788.5		$	2,138.4		$	2,346.3		$	2,530.8		$	2,840.8		$	3,333.8		$	4,165.5		$	5,361.5		$	6,457.4
Cumulative paid as of:
One year later		405.9			443.9			466.0			514.5			610.0			850.6			885.2			1,101.6			1,464.7
Two years later		611.1			669.4			721.2			843.0			968.8			1,339.2			1,501.0			2,010.2
Three years later		736.2			803.1			921.7			1,064.4			1,250.7			1,670.1			2,066.2
Four years later		815.4			927.0			1,062.2			1,261.7			1,438.6			2,023.5
Five years later		896.9			1,007.7			1,178.3			1,336.5			1,622.3
Six years later		949.9			1,093.8			1,197.5			1,436.7
Seven years later		1,006.5			1,087.1			1,249.3
Eight years later		986.5			1,115.7
Nine years later		1,004.1
Net reserves re-estimated as of:
One year later		1,457.6			1,763.3			1,901.5			2,145.6			2,292.7			2,815.5			3,405.3			4,292.4			5,597.8
Two years later		1,499.0			1,642.6			1,853.5			2,051.3			2,274.9			2,922.4			3,599.5			4,551.5
Three years later		1,364.6			1,617.7			1,736.4			1,970.4			2,300.8			3,027.2			3,802.1
Four years later		1,396.2			1,541.1			1,677.3			1,989.1			2,333.7			3,171.9
Five years later		1,339.0			1,468.9			1,661.2			1,990.7			2,410.7
Six years later		1,284.5			1,452.9			1,645.9			2,013.0
Seven years later		1,260.1			1,446.1			1,649.3
Eight years later		1,263.3			1,448.7
Nine years later		1,272.4
Reinsurance recoverable re-estimated as of December 31, 2003		130.5			246.5			337.6			427.0			692.1			1,307.3			1,758.6			1,703.8			1,510.6
Gross reserves re-estimated as of December 31, 2003		1,402.9			1,695.2			1,986.9			2,440.0			3,102.9			4,479.2			5,560.7			6,255.4			7,108.4
Cumulative net redundancy/(deficiency)		136.9			339.8			489.1			333.3			120.1			(331.0	)		(468.4	)		(386.0	)		(236.3	)
Cumulative redundancy/(deficiency) as a percentage of initial net reserves		9.7	%		19.0	%		22.9	%		14.2	%		4.7	%		(11.7	)%		(14.0	)%		(9.3	)%		(4.4	)%
Cumulative gross redundancy/(deficiency)		66.0			196.2			258.4			196.4			(114.8	)		(933.5	)		(1,014.8	)		(545.0	)		(287.1	)
Cumulative redundancy/(deficiency) as a percentage of initial gross reserves		4.5	%		10.4	%		11.5	%		7.4	%		(3.8	)%		(26.3	)%		(22.3	)%		(9.5	)%		(4.2	)%

     As a significant portion of our reserves relate to liabilities payable in currencies other than U.S. dollars, any fluctuations of the U.S. dollar to those currencies will have an impact on the reserve redundancy/(deficiency). As seen from the table above, the net reserve position for 1998 developed favorably from $2,530.8 million as of December 31, 1998 to $2,410.7 million as of December 31, 2003, thereby reflecting a redundancy of $120.1 million. However, as seen from the table below, applying the exchange rate as of December 31, 1998 to the 1998 reserves re-estimated as of December 31, 2003 would result in re-estimated reserves of $2,507.7 million, or a redundancy of $23.2 million, illustrating that a substantial part of the apparent redundancy is due to currency movements, which may or may not persist to the date claims are actually paid. As a result of these currency movements, the cumulative redundancy/(deficiency) shown above is considerably higher/(lower) as of December 31, 2003 than if the reserves were shown on a constant exchange rate basis for all years presented. Due to inherent volatility of exchange rates, this effect may change in the future. Accordingly, we expect that future changes in foreign exchange rates will impact our reserve adequacy re-estimates. However, with respect to our primary currencies, we believe that the potential volatility of our liabilities is offset to a large extent by our efforts to invest in assets denominated in the same currency.

     The table above also shows that our net loss reserves have developed larger redundancies/(lower deficiencies) than our gross loss reserves. Changes in estimates of our net losses directly impact our reported results. Accordingly, our estimates of reinsurance recoveries on incurred losses and our collections of those recoveries from our retrocessionaires also directly impact our reported results. See “— Retrocessional Reinsurance” above for a discussion of the types of retrocessional reinsurance coverage that we purchase.

     At December 31, 2003 and 2002, we recorded $1,385.4 million and $1,459.8 million, respectively, of reinsurance recoverables on loss and loss adjustment expense reserves. Approximately 27.7% and 41.0%, respectively, of this amount relates to workers’ compensation business and 27.8% and 23.1%, respectively, relates to recoverables in connection with the September 11th terrorist attacks.

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     The following table shows the development of our initial reserves net of reinsurance using the same exchange rates in effect when each of the initial reserves was set to re-estimate the reserves in subsequent years.

	As of December 31,
	1994			1995			1996			1997			1998			1999			2000			2001			2002			2003
	($ in millions)
Initial net reserves for losses and loss adjustment expenses	$	1,409.3		$	1,788.5		$	2,138.4		$	2,346.3		$	2,530.8		$	2,840.8		$	3,333.8		$	4,165.5		$	5,361.5		$	6,457.4
Net reserves re-estimated as of:
One year later		1,410.1			1,805.6			2,004.9			2,108.6			2,394.8			2,907.9			3,457.4			4,268.1			5,337.9
Two years later		1,479.5			1,758.2			1,925.4			2,078.8			2,412.6			3,035.5			3,602.4			4,436.9
Three years later		1,387.9			1,707.3			1,865.4			2,016.6			2,463.0			3,118.1			3,734.8
Four years later		1,405.6			1,674.5			1,819.3			2,035.0			2,469.9			3,213.4
Five years later		1,382.7			1,612.4			1,799.4			2,023.7			2,507.7
Six years later		1,338.7			1,589.9			1,775.9			2,017.9
Seven years later		1,306.6			1,588.4			1,755.5
Eight years later		1,316.7			1,574.4
Nine years later		1,313.6
Cumulative redundancy/(deficiency)		95.7			214.1			382.9			328.5			23.2			(372.6	)		(401.0	)		(271.4	)		23.6
Cumulative redundancy/(deficiency) as a percentage of initial net reserves		6.8	%		12.0	%		17.9	%		14.0	%		0.9	%		(13.1	)%		(12.0	)%		(6.5	)%		0.4	%

     As described below, the loss development triangles show net cumulative redundancies for 1994 through 1998 and 2002 and net cumulative deficiencies for 1999 through 2001.

     The payment pattern of our loss and loss adjustment reserves varies from year to year. Based on historical payment patterns and other relevant data, we estimate that the mean time to payment, on an undiscounted basis, of our loss and loss adjustment provisions, including future life benefits, as of December 31, 2003, was 3.9 years. We expect this average payment period to change as our mix of business changes, as well as due to changes of payment patterns and fluctuations in currency exchange rates.

Reconciliation of Beginning and Ending Loss and Loss Adjustment Expense Reserves

     The table below is a summary reconciliation of the beginning and ending reserves for losses and loss adjustment expenses, net of reinsurance, for the years ended December 31, 2003, 2002 and 2001.

	2003			2002		2001
As of January 1,
Gross reserves for losses and loss adjustment expenses	$	6,821.3		$	5,710.5	$	4,546.0
Less reinsurance recoverable		1,459.8			1,545.0		1,212.2
Net reserves for losses and loss adjustment expenses		5,361.5			4,165.5		3,333.8
Losses and loss adjustment expenses incurred:
Current year		2,527.9			2,186.8		2,039.5
Prior years		(31.3	)		148.5		123.6
Total		2,496.6			2,335.3		2,163.1
Losses and loss adjustment expenses paid:
Current year		324.7			299.4		359.1
Prior years		1,464.7			1,095.5		885.2
Total		1,789.4			1,394.9		1,244.3
Foreign currency translation effects		388.7			255.6		(87.1	)
As of December 31,
Net reserves for losses and loss adjustment expenses		6,457.4			5,361.5		4,165.5
Reinsurance recoverable		1,385.4			1,459.8		1,545.0
Gross reserves for losses and loss adjustment expenses	$	7,842.8		$	6,821.3	$	5,710.5

     In 2003, Converium recorded $31.3 million at the 2003 average exchange rate ($23.6 million at the 2002 exchange rate) of net positive development. See — “Adequacy of Reserves.”

     In 2002, Converium strengthened reserves for prior years by $148.5 million. Throughout the year, increased loss experience related to prior years continued to emerge, and Converium performed an in-depth actuarial reserve analysis of certain lines of business. This resulted in an additional $148.5 million provision for losses, primarily related to underwriting

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years 1997 through 2000. In the Standard Property & Casualty Reinsurance segment, there were additional provisions of $62.2 million for the motor, general third party liability and property lines of business. In the Specialty Lines segment, there were additional provisions of $86.3 million, primarily related to commercial umbrella and medical errors and omissions liability lines of business.

     In 2001, Converium strengthened reserves for prior years by $123.6 million. Converium retained an actuarial consulting firm to perform an independent review of non-life net reserves as of December 31, 2000. This review reflected certain information that became available after the issuance of the December 31, 2000 financial statements, including most fourth quarter 2000 and some first quarter 2001 reports from ceding companies, who typically report on a one-quarter lag. Based on the independent review and Converium’s own evaluations of these new developments, additional provisions of $123.6 million, net of reinsurance, were recorded in 2001, principally related to accident years 2000 and prior at Converium Reinsurance (North America) Inc. In the Standard Property & Casualty Reinsurance segment, there were additional net provisions of $46.6 million, primarily for the motor and property lines of business. In the Specialty Lines segment, there were additional net provisions of $77.0 million, primarily related to the excess and surplus, commercial umbrella and marine and energy lines of business, offset by positive development in aviation and space.

Reserves for Asbestos and Environmental Losses

     We have exposure to liabilities for asbestos and environmental impairment from our assumed reinsurance contracts, primarily arising from business written by Converium Rückversicherung (Deutschland) AG, historically known as Agrippina Rückversicherung AG and subsequently known as Zürich Rückverscherung (Köln) AG or ZRK. Our asbestos and environmental exposure primarily originates from U.S. business written through the London Market and from treaties directly written with reinsurers in the United States. We cancelled our relevant London Market reinsurance contracts in 1966 and 1967. At the time, we reduced our participation in asbestos and environmental-exposed U.S. treaties, with the eventual result that Converium Rückversicherung (Deutschland) AG ceased property and liability underwriting in the United States in 1990. Due to uncertainties as to the definitions and to incomplete reporting from clients, exact separation of asbestos and environmental exposures cannot be reached. We believe that Converium Reinsurance (North America) Inc.’s exposure to asbestos-related and environmental pollution claims is limited due to the diminutive amount of business written prior to 1987 and the protection provided by the continuing reinsurance protections described below under “Item 10. — Additional Information — C. Material Contracts.” In addition, Converium AG’s exposure is also minimal because, under the terms of the Quota Share Retrocession Agreement, Converium AG will only reinsure business written with an inception or renewal date on or after January 1, 1987. In 1986, our contract wording was revised, consistent with a general industry change, such that asbestos and environmental claims were generally excluded.

     As of December 31, 2003 and 2002, our total loss and adjustment expense reserves, including additional reserves and IBNR reserves, for U.S.-originated asbestos and environmental losses were approximately $45.8 million or 0.7% and $44.6 million or 0.8% of our total net reserves for losses and loss adjustment expenses, respectively. This provision includes reserves originally communicated by our cedents, together with additional reserves we established.

     We estimate that the survival ratio of our asbestos and environmental risk portfolio, calculated as the ratio of reserves held, including IBNR, over claims paid over the average of the last three years, is approximately 13.6 years and 13.5 years as of December 31, 2003 and 2002, respectively. Survival ratio is an industry measure of the number of years it would take a company to exhaust its reserves for asbestos and environmental liabilities based on that company’s current level of claims payments. We currently have no retrocessional protection for our U.S.-originated asbestos and environmental exposure, other than the arrangements with Zurich Financial Services provided by the stop-loss agreement described above and the other arrangements described below under “Item 10. — Additional Information — C. Material Contracts.”

     Reserving for asbestos and environmental claims is subject to a range of uncertainties that has historically been greater than those presented by other types of claims. Among the complications are a lack of historical data, long reporting delays and uncertainty as to the number and identity of insureds with potential exposure. In addition, there are complex, unresolved legal issues regarding policy coverage and the extent and timing of contractual liability.

     In the environmental context, for example, such legal issues include:

• whether administrative actions by environmental authorities constitute a “suit” which triggers an insurer’s duty to defend

• the timing of injury or damage which triggers comprehensive general liability coverage

• the allocation of indemnity and defense costs among triggered policy years or, in some circumstances, to the policyholders

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•	the number of “occurrences” where environmental claims arise from one or more causes and result in one or more effects
•	the efficacy of policy exclusions for pollution and related matters
•	the extent to which personal injury insurance may apply in the context of environmental losses
•	whether environmental clean-up costs are “property damage” within the intent of a comprehensive general liability policy, and whether an action requiring the insured to undertake clean-up measures is an action for “damages” within the intent of such a policy
•	the applicability of so-called “owned property” exclusions in comprehensive general liability policies in the context of environmental claims
•	whether sums expended by an insured to investigate the remediation of hazardous waste constitute “loss” or “expense” within the intent of a comprehensive general liability policy
	In the asbestos context, many of these same issues exist, and other issues may arise concerning:
•	the scope of so-called “asbestosis” exclusions
•	the extent to which policy aggregate limits for product liability or completed operations apply in the context of a particular asbestos exposure
•	the interplay between various insurers’ policy wordings, especially in the context of the trigger of coverage, when determining insurers’ defense and indemnity obligations for a particular asbestos loss
•	the existence and nature of defense or defense reimbursement obligations under various policy forms
•	the disposition of asbestos claims in the context of policyholder or insurer insolvencies.

     These issues are not likely to be resolved in the near future. Consequently, traditional loss reserving techniques cannot wholly be relied on and, therefore, the uncertainty with respect to the ultimate cost of these types of claims is greater than the uncertainty relating to standard lines of business. In addition, changes to existing legal interpretation, new legislation or new court decisions could materially impact our reserves, results of operations, cash flows and financial position in future periods.

Investments

     Our overall financial results are in large part dependent upon the quality and performance of our investment portfolio. Net investment income and net realized capital gains (losses) accounted for 6.4%, 7.1% and 8.4% of our revenues for the years ended December 31, 2003, 2002 and 2001, respectively.

     Our assets are invested with the objective of achieving investment returns consistent with those of the markets in which we invest, using appropriate risk management, diversification, tax and regulatory considerations, and to provide sufficient liquidity to enable us to meet our obligations on a timely basis. We principally focus on high quality, liquid securities, and seek to invest in securities whose durations correspond to the estimated duration of the reinsurance liabilities they support.

     Our approach to fixed income investments is to limit credit risk by focusing on investments rated A or better and to reduce concentration risk by limiting the amount that may be invested in securities of any single issuer or group of issuers. With respect to equity investments, we seek to diversify our equity portfolio so as to provide a broad exposure across major sectors of individual stock markets. To reduce the effects of currency exchange rate fluctuations, we seek to match the currencies of our investments with the currencies of our underlying reinsurance liabilities.

     Our investments are managed mostly by external investment managers, and their performance is measured against benchmarks. Our investment practices are governed by guidelines established and approved by our Board of Directors. Although these guidelines stress diversification of risks, conservation of principal and liquidity, these investments are subject to market-wide risks and fluctuations, as well as risks inherent in particular securities.

     At December 31, 2003, total invested assets were $7.5 billion compared to $6.1 billion as of December 31, 2002, an increase of $1.4 billion, or 23.1%. This increase is mainly due to strong operating cash flow as well as increases in unrealized gains on investments, and changes in currency translation due to the weakening of the U.S. dollar.

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     The table below presents the carrying value of our consolidated investment portfolios as of December 31, 2003, 2002 and 2001.

	As of December 31,
	2003					2002					2001
	$		% of			$		% of			$		% of
	millions		Total			millions		Total			millions		Total
Fixed maturities securities	$	4,928.6		65.5	%	$	3,443.1		56.3	%	$	2,331.4		47.4	%
Equity securities		840.2		11.2			530.8		8.7			701.4		14.3
Funds Withheld Asset		1,530.6		20.3			1,648.1		27.0			1,598.5		32.5
Short-term investments		55.8		0.7			318.0		5.2			89.5		1.8
Other investments		173.5		2.3			177.3		2.8			195.1		4.0
Total investments	$	7,528.7		100.0	%	$	6,117.3		100.0	%	$	4,915.9		100.0	%

Fixed Maturities

     As of December 31, 2003, our fixed maturities portfolio, excluding the Funds Withheld Asset (described more fully below), had a carrying value of $4.9 billion and represented 63.1% of our total investment portfolio including cash and cash equivalents (82.7% including the Funds Withheld Asset). This represents an increase in carrying value of $1,485.5 million, or 43.1%, from December 31, 2002, excluding the Funds Withheld Asset. This increase was mainly due to the reinvestment of 2003 cash flows from operations, the reinvestment in 2003 of proceeds received in late 2002 from our guaranteed subordinated notes and unrealized gains on fixed maturities and currency translation adjustments.

     To protect our balance sheet from a possible rise of the yield curves, we stabilized the modified duration of our bond portfolio, excluding held-to-maturity securities, at 3.6. Additionally, we created a portfolio of held-to-maturity government bonds totalling $500.4 million (10.2% of our fixed maturities portfolio, excluding the Funds Withheld Asset), of which $308.0 million were transferred from available-for-sale to held-to-maturity and $192.4 million were directly invested from operational cash flow.

     We invest in government, agency and corporate fixed income securities of issuers from around the world that meet our liquidity and credit standards. We place an emphasis on investing in listed fixed income securities that we believe to be liquid.

     The table below presents the composition of our fixed income maturities portfolio, excluding short-term investments, based on carrying value by scheduled maturity.

(US$ million)	Estimated fair value		% of total			Carrying value		% of total
As of December 31, 2003	Available-for-sale (AFS)		AFS			Held-to-maturity (HTM)		HTM
Less than one year	$	48.9		1.1	%	$	19.0		3.8	%
One year through five years		2,241.7		50.6			78.8		15.7
Five years through ten years		939.0		21.2			364.7		72.9
Over ten years		162.1		3.7			37.9		7.6
Subtotal		3,391.7		76.6			500.4		100.0
Mortgage and asset-backed securities		849.1		19.2			—		—
Unit trust bonds		187.4		4.2			—		—
Total as of December 31, 2003	$	4,428.2		100.0	%	$	500.4		100.0	%

     Most of our fixed income securities are rated by Standard & Poor’s, Moody’s or similar rating agencies. As of December 31, 2003, approximately 99.5% of our fixed maturities securities portfolio was invested in securities rated A or better by these agencies and approximately 81.2% was invested in AAA/Aaa-rated securities.

     The table below presents the composition of our fixed income securities portfolio by rating as assigned by Standard & Poor’s or Moody’s, using the lower of these ratings for any security where there is a split rating.

(US$ million)	Estimated fair value		% of total			Carrying value		% of total
As of December 31, 2003	Available-for-sale (AFS)		AFS			Held-to-maturity (HTM)		HTM
AAA/Aaa	$	3,514.8		79.4	%	$	485.2		97.0	%
AA/Aa2		501.5		11.3			15.2		3.0
A/A2		388.5		8.8			—		—
BBB/Baa2		9.3		0.2			—		—
BB		10.1		0.2			—		—
Not rated		4.0		0.1			—		—
Total as of December 31, 2003	$	4,428.2		100.0	%	$	500.4		100.0	%

     Our guidelines also restrict our maximum investment in bonds issued by any group or industry sector by reference to local

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benchmarks and applicable insurance regulations. As of December 31, 2003, no aggregated amount of bonds issued by a single group (excluding governments and funds) represented more than 5% of our fixed maturities securities portfolio.

Equity Securities

     As of December 31, 2003, our equity securities portfolio had a carrying value of $840.2 million. This represents an increase in carrying value of $309.4 million, or 58.3%, from December 31, 2002. This increase was primarily due to purchases, as well as unrealized gains due to the continued recovery of the capital markets and changes in currency translation due to the weakening of the U.S. dollar. This brought our equity allocation, excluding our investment in PSP Swiss Property AG, back to approximately 9.7% of our total investment portfolio as of December 31, 2003, including cash and cash equivalents.

     Substantially our entire equity portfolio consists of listed securities, held directly or through funds. Currently our entire equity portfolio is in developed markets.

     Our exposure to private equity fund investments as of December 31, 2003 was approximately $59.9 million. This represents the sum of the fair value of invested capital (as determined by the fund managers) and remaining unpaid commitments. Of this total, the value of remaining unpaid commitments was approximately $12.6 million.

     At December 31, 2003 and 2002, gross unrealized gains on our equity portfolio were $96.2 million and $2.6 million and gross unrealized losses were $1.7 million and $56.2 million, respectively. We have reviewed the securities that have declined in value and have recorded impairments accordingly.

     Our impairment policy requires us to record, as realized capital losses, declines in value that exceed 20% over a period of six months, or that exceed 50% regardless of the period of decline. To continue to adhere to emerging asset impairment standards, beginning in the second quarter of 2003, we revised our impairment policy to also record as realized capital losses any declines in value of equity securities over a period of more than twelve months. The same policy applies to fixed maturities securities when the decline in value is attributable to the deteriorating credit-worthiness of the issuer. At management’s judgment, we impair additional securities based on prevailing market conditions by considering various factors such as the financial condition of the issuer, the market value and the expected future cash flows of the security.

     Our guidelines also restrict our maximum investment in any one equity security or industry sector by reference to local benchmarks and applicable insurance regulations. As of December 31, 2003, excluding our investments in funds and PSP Swiss Property AG, no single equity security represented more than 5% of our equity securities portfolio.

Funds Withheld Asset

     The transfer of certain historical reinsurance business to Converium was effective as of July 1, 2001 by means of the Quota Share Retrocession Agreement. In addition, on that date, the Funds Withheld Asset was established. Its initial balance was set to match the net balance of the liabilities, less the premium receivables (including outstanding collectible balances and reinsurance deposits) on the business to which the Quota Share Retrocession Agreement applies. As of December 31, 2003, the Funds Withheld Asset was $1,530.6 million compared to $1,648.1 million at December 31, 2002. The decrease of $117.5 million was substantially due to paid claims and commutations offset by changes in foreign exchange rates.

     In general, the Funds Withheld Asset is reduced by paid claims, profit commissions, amounts paid to maintain the retrocession agreements and other amounts paid on the business subject to the Quota Share Retrocession Agreement, and is increased by premiums (less premium refunds), salvage and subrogation, recoveries under retrocession agreements, profit commissions and other amounts received for the business subject to the Quota Share Retrocession Agreement. The balance of the Funds Withheld Asset will decrease over time. However, business historically written on the ZIC and ZIB balance sheets is being renewed and written on the Converium balance sheet. As a result, we will generate invested assets from the new and renewal business written on the Converium balance sheet which we expect to at least partially offset reductions of the balance of the Funds Withheld Asset. We do not expect the Funds Withheld Asset to have a material impact on our liquidity, as we will not be required to access our own liquidity sources for claims under the Quota Share Retrocession Agreement.

     Under the Quota Share Retrocession Agreement, the interest payable to Converium AG on the Funds Withheld Asset is based on fixed interest rates tied to each of our major functional currencies. These interest rates were calculated as if the assets had been invested in fixed income securities denominated in the functional currencies payable on the Funds Withheld Asset as of July 1, 2001 and reflected the estimated duration of the underlying reinsurance liabilities as of that date. During 2003, the weighted average interest rate was 5.4%.

     Under the Quota Share Retrocession Agreement, the Funds Withheld Asset may be prepaid to us in whole or in part as of

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the end of any calendar quarter. In the event that the Funds Withheld Asset is prepaid, we would have to reinvest these assets in investments which may not provide yields comparable to those under the Quota Share Retrocession Agreement. To the extent we are not able to invest these funds at comparable yields, our investment income could be adversely affected.

Short-Term Investments

     Our short-term investment portfolio includes investments in fixed-term deposits and fiduciary investments. These investments generally have maturities of between three months and one year. As of December 31, 2003, we had short-term investments with a carrying value of $55.8 million, representing 0.7% of our total investment portfolio, including cash and cash equivalents. Short-term investments at December 31, 2002 were $318.0 million, and included $193.7 million in proceeds received on December 23, 2002 from the issuance of our guaranteed subordinated notes. These proceeds were substantially invested in January 2003. None of our short-term investments portfolio is restricted as to its use.

Real Estate

     At December 31, 2003 and 2002, we had real estate held for investment of $130.2 million and $167.9 million, respectively, consisting primarily of investments in residential and commercial rental properties located in Switzerland. The reduction of the allocation is due to the sale of some non-core properties, partially offset by the impact of the weakening U.S. dollar. Our direct real estate portfolio represented 1.7% of our total investment portfolio, including cash and cash equivalents.

     In addition to these properties, Converium owns a 7.4% participation in PSP Swiss Property AG (an indirect real estate investment, included in equity securities) with a market value of $80.0 million as of December 31, 2003.

Premiums Receivable

     We had premiums receivable of $2.0 billion at December 31, 2003 compared to $1.7 billion at December 31, 2002, an increase of $287.0 million, or 16.7%. This increase is due to strong growth in premium volume in 2003. Premiums receivable include those currently due, as well as deferred premiums receivable, which is comprised primarily of accruals on premium balances which have not yet been reported and which are not contractually due to be paid until sometime in the future. Current premiums receivable represented 9.1% and 7.6% of total premiums receivable at December 31, 2003 and 2002, respectively, and accrued premiums receivable represented 90.9% and 92.4%, respectively.

Reinsurance Assets

     Retrocessional reinsurance arrangements generally do not relieve Converium from its direct obligations to its reinsureds. Thus, a credit exposure exists with respect to reinsurance ceded to the extent that any retrocessionaire is unable or unwilling to meet the obligations assumed under the retrocessional agreements. At December 31, 2003, we held $635.3 million in collateral as security under related retrocessional agreements in the form of deposits, securities and/or letters of credit. Converium is able to access outside capacity for both traditional and non-traditional coverage and therefore is not dependent upon any single retrocessional market.

     As of December 31, 2003 we had reinsurance recoverables from retrocessionaires of approximately $1.7 billion on paid and unpaid losses and loss adjustments expenses, unearned premium reserves and future life benefits, an increase of 5.6% from December 31, 2002. Recoverables from subsidiaries of Zurich Financial Services total 19.5% of equity at December 31, 2003. Recoverables from one other third-party retrocessionaire were 10.2% of equity at December 31, 2003. Recoverables from retrocessionaires relating to contracts in arbitration were 7.9% of equity at December 31, 2003. There were no recoverables from any other retrocessionaire that exceeded 10% of equity at December 31, 2003. Allowances of $35.4 million and $17.4 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2003 and 2002, respectively.

Capital Expenditures

     In the three years ending December 31, 2003, we invested a total of $63.7 million in fixed assets. Most of these amounts were invested in equipment and information technology, and were financed from our free cash flow. We currently intend to continue to make capital investments at a similar pace and, in particular, to further enhance our global intellectual information technology platforms.

Ratings

     Converium is rated “A” (Strong), stable outlook, by Standard & Poor’s Corporation and “A” (Excellent), stable outlook, by A.M. Best Company, Inc.

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     Standard & Poor’s “A” range (“A+”, “A” and “A-”) is the second highest of three ratings ranges within what Standard & Poor’s considers the “secure” category. An insurer rated “A” is believed by Standard & Poor’s to have strong financial security characteristics, but to be somewhat more likely to be affected by business conditions than are insurers with higher ratings. A plus (+) or minus (-) shows relative standing in a rating category.

     A.M. Best states that its “A” (Excellent) rating is assigned to those companies which, in its opinion, have, on balance, achieved excellent financial strength, operating performance and market profile when compared to the standards established by A.M. Best and have demonstrated a strong ability to meet their ongoing obligations to policyholders. The “A” (Excellent) rating is the third highest of fifteen ratings assigned by A.M. Best, which range from “A++” (Superior) to “F” (In liquidation).

     Other agencies may rate Converium or one or more of our subsidiaries on an unsolicited basis.

     Our Standard & Poor’s and A.M. Best ratings are not designed to be, and do not serve as, measures of protection or valuation offered to investors and these financial strength ratings should not be relied on with respect to making an investment in our securities. Standard & Poor’s and A.M. Best review their ratings periodically and we cannot assure you that we will maintain our current ratings in the future.

     On December 23, 2002, Converium Finance S.A. issued $200.0 million of 30-year subordinated notes. Converium Holding AG and Converium AG, jointly and severally, guaranteed, on a subordinated basis, payments on the notes. The guaranteed subordinated notes due 2032 are listed on the New York Stock Exchange under the ticker symbol CHF. The notes are callable from 2007. The securities were rated Baa1/BBB+ by Moody’s and Standard & Poor’s and carry a 8.25% coupon, payable quarterly.

Regulation

General

     The business of reinsurance is regulated in most countries, although the degree and type of regulation varies significantly from one jurisdiction to another. Reinsurers are generally subject to less direct regulation than primary insurers in most countries. In Switzerland and Germany, we operate under relatively less intensive regulatory regimes. Historically, neither Swiss nor German regulations have materially restricted our business. However, in the United States, licensed reinsurers must comply with financial supervision standards comparable to those governing primary insurers. Accordingly, our U.S. subsidiaries are subject to extensive regulation under state statutes, which delegate regulatory, supervisory and administrative powers to state insurance commissioners.

     This regulation, which is described in more detail below, generally is designed to protect policyholders rather than investors, and relates to such matters as rate setting; limitations on dividends and transactions with affiliates; solvency standards which must be met and maintained; the licensing of insurers and their agents; the examination of the affairs of insurance companies, which includes periodic market conduct examinations by the regulatory authorities; annual and other reports, prepared on a statutory accounting basis; establishment and maintenance of reserves for unearned premiums and losses; and requirements regarding numerous other matters. U.S. regulations accordingly have in the past materially affected our U.S. business operations, although not, we believe, in a manner disproportionate to or unusual in our industry. We allocate considerable time and resources to comply with these requirements, and could be adversely affected if a regulatory authority believed we had failed to comply with applicable law or regulation.

     We believe that Converium and all of its subsidiaries are in material compliance with all applicable laws and regulations pertaining to their business and operations. Set forth below is a summary of the material regulations applicable to us.

Switzerland

     Converium AG has received an operating license from the Swiss Federal Ministry of Justice and Police (Eidgenoessisches Justiz-und Polizeidepartement) (the “Swiss Ministry of Justice and Police”). Converium AG is subject to continued supervision by the Federal Office for Private Insurance (Bundesamt für Privatversicherungswesen) (the “FOPI”), an administrative unit of the Swiss Ministry of Justice and Police, pursuant to the Swiss Insurance Supervisory Act of June 23, 1978, as amended (Versicherungsaufsichtsgesetz). The FOPI has supervisory authority as well as the authority to make decisions to the extent that the Swiss Ministry of Justice and Police is not explicitly designated by law.

     Unlike insurance business, which is strictly regulated in Switzerland, regulation of reinsurance business is less intensive and most of the technical rules for direct insurers are not applicable to the reinsurance business. The supervision exercised by the FOPI is mainly indirect through the supervision of direct insurance companies and the reinsurance arrangements which

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they have established. Reinsurance companies from other countries which conduct only reinsurance business in Switzerland from their foreign domicile are exempt from supervision by the FOPI. Based upon a decree of the Federal Council of November 30, 2001, a commission has been constituted to consider a revision of the overall framework of the Swiss banking and insurance supervision. The full report by the commission is expected to be released this summer. The proposal will include the formation of a uniform financial services authority which will comprise the supervision on banks (currently by the Federal Banking Commission) and insurance (currently by the FOPI).

     Under current regulations, Swiss insurance and reinsurance companies cannot operate in any field other than reinsurance and insurance. This rule is subject to exceptions, which are granted by the FOPI. Generally, these exceptions apply if the nature and volume of the proposed non-insurance or non-reinsurance business does not threaten the solvency of the company. Investments in an entity operating outside the reinsurance or insurance field are subject to supervisory authority approval if the investment represents more than 20% (or 10% in the case of a life insurance business) of the share or cooperative capital of the non-insurance entity or if the investment represents more than 10% of the insurer’s or reinsurer’s shareholders’ equity. Approval is granted if the investment does not threaten the solvency of the company.

     The FOPI requires each reinsurance company to submit a business plan which provides details about the calculation of its technical reserves and about its retrocession policies, and information about the reinsurer’s solvency. The FOPI initially examines documents relating to the company’s solvency, organization and management. If all legal requirements are met, an operating license is granted by the Swiss Ministry of Justice and Police. Thereafter, companies must submit an annual business report, including financial statements, detailing information on all aspects of their business activities, such as premium income, paid out benefits, reserves and profits.

     The Versicherungsaufsichtsgesetz is currently subject to a total revision. The draft proposal passed by the Swiss Federal Council, on May 9, 2003, is currently subject of the discussions in the Swiss parliament. The final revised Act is expected to become effective as of January 1, 2005. The main changes resulting from the revised Act relate to the amended definition of solvency (Art. 9 of the proposal), which will include consideration of financial and operational risks, an emphasis on the control of corporate governance elements by the Swiss insurance supervisory authority and an increased transparency and consumer protection. The solvency related amendments will result in the Swiss regulatory system introducing a system, which pre-empts the forthcoming changes in the EU, based upon Solvency II.

United States

General U.S. State Supervision

     Insurance and reinsurance regulation is enforced by the various state insurance departments and the extent and nature of regulation varies from state to state. Converium Reinsurance (North America) Inc. is a Connecticut-domiciled reinsurer which is licensed, accredited or approved in all 50 states, is an accredited reinsurer in the District of Columbia and is an admitted reinsurer for the United States Treasury. Converium Insurance (North America) Inc. is a New Jersey-domiciled insurer licensed in 49 states (excluding only New Hampshire) and the District of Columbia (as a reinsurer). In addition, some states consider an insurer to be “commercially domiciled” in their states if the insurer writes insurance premiums that exceed certain specified thresholds. As a “commercially domiciled” insurer, an insurer would be subject to some of the requirements normally applicable only to insurers domiciled in those states, including, in particular, certain requirements of the insurance holding company laws. Converium Insurance (North America) Inc. is currently “commercially domiciled” in California.

Insurance Holding Company Regulation

     We and our U.S. insurance and reinsurance subsidiaries are subject to regulation under the insurance holding company laws of various states. The insurance holding company laws and regulations vary from state to state, but generally require insurers and reinsurers that are subsidiaries of insurance holding companies to register and file with state regulatory authorities certain reports including information concerning their capital structure, ownership, financial condition and general business operations. Generally, all transactions involving the insurers in a holding company system and their affiliates must be fair and, if material, require prior notice and approval or non-disapproval by the state insurance department. Further, state insurance holding company laws typically place limitations on the amounts of dividends or other distributions payable by insurers and reinsurers. Connecticut and New Jersey, the jurisdictions in which Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. are domiciled, each provide that, unless the prior approval of the state insurance commissioner has been obtained, dividends may be paid only from earned surplus and the annual amount payable is limited to the greater of 10% of policyholder surplus at the end of the prior year or 100% of statutory net income for the prior year (excluding realized gains, in the case of the New Jersey insurer). In addition, Converium Reinsurance (North America) Inc. may not, for a period of two years from the date of any change of control, make any dividends to its shareholders without the prior approval of the Insurance Commissioner.

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     State insurance holding company laws also require prior notice or state insurance department approval of changes in control of an insurer or reinsurer or its holding company. The insurance laws of Connecticut and New Jersey provide that no corporation or other person may acquire control of a domestic insurance or reinsurance company unless it has given notice to such company and obtained prior written approval of the state insurance commissioner. Any purchaser of 10% or more of the outstanding voting securities of an insurance or reinsurance company or its holding company is presumed to have acquired control, unless this presumption is rebutted. Therefore, an investor who intends to acquire 10% or more of our outstanding voting securities may need to comply with these laws and would be required to file notices and reports with the Connecticut and New Jersey insurance commissioners prior to such acquisition.

     In addition, many state insurance laws require prior notification to the state insurance department of a change in control of a non-domiciliary insurance company licensed to transact insurance in that state. While these pre-notification statutes do not authorize the state insurance departments to disapprove the change in control, they authorize regulatory action in the affected state if particular conditions exist such as undue market concentration. Any future transactions that would constitute a change in control of Converium Holdings (North America) Inc. or either of its U.S. insurance subsidiaries may require prior notification in the states that have adopted pre-acquisition notification laws.

Insurance Regulation

     Converium Insurance (North America) Inc. is subject to broad state insurance department administrative powers with respect to all aspects of the insurance business including: licensing to transact business, licensing agents, admittance of assets to statutory surplus, regulating premium rates, approving policy forms, regulating unfair trade and claims practices, methods of accounting, establishing reserve requirements and solvency standards, and regulating the type, amounts and valuations of investments permitted and other matters.

     State insurance laws and regulations require our U.S. insurance and reinsurance subsidiaries to file financial statements with insurance departments everywhere they do business, and the operations of our U.S. insurance and reinsurance subsidiaries and accounts are subject to the examination by those departments at any time. Our U.S. insurance and reinsurance subsidiaries prepare statutory financial statements in accordance with accounting practices and procedures prescribed or permitted by these departments.

     State insurance departments conduct periodic examinations of the books and records, financial reporting, policy filings and market conduct of insurance companies domiciled in their states, generally once every three to five years. Examinations are generally carried out in cooperation with the insurance departments of other states under guidelines promulgated by the National Association of Insurance Commissioners. The Connecticut Insurance Department last completed a financial examination of Converium Reinsurance (North America) Inc. (“CRNA”) for the five-year period ending December 31, 2002. The New Jersey Department of Banking and Insurance last completed a financial examination of Converium Insurance (North America) Inc. (“CINA”) for the five-year period ending December 31, 2000.

Reinsurance Regulation

     Converium Reinsurance (North America) Inc. is subject to regulation and supervision that is similar to the regulation of licensed primary insurers in many respects. Generally, state regulatory authorities monitor compliance with, and periodically conduct examinations regarding, state mandated standards of solvency, licensing requirements, investment limitations, restrictions on the size of risks which may be reinsured, deposits of securities for the benefit of reinsureds, methods of accounting, and reserves for unearned premiums, losses and other purposes. However, in contrast with primary insurance policies which are regulated as to rate, form, and content, the terms and conditions of reinsurance agreements generally are not subject to regulation by state insurance regulators.

     Converium Reinsurance (North America) Inc. is accredited or approved to write reinsurance in certain states. The ability of any primary insurer, as reinsured, to take credit for the reinsurance placed with reinsurers is a significant component of reinsurance regulation. Typically, a primary insurer will only enter into a reinsurance agreement if it can obtain credit on its statutory financial statements for the reinsurance ceded to the reinsurer. Credit is usually granted when the reinsurer is licensed or accredited in the state where the primary insurer is domiciled. In addition, many states allow credit for reinsurance ceded to a reinsurer that is licensed in another state and which meets certain financial requirements, or if the primary insurer is provided with collateral to secure the reinsurer’s obligations.

U.S. Reinsurance Regulation of our Non-U.S. Reinsurance Subsidiaries

     Converium AG and Converium Rückversicherung (Deutschland) AG, our non-U.S. reinsurance subsidiaries, also assume reinsurance from primary U.S. insurers. In order for primary U.S. insurers to obtain financial statement credit for the reinsurance obligations of our non-U.S. reinsurers, our non-U.S. reinsurers must satisfy reinsurance requirements. Non-U.S.

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reinsurers that are not licensed in a state generally may become accredited by filing certain financial information with the relevant state commissioner and maintaining a U.S. trust fund for the payment of valid reinsurance claims in an amount equal to the reinsurer’s U.S. reinsurance liabilities covered by the trust plus an additional $20 million. In addition, unlicensed and unaccredited reinsurers may secure the U.S. primary insurer with funds equal to its reinsurance obligations in the form of cash, securities, letters of credit or reinsurance trusts.

NAIC Ratios

     The NAIC has developed a set of financial relationships or tests known as the NAIC Insurance Regulatory Information System to assist state regulators in monitoring the financial condition of insurance companies and identifying companies that require special attention or action by insurance regulatory authorities. Insurance companies generally submit data quarterly to the NAIC, which in turn analyzes the data using prescribed financial data ratios, each with defined “usual ranges.” If an insurance company’s results vary significantly from expected ranges, regulators may make further inquiries. Regulators have the authority to impose remedies ranging from increased monitoring to certain business limitations to various degrees of supervision. For example, as a result of having two IRIS loss reserve tests fall outside of the specified parameters as of December 31, 2001 and December 31, 2002, Converium Reinsurance (North America) Inc. was required by the State of New York Insurance Department to engage a qualified independent loss reserve specialist to render an opinion as to the adequacy of its loss and loss adjustment expense reserves at December 31, 2002 and December 31, 2003, respectively. Neither our U.S. insurance nor our reinsurance subsidiary are currently subject to any other increased regulatory scrutiny based on these ratios.

Risk-Based Capital

     The Risk-Based Capital for Insurers Model Act, or the Model Act, as it applies to non-life insurers and reinsurers, was adopted by the NAIC in 1993. The main purpose of the Model Act is to provide a tool for insurance regulators to evaluate the capital of insurers relative to the risks assumed by them and determine whether there is a need for possible corrective action. U.S. insurers and reinsurers are required to report the results of their risk-based capital calculations as part of the statutory annual statements filed with state insurance regulatory authorities. The Model Act provides for four different levels of regulatory actions based on annual statements, each of which may be triggered if an insurer’s Total Adjusted Capital, as defined in the Model Act, is less than a corresponding level of risk-based capital (“RBC”).

     The Company Action Level is triggered if an insurer’s Total Adjusted Capital is less than 200% of its Authorized Control Level RBC, as defined in the Model Act. At the Company Action Level, the insurer must submit a RBC plan to the regulatory authority that discusses proposed corrective actions to improve its capital position. The Regulatory Action Level is triggered if an insurer’s Total Adjusted Capital is less than 150% of its Authorized Control Level RBC. At the Regulatory Action Level, the regulatory authority will perform a special examination of the insurer and issue an order specifying corrective actions that must be followed. The Authorized Control Level is triggered if an insurer’s Total Adjusted Capital is less than 100% of its Authorized Control Level RBC, and at that level the regulatory authority is authorized (although not mandated) to take regulatory control of the insurer. The Mandatory Control Level is triggered if an insurer’s Total Adjusted Capital is less than 70% of its Authorized Control Level RBC, and at that level the regulatory authority must take regulatory control of the insurer. Regulatory control may lead to rehabilitation or liquidation of an insurer. As of December 31, 2003, the Total Adjusted Capital of each of our U.S. reinsurance subsidiary and our U.S. insurance subsidiary exceeded amounts requiring company or regulatory action at any of the four levels.

The Gramm-Leach-Bliley Act

     In November 1999, the Gramm-Leach-Bliley Act of 1999, or the GLBA, was enacted, implementing fundamental changes in the regulation of the financial services industry in the United States. The GLBA permits the transformation of the already converging banking, insurance and securities industries by permitting mergers that combine commercial banks, insurers and securities firms under one holding company, a “financial holding company.” Bank holding companies and other entities that qualify and elect to be treated as financial holding companies may engage in activities, and acquire companies engaged in activities that are “financial” in nature or “incidental” or “complementary” to such financial activities. Such financial activities include acting as principal, agent or broker in the underwriting and sale of life, property, casualty and other forms of insurance and annuities. However, although a bank cannot act as an insurer nor can it own an insurer as a subsidiary in most circumstances, a financial holding company can own any kind of insurer, insurance broker or agent. Under the GLBA, national banks retain their existing ability to sell insurance products in some circumstances.

     Under state law, the financial holding company must apply to the insurance commissioner in the insurer’s state of domicile for prior approval of the acquisition of the insurer. Under the GLBA, no state may prevent or restrict affiliations between banks and insurers, insurance agents or brokers. Further, states cannot prevent or significantly interfere with bank or bank subsidiary sales activities. Finally, both bank and bank affiliates can obtain licenses as producers.

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     Until the passage of the GLBA, the Glass-Steagall Act of 1933, as amended, had limited the ability of banks to engage in securities-related businesses, and the Bank Holding Company Act of 1956, as amended, had restricted banks from being affiliated with insurers. With the passage of the GLBA, among other things, bank holding companies may acquire insurers, and insurance holding companies may acquire banks. The ability of banks to affiliate with insurers may materially affect our U.S. insurance and reinsurance subsidiaries’ product lines by substantially increasing the number, size and financial strength of potential competitors.

Insurance Guaranty Association Assessments

     Each state has insurance guaranty association laws under which property and casualty insurers doing business in the state may be assessed by state insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. These laws do not apply to reinsurers. Typically, states assess each member insurer in an amount related to the member insurer’s proportionate share of the business written by all member insurers in the state. Losses caused by the September 11th terrorist attacks, loss reserve deficiencies, or prior investment results may result in the insolvency of certain U.S. insurance companies, increasing the possibility that we will be assessed by state insurance guaranty associations. While we cannot predict the amount and timing of any future assessments on our insurance companies under these laws, we have established reserves that we believe are adequate for assessments relating to insurance companies that are currently subject to insolvency proceedings.

Terrorism Legislation

     On November 26, 2002, President George W. Bush signed into law the Terrorism Risk Insurance Act of 2002 (TRIA). This legislation establishes a program under which the Federal government will share the risk of loss arising from future terrorist attacks with the insurance industry. The law does not apply to reinsurers, and the federal government does not share in the risk of loss emanating from future terrorist attacks with the reinsurance industry. Each reinsurer is free to make its own contractual arrangements with its ceding partners, as it deems appropriate.

     Regarding our ceding companies, TRIA offers a three-year program, imposes a deductible that must be satisfied before federal assistance is triggered and contains a coinsurance feature. The deductible is based on a percentage of direct earned premiums for commercial insurance lines from the previous calendar year. It rises from 1% during the transition period, running from the date of enactment to December 31, 2002, to 7% during year one of the program (2003), 10% during year two, and 15% in year three. The federal program covers 90% of losses in excess of the applicable deductible, while the insurance company retains the remaining 10%. The program imposes an annual of cap of $100 billion on covered losses. Participation in the program for insurers providing commercial property and casualty insurance is mandatory. While TRIA appears to provide the property and casualty sector with an increased ability to withstand the effect of potential terrorist events during the next three years, any company’s results of operations or equity could nevertheless be materially adversely impacted, in light of the unpredictability of the nature, targets, severity or frequency of such potential events.

Germany

     Converium Rückversicherung (Deutschland) AG is regulated in Germany and is engaged exclusively in the reinsurance business. It is thus an insurance enterprise within the meaning of the German Insurance Supervision Act and as such is subject to governmental supervision. This supervision is exercised by the Federal Insurance Supervisory Office located in Bonn.

     In contrast to insurance enterprises, companies that engage exclusively in reinsurance activities are subject to a less extensive scope of governmental supervision. The supervisory authority’s monitoring of reinsurers consists of ensuring that they comply with the specific accounting regulations applicable to insurance enterprises. For this purpose, reinsurance enterprises are required to submit quarterly and annual financial statements to the supervisory authority.

     In addition, reinsurers are obligated to submit detailed reports on the nature and volume of their business to the supervisory authority in accordance with the Ordinance on Reporting by Insurance Enterprises to the Federal Insurance Supervisory Office.

     The supervisory authority may, at its discretion, perform inspections at the reinsurer’s premises to verify compliance with these statutory obligations.

     In current practice, for the most part German reinsurers are only indirectly supervised, principally through the supervision of primary insurance companies. Exploration of subjecting German reinsurance companies to a more extensive form of regulation and supervision has not progressed very far to date. However, German reinsurance companies may become subject to more intense regulation in the future. In particular, the Federal Insurance Supervisory Office requires German insurance companies to monitor their reinsurance agreements, which has led to the installation of internal rating systems for reinsurers

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by German insurance companies.

     A draft act is currently being discussed in Germany to fully integrate the reinsurance industry into the whole scope of supervision comparable with the already existing situation in the primary insurance industry. This would follow the new EU guidance for reinsurers The new law is intended to become effective by January 1, 2005. The main objects affecting the reinsurance industry include topics such as legal form of the company, location of the headquarters, qualification of the executive management, control procedures towards shareholders, investment principles and special intervention rights for the supervision bodies.

United Kingdom

     Converium Insurance (UK) Ltd. (“CIL”) is subject to UK insurance regulation and the supervision by the UK Financial Services Authority (FSA). It is anticipated that the UK regulatory environment will be subject to considerable change between 2004 and 2006. This will include adoption of increased solvency requirements, which are based upon the EU Solvency I Directive. The latter will trigger increased capital requirements for certain liability business. Prior to the introduction of the EU Solvency II Directive, the FSA is expected to introduce “enhanced capital requirements” for general insurers, which will include capital charges based upon assets, claims and premium (Consultation Paper CP 190). CIL has taken steps to anticipate the new requirements, in particular the initial capitalization of the company has been set at a level that is expected to meet the enhanced capital requirements for general insurers set out in CP190.

European Union Directives

     Our businesses in the United Kingdom and Germany, as well as in the other member states of the European Union (“EU”) and the European Economic Area, or EEA, are impacted by EU directives. These directives are implemented through legislation in each member state. Switzerland, which is not a member state of the EU, entered into a treaty with the EU in 1989 which allows Swiss direct insurers, other than life insurers, the free establishment of branches and subsidiaries within the EU. Without being part of the EEA nor being bound by contract, Switzerland reviews and largely conforms its financial services regulations with EU Directives.

     In October 2002, the European Commission, or EC, released a draft Proposal for a Directive of the European Parliament and of the Council concerning reinsurance and retrocession, which has been subject to a consultation process in the interim. The proposed Directive, when adopted will essentially establish the principles applicable to the taking-up of the business of reinsurance in a Member State as well as rules regarding technical provisions and the solvency requirements applicable to reinsurance companies. The Directive is based largely on solvency related concepts stipulated in the prior Directive adopted by the EU for insurance companies. The proposed Directive does not currently provide for any discrimination of non-EU based reinsurance companies. However, if the final adopted Directive should include such discriminatory regulations, this could be a disadvantage for Converium AG in its doing business in the EU, as Converium AG derives a substantial proportion of its revenues within the EU and any competitive disadvantage we face there could have an adverse effect on our result of operations.

C. ORGANIZATIONAL STRUCTURE

     We are a multinational group of companies with insurance and reinsurance subsidiaries and other companies organized in jurisdictions worldwide. Our significant subsidiaries are Converium AG, Converium Finance S.A., Converium Rückversicherung (Deutschland) AG and Converium Holdings (North America) Inc., which holds our subsidiaries Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. Converium AG, owns, directly or indirectly, 100% of all of our operating companies. In January 2003, Converium purchased the remaining 1.37% interest in Converium Rückversicherung (Deutschland) AG which increased its interest to 100.0%.

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     The following chart summarizes our corporate structure.

(1) The sale and purchase agreement to acquire an additional 5.1% stake in GAUM was successfully completed in February 2004. The total shareholding in GAUM is now 30.1%.

D. PROPERTY, PLANTS AND EQUIPMENT

     Our operational head office is located at General Guisan — Quai 26, 8002 Zurich, Switzerland, where we lease an aggregate of 227,226 square feet. We also maintain offices at:

• our U.S. headquarters in New York, New York, at One Chase Manhattan Plaza, New York, NY 10005 where we sublease an aggregate of 77,013 square feet and

• our German headquarters in Cologne, Germany, at Clever Strasse 36, 50668 Köln, Germany where we lease an aggregate of 44,918 square feet

     In addition to our headquarter offices, we lease space for our branch and marketing offices. In addition, we have administrative offices in Stamford, Connecticut. We believe that these facilities are adequate for our present needs in all material respects. We also hold other properties for investment purposes.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

     You should read the following discussion and analysis in conjunction with our consolidated financial statements including the related notes to those financial statements. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. This discussion contains forward-looking statements that involve risks and uncertainties and actual results may differ materially from the results described or implied by these forward-looking statements. You should read the information under “Risk Factors” on page 6 of this annual report for information about material risks and uncertainties that affect our

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business and “Cautionary Note Regarding Forward-Looking Statements” on page 3 for information about our presentation of forward-looking information.

Overview

     Converium Holding AG and subsidiaries (“Converium”) is a leading global professional reinsurer, which offers a full range of traditional non-life and life reinsurance products as well as innovative “non-traditional” solutions to help clients manage capital and risk. Our principal lines of non-life reinsurance include general third party liability, motor, personal accident, property, agribusiness, aviation and space, credit and surety, engineering, marine and energy, professional liability and other special liability and workers’ compensation. The principal life reinsurance products are ordinary life and disability reinsurance, including quota share, surplus coverage and financing contracts, and accident and health.

     Converium was formed through the restructuring and integration of substantially all of the third-party assumed reinsurance business of Zurich Financial Services through a series of transactions (“Formation Transactions”). On December 1, 2001, Converium entered into a Master Agreement with Zurich Financial Services (the “Master Agreement”), which set forth the terms of the separation from Zurich Financial Services. In December 2001, Zurich Financial Services sold 87.5% of its interest in Converium through an initial public offering, which date represented the legal separation from Zurich Financial Services. Zurich Financial Services’ remaining 12.5% interest in Converium was sold in January 2002.

     Subsequent to these Formation Transactions, Converium has operated as an independent company. However, under the Master Agreement, Converium has several ongoing business relationships with Zurich Financial Services. See “Item 10. — Additional Information — C. Material Contracts” and the notes to the consolidated financial statements.

     Based on calendar year 2002 third-party net premiums written, Converium ranks among the ten largest global reinsurers. Converium is rated “A” (Strong), stable outlook, by Standard & Poor’s Corporation and “A” (Excellent), stable outlook, by A.M. Best Company, Inc. Our Standard & Poor’s and A.M. Best ratings are not designed to be, and do not serve as, measures of protection or valuation offered to investors and these financial strength ratings should not be relied on with respect to making an investment in our securities. Standard & Poor’s and A.M. Best review their ratings periodically and we cannot assure you that we will maintain our current ratings in the future.

     In October 2003, Converium implemented changes to its organizational and financial reporting structures. At the time of its IPO in December 2001, Converium adopted an organizational model based on geography. This was largely driven by the historical development of its then parent, Zurich Financial Services. Over its first two years as an independent reinsurer, Converium has become more globally integrated and has seen its business strategy evolve. As a result, the issues of legal entity and geography have become less relevant criteria when evaluating business strategy and capital and resource allocation.

     Converium’s business is now organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance, which are based principally on global lines of business. In addition to the three segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions.

     We prepare segregated financial information for each of our operating segments. In the future, we plan to continue conducting our business and measuring our financial and operating performance based on these segments.

     We derive our revenues principally from:

• premiums from our non-life and life reinsurance and insurance businesses

• investment income and investment gains from our portfolio of invested assets, net of investment expenses

• interest on premium and loss deposits withheld by our clients

     Our costs and expenses principally consist of:

• losses and loss adjustment expenses, which include:

• non-life reinsurance and insurance losses and loss adjustment expenses

• death and other life reinsurance benefits

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• operating and administration costs, which include:

• treaty and individual risk underwriting acquisition costs, commonly referred to as commissions

• overhead costs, predominantly consisting of salaries and related costs

• interest expenses

• income taxes

Our profitability depends to a large extent on:

• the quality of our underwriting and pricing

• the level of incurred losses and commissions

• the timing of loss and benefit payments

• our ability to earn appropriate yields on our investment portfolio

• our ability to manage operating and administration costs

• our ability to efficiently and effectively manage risk, including retrocessions

     When reviewing our financial statements, there are certain business characteristics that affect the reporting of our results. The most significant factors are set forth below.

Formation Transactions and Consolidated Financial Statements

     We prepare our financial statements on a U.S. GAAP basis. For periods prior to December 11, 2001, we derived the financial information in this annual report from the historical financial statements of Zurich Financial Services. These statements present the financial condition, results of operations and cash flows of the businesses which, prior to the Formation Transactions, were owned by Zurich Financial Services and now comprise Converium. The Formation Transactions included the:

• creation of Converium Holding AG, based in Zug, Switzerland, as a separate legal entity

• reinsurance by Converium AG under the Quota Share Retrocession Agreement (described below) of substantially all of the third-party reinsurance business historically underwritten under the “Zurich Re” brand name by the Zurich Re Zurich business unit of Zurich Financial Services

• establishment of the Funds Withheld Asset contemplated by the Quota Share Retrocession Agreement

• transfer by Zurich Financial Services and its subsidiaries of cash and other assets and liabilities to Converium

     The assets transferred to us included:

• the shareholders’ equity of the legal entities comprising our operating businesses

• the operating assets of the Converium AG business

• cash and investments

     The following is a description of certain transactions that have been entered into by Converium and Zurich Financial Services and their respective subsidiaries to establish Converium as a stand-alone legal entity.

     Converium AG. Historically, Converium AG was not a separate legal entity and underwrote substantially all of its business pursuant to reinsurance policies issued by ZIC and Zurich International (Bermuda) Limited, or ZIB, both subsidiaries of Zurich Financial Services, and was operated as the Zurich Re Zurich business unit of Zurich Financial Services. These subsidiaries were retained by Zurich Financial Services. In June 2001, we incorporated Converium AG, based in Zurich,

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which is a wholly owned subsidiary of Converium Holding AG. Since October 1, 2001, Converium AG has written its new and renewal business on the balance sheet of the new legal entity. The third-party reinsurance business written by ZIC and ZIB under the “Zurich Re” brand name with an inception date on or after January 1, 1987 was reinsured by Converium AG pursuant to the Quota Share Retrocession Agreement. See “Item 10. — Additional Information — C. Material Contracts — Acquisition of the Converium AG Business — Quota Share Retrocession Agreement” for a description of this agreement. This business is reflected in our financial statements as if it had been written by Converium AG from the date of inception of the business.

     The transfer of the Converium AG business was accomplished pursuant to the Quota Share Retrocession Agreement, on a funds withheld basis. This means that Converium AG assumed all the liabilities (except certain liabilities arising from the September 11th terrorist attacks), primarily consisting of loss and loss adjustment expense reserves plus unearned premium balances, relating to the business. ZIC and ZIB retained the assets which support this business, and Converium AG receives an investment return derived from these assets in the form of interest. In this annual report, we refer to the assets retained by ZIC and ZIB as the “Funds Withheld Asset.” See “— Investment Results” and “Item 4. — Information on the Company — B. Business Overview — Investments.” Under the Quota Share Retrocession Agreement, ZIC and ZIB remain the legal counter-parties for the original insureds and Converium AG reinsures ZIC and ZIB. Converium AG retains the profits and losses from this business.

     Converium AG has financial risks relating to the gross loss and loss adjustment expense reserves and related third-party reinsurance recoverables arising out of the business reinsured under the Quota Share Retrocession Agreement. We manage all third-party retrocessions related to the reinsured business and bear the credit risk for uncollectible reinsurance balances (with the exception of reinsurance for September 11th events). Additionally, we have a right of offset under the Quota Share Retrocession Agreement so that reinsurance balances owed to ZIC and ZIB may be offset against the Funds Withheld Asset directly. The Quota Share Retrocession Agreement provides that ZIC and ZIB may not, during its term, cancel these existing third-party retrocessions for the benefit of the reinsurance policies covered under the agreement without the consent of Converium.

     Under the Quota Share Retrocession Agreement, the interest payable to Converium AG on the Funds Withheld Asset is based on fixed interest rates tied to each of our major functional currencies. These interest rates were calculated as if the assets had been invested in fixed income securities denominated in the functional currencies as of July 1, 2001 and reflect the estimated duration of the underlying reinsurance liabilities as of that date. Interest on the Funds Withheld Asset is payable quarterly in the currencies of the assets held and the amount of interest payable will vary due to changes in the currency mix of the Funds Withheld Asset and changes in foreign exchange rates. Among other things, this structure is designed to reduce our exposure to foreign currency movements.

     Converium Reinsurance (North America) Inc. In North America, our business is conducted through the legal entities Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc., which are held through Converium Holdings (North America) Inc. Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. were historically known as Zurich Reinsurance (North America), Inc., and ZC Insurance Company, or ZCIC, respectively. Converium Holdings (North America) Inc. is a Delaware holding company established to own our North American reinsurance and insurance operations.

     Historically, a number of Zurich Financial Services business units wrote business not managed by us on the Converium Reinsurance (North America) Inc. balance sheet. These units included Zurich Financial Services’ internal reinsurance division, referred to as GRI, and the Centre Group of companies, referred to as Centre Group. As part of the Formation Transactions, the business underwritten by GRI and Centre Group has been either novated or retroceded to affiliates of Zurich Financial Services pursuant to certain reinsurance and novation agreements. See “Item 10. — Additional Information — C. Material Contracts — Acquisition of the Converium Reinsurance (North America) Inc. Business” for a description of these agreements. Our financial statements reflect the business that remains the financial responsibility of Converium Reinsurance (North America) Inc. and exclude novated business from all periods presented. The business that was retroceded is reported as 100% ceded for all periods presented. Converium Reinsurance (North America) Inc. will only have financial responsibility for the retroceded business if these affiliates of Zurich Financial Services do not meet their reinsurance obligations. However, this risk is mitigated by the fact that we hold reinsurance deposits to collateralize the retroceded liabilities.

     Converium Rückversicherung (Deutschland) AG. Converium Rückversicherung (Deutschland) AG was historically known as Agrippina Rückversicherung and subsequently known as Zürich Rückversicherung (Köln) AG, or ZRK. Historically, Zurich Re Zurich, ZIC and GRI all wrote reinsurance business through policies issued by ZRK. As part of the Formation Transactions, business not managed by us but written on contracts issued by ZRK was novated, commuted or retroceded to affiliates of Zurich Financial Services or third parties. Our financial statements reflect the business that remains the financial responsibility of Converium Rückversicherung (Deutschland) AG and exclude novated and commuted business from all periods presented.

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Critical Accounting Policies

     Our discussion and analysis of the financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements in accordance with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts and related disclosures. Changes in our financial and operating environment could influence the accounting estimates that support our financial statements. The following presents those accounting policies that management believes are the most critical to its operations and those policies that require significant judgment on the part of management. The assumptions and judgments used by management are the ones they believe to be the most appropriate at this time. However, as described below, these estimates could change materially if different information or assumptions were used. The descriptions below are summarized and have been simplified for clarity. A more detailed description of these and other significant accounting policies used by us in preparing our financial statements is included in the Notes to the Consolidated Financial Statements.

     Non-life loss and loss adjustment reserves. We are required by applicable insurance laws and regulations, as well as U.S. GAAP, to establish reserves for payment of losses and loss adjustment expenses that arise from our non-life reinsurance and insurance businesses. Loss and loss adjustment reserves are based on estimates of future payments to settle claims, including legal and other expenses. The liability for unpaid losses and loss adjustment expenses for property and casualty business includes amounts determined from loss reports on individual cases and amounts for losses incurred but not reported. We estimate our loss and loss adjustment reserves on the basis of facts reported to us by ceding companies, in conjunction with actuarial estimates and methodologies, which are commonly used in our industry, for instances where we have not received reports from ceding companies. Our estimates of losses and loss adjustment expenses are subject to assumptions reflecting economic and other factors such as inflation rates, changes in legislation, court rulings, case law and prevailing concepts of liability, which can change over time. In addition, if ceding company data is not provided to us on a timely basis, this could potentially impact the accuracy of our estimates. We review and update our estimates and record changes to our loss and loss adjustment reserves in current income.

     The impact of changes in loss estimates can be mitigated by risk diversification. Risk diversification is a basic risk management tool in the insurance and reinsurance industry; as a multi-line reinsurer there are always likely to be reserve adjustments at the line of business level. Our book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

     Premiums. When we underwrite business, we receive premiums for assuming the risk. Premiums written in any given period include premiums reported to us by our clients and those we estimate and accrue on contracts underwritten.

     In a typical reporting period, we generally earn a portion of the premiums written during that period together with premiums that were written during earlier periods. Likewise, some part of our premiums written will not be earned until future periods. We allocate premiums written but not yet earned to an unearned premium reserve, which represents a liability on our balance sheet. As time passes, the unearned premium reserve is gradually reduced and the corresponding amount is released through the income statement as premiums earned. Premiums are typically earned on a pro rata basis over the period that the coverage is in effect. Our premium earned and written estimates are regularly reviewed and enhanced as information is reported to us by our clients and we are able to refine our estimates and assumptions. Our estimation procedures are also affected by the timeliness and comprehensiveness of the information our clients provide to us.

     We write a wide range of different types of insurance and reinsurance policies, some of which are earned during periods shorter than one reporting period, while some are earned during substantially longer periods. This mix of business can change significantly from one period to the next and these changes can cause the relationship between written and earned premiums to differ, perhaps significantly, on a year-to-year basis. In our analysis of trends, we relate the change in premiums earned to the change in premiums written. Typically, differences in the percentage growth or decline between premiums written and earned mainly reflect differences in our mix of business from year to year.

     Reinsurance recoverables. We cede reinsurance to retrocessionaires in the normal course of business. Under U.S. GAAP, reinsurance is recorded gross in the balance sheet. Reinsurance assets (recoverables) include the balances due from retrocessionaires for paid and unpaid losses and loss adjustment expenses, ceded unearned premiums, and ceded future life benefits. Amounts recoverable from retrocessionaires are estimated in a manner consistent with the liabilities associated with the reinsured contracts.

     Retrocessional reinsurance arrangements generally do not relieve us from our direct obligations to our reinsureds. Thus, a credit exposure exists with respect to reinsurance ceded to the extent that any retrocessionaire is unable or unwilling to meet the obligations assumed under the retrocessional agreements. Failure of retrocessionaires to indemnify us due to insolvencies or disputes could result in uncollectible amounts and losses to us. We establish an allowance for potentially uncollectible

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recoverables from retrocessionaires for amounts owed to us that management believes will not be collected. In addition, we immediately charge operations for any recoverable balances that are deemed to be uncollectible. Collateral and other offsets are considered in determining the allowance or expense.

     Foreign currency translation. In view of our global scale and the fact that more of our business is transacted in U.S. dollars than in any other currency, we report our financial information in U.S. dollars. However, a large portion of our revenues and expenses are denominated in other currencies including the Euro, UK pound, Swiss franc, and Japanese yen. Since these currencies are functional currencies for our business units, translation differences are recorded directly in shareholders’ equity. Exchange rate differences arising from holding assets, other than investment assets, and liabilities denominated in non-functional currencies are recorded as income or expense, as the case may be, in our income statement.

     Invested assets. The majority of our fixed maturities and equity securities are classified as available-for-sale; these investments are carried at fair value. Fixed maturities for which we have the intent and ability to hold to maturity are classified as held-to-maturity. Held-to-maturity securities are carried at amortized cost, if purchased, or carrying value, if transferred from the available-for-sale category to the held-to-maturity category. The difference between the fair value and amortized cost at the date of transfer of such securities is amortized over the life of the respective securities. The carrying value of transferred securities is the fair value at the date of transfer less unamortized net unrealized gains. Fixed maturities and equity securities which we buy with the intention to resell in the near term, are classified as trading and are carried at fair value. Unrealized gains or losses on investments carried at fair value, except those designated as trading are recorded in other comprehensive income, net of deferred income taxes.

     When declines in values of securities below cost or amortized cost are considered to be other than temporary, an impairment charge is recorded as a realized capital loss in the statement of income for the difference between cost or amortized cost and estimated fair value. “Other than temporary declines” are declines in value of the security that exceed 20% over a period of six months, or that exceed of 50% regardless of the period of decline. To continue to adhere to emerging asset impairment standards, beginning in the second quarter of 2003, we revised our impairment policy to also record as realized capital losses any declines in value of equity securities over a period of more than twelve months. The same policy applies to fixed maturities securities when the decline in value is attributable to the deteriorating credit-worthiness of the issuer. At management’s judgment, we impair additional securities based on prevailing market conditions by considering various factors such as the financial condition of the issuer, the market value and the expected future cash flows of the security.

     Income taxes. Deferred income taxes are provided for all temporary differences, which are based on the difference between financial statement carrying amounts and the income tax bases of assets and liabilities using enacted local income tax rates and laws. In addition, a deferred tax asset is established for net operating loss carryforwards. We have significant net operating loss carryforwards that we can use to offset future taxable income. Realization of the deferred tax asset related to these carryforwards is dependent upon generating sufficient taxable income within specified future periods. We establish a valuation allowance against our deferred tax asset based upon our assessment if it is more than likely than not that some or all of the deferred tax asset will not be realized in the applicable jurisdiction. In establishing the appropriate value of the deferred tax asset, we must make judgments about our ability to recognize the benefit of the asset over time, including our ability to utilize the net operating loss carryforwards. In the event that we are unable to realize a deferred tax asset, net income would be adversely affected to the extent a valuation allowance has not been established.

Investment Results

     Investment results are an important part of our overall profitability. Our net investment income was $233.0 million for the year ended December 31, 2003, representing a decrease of $18.8 million, or 7.5% as compared to the same period of 2002. The decrease reflects lower investment income yields offset by an increase in invested assets from operating cash flows. Our net investment income increased $23.1 million, or 10.1% for 2002 as compared to 2001. The increase is primarily from an increase in invested assets due to our additional capitalization in late 2001 and the investment of cash flows from operating activities during 2002.

     We had net realized capital gains for the year ended December 31, 2003 of $18.4 million, compared to net realized capital losses of $10.3 million and $18.4 million in 2002 and 2001, respectively. Included in the 2002 realized amounts were gains on the restructuring of the fixed maturities portfolio of $62.9 million, offset by losses on the restructuring of the equity portfolio of $48.2 million, and losses realized on the sale of WorldCom fixed income investments of $15.8 million.

     We recorded $27.4 million, $48.3 million and $82.5 million of impairment charges during 2003, 2002 and 2001, respectively, primarily on our equity portfolio. To continue to adhere to emerging asset impairment standards, beginning in the second quarter of 2003, we revised our impairment policy to also record as realized capital losses any declines in value of equity securities over a period of more than twelve months. The same policy applies to fixed maturities securities when the decline in value is attributable to the deteriorating credit-worthiness of the issuer. This resulted in additional impairment

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charges of $3.4 million in 2003.

     The following table shows the average pre-tax yields and investment results on our investment portfolio for the years ended December 31, 2003, 2002 and 2001.

	Net Investment Income and Net Realized and Unrealized Capital Gains (Losses)
	Year Ended December 31,
	2003									2002									2001
							Realized									Realized									Realized
	Net Investment			Pre-tax			gains			Net Investment			Pre-tax			gains			Net Investment			Pre-tax			gains
	Income			yield			(losses)			Income			yield			(losses)			Income			yield			(losses)
	($ in millions, except for percentages)
Fixed maturities securities	$	121.0			3.0	%	$	34.5		$	132.7			4.6	%	$	88.0		$	130.0			5.7	%	$	45.9
Equity securities		11.4			1.7			(16.1	)		14.5			2.4			(101.2	)		9.7			1.5			(64.6	)
Funds Withheld Asset / Zurich Financing Agreement		85.6			5.4			—			81.1			5.3			—			75.7			5.2			—
Short-term and other		26.0			3.8			—			35.4			4.5			2.9			18.1			3.6			0.3
Less investment expenses		(11.0	)		—						(11.9	)		—						(4.8	)		—
Total		233.0			3.3						251.8			4.3						228.7			4.7
Net realized capital gains (losses)		18.4									(10.3	)								(18.4	)
Net investment income and net realized capital gains (losses)		251.4			3.5						241.5			4.1						210.3			4.3
Change in net unrealized gains (losses)		154.2									(109.0	)								14.4
Total investment return	$	405.6			5.7	%				$	132.5			2.2	%				$	224.7			4.6	%

     Our average net investment income yield was 3.3% for the year ended December 31, 2003, as compared to 4.3% and 4.7% for the same periods in 2002 and 2001, respectively.

     Our average total investment income yield was 3.5% for the year ended December 31, 2003, as compared to 4.1% and 4.3% for the same periods in 2002 and 2001, respectively. Yields are calculated based on the average of beginning and ending investment balances (including cash and cash equivalents). The decrease in yield in 2003 is due to sustained lower interest rates worldwide. In addition, we positioned our fixed income portfolios to a shorter duration in anticipation of a potential interest rate increase. We paid fees in the amount of $8.0 million, $6.1 million and $4.7 million to our asset managers and custodians in 2003, 2002 and 2001, respectively, including other investment related costs.

     Our average total investment return was 5.7% for the year ended December 31, 2003 as compared to 2.2% and 4.6% for 2002 and 2001, respectively. This resulted from a recovery in the global capital markets which positively impacted changes to the unrealized capital positions of both our fixed income and equity instruments. The average total investment return in 2002 and 2001 included the effect of foreign currency on the change in net unrealized capital gains and losses of $(50.3) million and $(1.2) million, respectively. While the effect was fairly insignificant for 2001, in 2002 this lowered the average total investment return by 0.8%. As of 2003, the currency effect on the change in net unrealized capital gains and losses is directly booked to cumulative currency translation adjustments, and therefore no longer affects the investment return. This approach is also consistent with our aim to match the currency of our assets with our liabilities, which implies that any currency impact on the assets is essentially offset by the impact on the corresponding liability.

     Under the Quota Share Retrocession Agreement, the Funds Withheld Asset may be prepaid to us in whole or in part as of the end of any calendar quarter. In the event that the Funds Withheld Asset is prepaid, we would have to reinvest these assets in investments which may not provide yields comparable to those payable under the Quota Share Retrocession Agreement. To the extent we are not able to invest these funds at comparable yields, our investment income could be adversely affected.

Restructuring Charge

     In connection with the Formation Transactions, Converium incurred $50.0 million in restructuring costs during 2001. Any restructuring costs relating to the Formation Transactions in excess of this amount were borne by Zurich Financial Services. The restructuring costs, according to the Master Agreement, included the costs and expenses of the Formation Transactions, including advisors’ fees, retention plan costs expensed in 2001 and stamp duty taxes. Converium did not incur any restructuring costs during 2003 or 2002.

Income Tax

     We are subject to local income tax requirements in the jurisdictions in which we operate. The income tax expense reflected in our financial statements therefore reflects a number of different local tax rates, and as a result may change from one period to the next depending on both the amount and the geographic contribution of our taxable income. In addition, the income tax we pay is based on local tax statements in which our reported income and expenses may differ from that reported in our

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financial statements.

     As a result of changes in our geographic contribution of taxable income as well as changes in the amount of our non-taxable income and expense, the relationship between our reported income before tax and our income tax expense may change significantly from one period to the next. For more information about our income tax expenses, see Note 11 to our consolidated financial statements.

Regulatory and Legislative Environment

     Our business is subject to regulation in all of the jurisdictions in which we operate. Regulation includes compliance with applicable laws covering operating and reporting requirements, monitoring of solvency and reserves and asset valuation. Changes in government policy or taxation also may affect our results of operations. In addition, political, judicial and legislative developments could broaden the intent and scope of coverage of existing policies written by our clients, which may result in additional liabilities for reinsurers. See “Item 4. — Information on the Company — B. Business Overview — Regulation.”

Results of Operations

     The table below presents summary income statement data for the years ended December 31, 2003, 2002 and 2001.

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Revenues:
Gross premiums written	$	4,223.9		$	3,535.8		$	2,881.2
Net premiums written	$	3,827.0		$	3,322.2		$	2,482.6
Net premiums earned	$	3,676.5		$	3,165.5		$	2,295.2
Net investment income and net realized capital gains (losses)		251.4			241.5			210.3
Other income (loss)		2.7			(1.2	)		(5.8	)
Total revenues		3,930.6			3,405.8			2,499.7
Benefits, losses and expenses:
Losses, loss adjustment expenses and life benefits		(2,674.2	)		(2,492.0	)		(2,300.5	)
Underwriting acquisition costs		(803.2	)		(666.7	)		(508.1	)
Other operating and administration expenses		(197.8	)		(173.3	)		(146.4	)
Interest expense		(31.0	)		(16.4	)		(24.2	)
Amortization of goodwill and restructuring costs		—			—			(57.8	)
Total benefits, losses and expenses		(3,706.2	)		(3,348.4	)		(3,037.0	)
Income (loss) before taxes		224.4			57.4			(537.3	)
Income tax (expense) benefit		(39.3	)		49.4			169.9
Net income (loss)	$	185.1		$	106.8		$	(367.4	)

     The table below shows the reconciliation between pre-tax income and pre-tax operating income. We use pre-tax operating results to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which are driven by the timing of the disposition of investments and not by our operating performance.

Pre-Tax Operating Income (Loss)

	Year Ended December 31,
	2003		2002			2001
	($ in millions)
Income (loss) before taxes	$	224.4	$	57.4		$	(537.3	)
Net realized capital gains (losses)		18.4		(10.3	)		(18.4	)
Amortization of goodwill and restructuring costs		—		—			57.8
Pre-tax operating income (loss)	$	206.0	$	67.7		$	(461.1	)
Net income (loss)	$	185.1	$	106.8		$	(367.4	)

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Converium Consolidated Net Income

     Converium reported net income of $185.1 million for the year ended December 31, 2003, an improvement of $78.3 million as compared to net income of $106.8 million for 2002. The increase is due to continued improvements in the non-life underwriting results, as well as pre-tax net realized capital gains in 2003 versus pre-tax net realized capital losses in 2002.

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Developments on our Guaranteed Minimum Death Benefit (GMDB) book were offset by an overall improved non-life combined ratio.

     Converium reported pre-tax operating income (defined as pre-tax income or loss excluding pre-tax net realized capital gains or losses, amortization of goodwill and restructuring costs) of $206.0 million for the year ended December 31, 2003, an improvement of $138.3 million as compared to pre-tax operating income of $67.7 million for 2002. The improvement in pre-tax operating income was due to significant premium growth and an overall improved non-life combined ratio.

     For the year ended December 31, 2003, gross premiums written increased 19.5%, net premiums written increased 15.2% and net premiums earned increased 16.1%. The growth was spread across most lines of business and resulted from increased rates and increasing the share of clients’ business upon renewing existing business or writing new business.

     In 2003, we recorded $31.3 million of net positive development on prior years’ loss reserves. In 2002, our results were impacted by losses from the European floods of $51.1 million (net of reinstatement premiums of $3.1 million) and the recognition of a $148.5 million provision for net adverse development on prior years’ reserves. Our non-life combined ratio was 97.9% for the year ended December 31, 2003 as compared to 103.7% in the same period of 2002.

     Converium recorded pre-tax net realized capital gains of $18.4 million for the year ended December 31, 2003 as compared to pre-tax net realized capital losses of $10.3 million for the same period of 2002. The pre-tax net realized capital gains in 2003 included $27.4 million of impairment charges on our equity portfolio as compared to $48.3 million of impairment charges in 2002.

     Converium’s effective tax rate was 17.5% for the year ended December 31, 2003, compared to a benefit of 86.1% in 2002. The 2002 consolidated tax benefit reflects a one-time benefit of $21.3 million as the result of a ruling received from the Swiss tax authorities regarding a tax loss carryforward.

Converium Consolidated Premiums

     Gross premiums written for the year ended December 31, 2003 increased $688.1 million, or 19.5% compared to the same period of 2002. Net premiums written for 2003 increased $504.8 million, or 15.2% compared to 2002. For the year ended December 31, 2003, we retained 90.6% of our gross premiums written, compared to 94.0% in 2002. Our net retention ratio decreased principally due to the purchase of increased retrocessions to reduce peak exposures associated with our increased participation in the Global Aerospace Underwriting Managers Limited (GAUM) pool.

     The increases in non-life net premiums written predominately reflect the continued improved market conditions, new client relationships in certain key markets and the expansion of shares of business with existing clients. During 2003, we took advantage of growth opportunities in the Standard Property & Casualty Reinsurance segment, where net premiums written grew by $193.4 million, or 13.3% for the year. This was due to increased penetration in all lines of business, but predominantly within property and motor. At December 31, 2003, the Specialty Lines segment grew by $256.6 million or 16.5%, driven by strong growth in agribusiness, workers’ compensation, credit and surety, and professional liability and other special liability lines. The Life & Health Reinsurance segment grew by $54.8 million or 17.4%, driven by growth in accident and health business in North America and in Continental Europe.

     Net premiums earned for the year ended December 31, 2003 increased $511.0 million, or 16.1% compared to 2002. Net premiums earned increased at a higher rate than net premiums written due to the seasonality of certain business within our portfolio.

Converium Consolidated Net Investment Income and Net Realized Capital Gains (Losses)

     Investment results are an important part of our overall profitability. Our net investment income was $233.0 million for the year ended December 31, 2003, representing a decrease of $18.8 million, or 7.5% as compared to the same period of 2002. The decrease reflects lower investment income yields offset by an increase in invested assets from operating cash flows.

     Our average total investment income yield was 3.5% for the year ended December 31, 2003, as compared to 4.1% for the same period in 2002. Yields are calculated based on the average of beginning and ending investment balances (including cash and cash equivalents). The decrease in yield in 2003 is due to sustained lower interest rates worldwide. In addition, we positioned our fixed income portfolios to a shorter duration in anticipation of a potential interest rate increase. We paid fees in the amount of $8.0 million and $6.1 million to our asset managers and custodians in 2003 and 2002, respectively, including other investment related costs.

     We had net realized capital gains for the year ended December 31, 2003 of $18.4 million, compared to net realized capital

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losses of $10.3 million for the year ended December 31, 2002. Included in the 2002 realized amounts were gains on the restructuring of the fixed maturities portfolio of $62.9 million, offset by losses on the restructuring of the equity portfolio of $48.2 million, and losses realized on the sale of WorldCom fixed income investments of $15.8 million.

     We recorded $27.4 million and $48.3 million of impairment charges during 2003 and 2002, respectively, primarily on our equity portfolio. To continue to adhere to emerging asset impairment standards, beginning in the second quarter of 2003, we revised our impairment policy to also record as realized capital losses any declines in value of equity securities over a period of more than twelve months. The same policy applies to fixed maturities securities when the decline in value is attributable to the deteriorating credit-worthiness of the issuer. This resulted in additional impairment charges of $3.4 million in 2003.

Converium Consolidated Other Income (Loss)

     Other income for the year ended December 31, 2003 was $2.7 million as compared to other losses of $1.2 million for the year ended December 31, 2002. Other income (loss) includes interest income on reinsurance deposits, interest expense on funds held under reinsurance contracts, fee income, write-off of uncollectible balances and results from private equity funds.

Converium Consolidated Losses, Loss Adjustment Expenses and Life Benefits

     Our losses, loss adjustment expenses and life benefits incurred increased $182.2 million, or 7.3% in 2003 versus an increase of $191.5 million or 8.3% in 2002. The non-life loss and loss adjustment expense ratio was 71.5% in 2003 as compared to 78.2% in 2002. Our reported losses, loss adjustment expenses and life benefits have been impacted by the following loss events:

     Net reserve development: In 2003, there was $31.3 million net positive development on prior years’ loss reserves, consisting of positive development of $49.4 million in the Standard Property & Casualty Reinsurance segment, offset by $18.1 million of adverse development in the Specialty Lines segment. Risk diversification is a basic risk management tool in the insurance and reinsurance industry; as a multi-line reinsurer there are always likely to be reserve adjustments at the line of business level. Our book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

     In 2002, Converium strengthened reserves for prior years by $148.5 million. Throughout the year, increased loss experience related to prior years continued to emerge, which resulted in an in-depth actuarial reserve analysis of certain lines of business. This resulted in an additional $148.5 million provision for losses, primarily related to underwriting years 1997 through 2000. In the Standard Property & Casualty Reinsurance segment, there were additional provisions of $62.2 million for the liability, motor and property lines. In the Specialty Lines segment, there were additional provisions of $86.3 million, primarily related to the commercial umbrella and medical errors and omissions liability lines of business.

     Guaranteed Minimum Death Benefit (GMDB) Business: In addition to the non-life reserve development described above, the Life & Health Reinsurance segment strengthened reserves on a closed block of variable annuity business by $20.5 million (to net $56.0 million) and $15.6 million in 2003 and 2002, respectively. As a result of the strong performance of the U.S. stock markets, the GMDB’s net amount at risk further decreased to $809.7 million and $1,243.0 million at December 31, 2003 and 2002, respectively. Although Converium feels that its currently carried reserves for its GMDB exposure are adequate, it has exercised the call option it negotiated in the third quarter of 2003 to access additional reinsurance protection of up to $75.0 million. This decision was made in light of the current volatility and the valuation of the equity markets in the United States. The annual expense associated with this protection is expected to be less than $0.5 million per year. Based on information available today, this additional reinsurance protection adequately addresses potential adverse deviations to the key assumptions i.e., mortality risks, lapse rate risks, surrenders, and investment risks, such as equity market performance and volatility, incorporated in Converium’s models.

     Impact of aviation and space business: Our aviation and space business contributes substantially to the profitability of the Specialty Lines’ segment. Related to this business, we had net premiums written of $341.8 million and $365.3 million and a net non-life technical result (defined as net premiums earned minus losses and loss adjustment expenses and underwriting acquisition costs) of $126.0 million and $64.3 million in 2003 and 2002, respectively. There were no large losses, defined as those in excess of $10.0 million or more of net incurred losses to us, in either 2003 or 2002.

     Impact of property catastrophe business: A substantial portion of our property catastrophe business is written on an excess of loss basis. Related to this business, we had gross premiums written of $194.7 million and $172.9 million and a net non-life technical result (defined as net premiums earned minus losses and loss adjustment expenses and underwriting acquisition costs) of $74.4 million and $60.4 million in 2003 and 2002, respectively. Included in the net technical results are the following large natural catastrophe losses, defined as those in excess of $10.0 million or more of net incurred losses to us: Typhoon Maemi ($15.4 million) and the Algerian Earthquake ($10.6 million) in 2003 and the European floods in 2002 ($51.1 million).

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     Asbestos and environmental exposures: As of December 31, 2003 and 2002, we had reserves for environmental impairment liability and asbestos-related claims of $45.8 million and $44.6 million, respectively. Our survival ratio (calculated as the ratio of reserves held, including IBNR, over claims paid over the average of the last three years) for asbestos and environmental reserves was 13.6 years at December 31, 2003, compared to 13.5 years at December 31, 2002.

     During 2003 and 2002, there was no additional development in net reserves for the September 11^th terrorist attacks (as losses are capped at $289.2 million by Zurich Financial Services or “ZFS”). In 2003 and 2002, the ultimate losses related to Enron declined $17.2 million and $5.2 million, respectively.

Converium Consolidated Underwriting Acquisition Costs

     Underwriting acquisition costs primarily relate to commissions on treaty and individual risk business. Our underwriting acquisition costs increased $136.5 million or 20.5% in 2003 versus an increase of $158.6 million or 31.2% in 2002. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio for the years ended December 31, 2003 and 2002 was 22.0% and 21.1%, respectively.

Converium Consolidated Operating and Administration Expenses

     Operating and administration expenses increased 14.1% in 2003 and 18.4% in 2002. These increases primarily arose from expenditures to support the growth in operations. Operating and administration expenses were also impacted in 2003 and 2002 by the decrease of the U.S. dollar against the hardening European currencies. Despite the increase in operating and administration expenses, the non-life administration expense ratio remained stable at 4.4% in 2003 and 2002. This was due to continued strong premium growth relative to the growth in expenses.

     We fully charge the cost of options to operating expense under the fair value approach of SFAS No. 123,“Accounting for Stock Based Compensation”, and recorded compensation expense of $6.1 million and $5.8 million for 2003 and 2002, respectively, in connection with our stock option plans.

Converium Consolidated Interest Expense

     Interest expense for the year ended December 31, 2003 was $31.0 million compared to $16.4 million in 2002. Interest expense on our Senior Notes was $14.2 million in each year. The increase in 2003 was mainly due to $16.5 million in interest expense on our $200.0 million 8.25% guaranteed subordinated notes issued in December 2002.

Converium Consolidated Income Tax (Expense) Benefit

     Our income tax (expense) benefit was $(39.3) million and $49.4 million for the years ended December 31, 2003 and 2002, respectively. Our effective tax rate for 2003 was 17.5%, compared to a benefit of 86.1% in 2002. The 2002 consolidated tax benefit reflects a one-time benefit of $21.3 million as the result of a ruling received from the Swiss tax authorities regarding a tax loss carried forward.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Converium Consolidated Net Income (Loss)

     Converium reported pre-tax operating income of $67.7 million for the year ended December 31, 2002, an improvement of $528.8 million as compared to the pre-tax operating loss of $461.1 million in 2001. Net income improved $474.2 million to $106.8 million for the year ended December 31, 2002.

     Our 2002 results were impacted by the recognition of a $148.5 million provision for net reserve development on prior years’ business, representing a movement of 3.6% of the net non-life reserves at December 31, 2001. In the Standard Property & Casualty Reinsurance segment, there were additional provisions of $62.2 million for the liability, motor and property lines. In the Specialty Lines segment, there were additional provisions of $86.3 million, primarily related to the commercial umbrella and medical errors and omissions liability lines of business. In addition, our results were also impacted by losses from the August 2002 European floods of $51.1 million (net of reinstatement premiums of $3.1 million), primarily from reinsurance contracts written in Germany, the Czech Republic, Austria and Italy.

     Our 2001 results were impacted by pre-tax losses of $289.2 million related to the September 11th terrorist attacks, net adverse development on prior years’ loss reserves of $123.6 million, $67.0 million in losses related to the Enron Chapter 11 reorganization and $28.5 million in ceded premiums for September 11th terrorist attacks and other coverages from Zurich

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Financial Services.

     Our net investment income increased 10.1% to $251.8 million for the year ended December 31, 2002 as compared to the same period for 2001. We recorded $10.3 million of pre-tax net realized capital losses on our investment portfolio, which included $48.3 million of impairment charges on our equity portfolio, as compared to $18.4 million of pre-tax net realized capital losses, including $82.5 million of impairment charges in 2001.

     The above results were affected by a tax benefit of $49.4 million in 2002 compared to a benefit of $169.9 million in 2001. The 2002 consolidated tax benefit reflects a one-time benefit of $21.3 million as the result of a ruling received from the Swiss tax authorities regarding a tax loss carryforward. The 2001 consolidated tax benefit results from pre-tax losses.

     The components of net income (loss) are described below.

Converium Consolidated Premiums

     Gross premiums written for the year ended December 31, 2002 increased $654.6 million, or 22.7% compared to the same period for 2001. Net premiums written for 2002 increased $839.6 million, or 33.8% compared to 2001. The growth in net premiums written exceeded the growth in gross premiums written due to an increased retention rate in 2002 compared to 2001, and a ceded premiums charge in 2001 of $28.5 million related to coverage from Zurich Financial Services for the September 11th terrorist attacks. For the year ended December 31, 2002, we retained 94.0% of our gross premiums written, compared to 86.2% in 2001.

     The increase in net premiums written reflects the hardening market conditions that emerged during 2002. As described in the following discussion of results by business segment, Specialty Lines experienced the largest premium growth, with net premiums written increasing $586.9 million, or 60.6% over 2001. Standard Property & Casualty Reinsurance grew by $172.2 million, or 13.5%, and Life & Health Reinsurance grew by $80.5 million, or 34.4% in 2002 compared to 2001.

     Net premiums earned for the year ended December 31, 2002 increased $870.3 million, or 37.9% compared to 2001. Net premiums earned increased at a higher rate than net premiums written due to the growth and seasonality of certain business within our portfolio.

Converium Consolidated Net Investment Income and Net Realized Capital Losses

     Investment results are an important part of our overall profitability. Our net investment income was $251.8 million for the year ended December 31, 2002, representing an increase of $23.1 million, or 10.1% as compared to the same period for 2001.

     The increase is primarily from an increase in invested assets due to our additional capitalization in late 2001 and the investment of cash flows from operating activities during 2002. Our average total investment income yield was 4.1% for the year ended December 31, 2002 as compared to 4.3% in 2001. The decline in 2002 reflects lower interest rates worldwide relative to 2001. Yields are calculated based on the average of beginning and ending investment balances (including cash and cash equivalents). We paid fees in the amount of $6.1 million and $4.7 million to our asset managers and custodians in 2002 and 2001, respectively.

     Our average total investment return was 2.2% for the year ended December 31, 2002 as compared to 4.6% for 2001. The average total investment return in 2002 and 2001 included the effect of foreign currency on the change in net unrealized capital gains and losses of $(50.3) million and $(1.2) million, respectively. While the effect was fairly insignificant for 2001, in 2002, this lowered the average total investment return by 0.8%.

     We had net realized capital losses for the year ended December 31, 2002 of $10.3 million, compared to net realized capital losses of $18.4 million in 2001. Included in the 2002 realized amounts were gains on the restructuring of the fixed maturities portfolio of $62.9 million, offset by losses on the restructuring of the equity portfolio of $48.2 million, and losses realized on the sale of WorldCom fixed income investments of $15.8 million.

     We recorded $48.3 million of impairment charges on our equity portfolio for the year ended December 31, 2002, compared to $82.5 million for 2001. The decline in 2002 reflects the restructuring of our portfolios, whereby certain unrealized losses were realized.

Converium Consolidated Other Loss

     Other loss for the years ended December 31, 2002 and 2001 was $1.2 million and $5.8 million, respectively. The other loss in 2002 represents write-offs of certain uncollectible reinsurance recoverables, offset by interest income on reinsurance

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deposits and interest relating to a dispute settlement. The other loss in 2001 is primarily due to interest expense on funds held under reinsurance contracts and losses from investments in private equity funds.

Converium Consolidated Losses, Loss Adjustment Expenses and Life Benefits

     Our losses, loss adjustment expenses and life benefits incurred increased $191.5 million, or 8.3% in 2002 as compared to 2001. The non-life loss and loss adjustment expense ratio was 78.2% in 2002, compared to 99.9% in 2001. Our reported losses, loss adjustment expenses and life benefits have been impacted by the following loss events:

     Net reserve development: In 2002, Converium strengthened reserves for prior years by $148.5 million. Throughout the year, increased loss experience related to prior years continued to emerge, which resulted in an in-depth actuarial reserve analysis of certain lines of business. This resulted in an additional $148.5 million provision for losses, primarily related to underwriting years 1997 through 2000. In the Standard Property & Casualty Reinsurance segment, there were additional provisions of $62.2 million for the liability, motor and property lines. In the Specialty Lines segment, there were additional provisions of $86.3 million, primarily related to the commercial umbrella and medical errors and omissions liability lines of business.

     In 2001, Converium strengthened reserves for prior years by $123.6 million. Converium retained an actuarial consulting firm to perform an independent review of non-life net reserves as of December 31, 2000. This review reflected certain information that became available after the issuance of the December 31, 2000 financial statements, including most fourth quarter 2000 and some first quarter 2001 reports from ceding companies, who typically report on a one-quarter lag. Based on the independent review and Converium’s own evaluations of these new developments, additional provisions of $123.6 million, net of reinsurance, were recorded in 2001, principally related to accident years 2000 and prior at Converium Reinsurance (North America) Inc. In the Standard Property & Casualty Reinsurance segment, there were additional net provisions of $46.6 million, primarily for the motor and property lines of business. In the Specialty Lines segment, there were additional net provisions of $77.0 million, primarily related to the excess and surplus, commercial umbrella and marine and energy lines of business, offset by positive development in aviation and space.

     Guaranteed Minimum Death Benefit (GMDB) Business: In 2002, following the ongoing downturn of the international equity markets, Converium’s Life & Health Reinsurance segment reported losses of $6.5 million, including paid claims of $12.5 million and reserve strengthening of $15.6 million for a closed block of variable annuity business in order to align the reserves to the expected future life benefits. In 2001, Converium’s Life & Health Reinsurance segment reported losses of $17.7 million, including reserve strengthening of $13.4 million on this business.

     Impact of aviation and space business: Our aviation and space business contributes substantially to the profitability of the Specialty Lines’ segment. Related to this business, we had net premiums written of $365.3 million and $182.8 million and a net non-life technical result (defined as net premiums earned minus losses and loss adjustment expenses and underwriting acquisition costs) of $64.3 million and $(167.9) million in 2002 and 2001, respectively. Included in the 2001 net technical result are net losses from the September 11th terrorist attacks of $168.7 million. There were no large losses, defined as those in excess of $10.0 million or more of net incurred losses to us, in 2002.

     Impact of property catastrophe business: A substantial portion of our property catastrophe business is written on an excess of loss basis. Related to this business, we had gross premiums written of $172.9 million and $148.1 million and a net non-life technical result (defined as net premiums earned minus losses and loss adjustment expenses and underwriting acquisition costs) of $60.4 million and $29.8 million in 2002 and 2001, respectively. Included in the net technical results are the following large natural catastrophe losses, defined as those in excess of $10.0 million or more of net incurred losses to us: the European floods in 2002 ($51.1 million) and the El Salvador earthquake in 2001 ($14.2 million).

     September 11th terrorist attacks: The September 11th terrorist attacks in the United States represented the largest loss event in the insurance industry’s history. In 2001, we recorded gross losses and loss adjustment expenses of $692.9 million arising out of the terrorist attacks. Net of retrocessional recoveries and the cap from Zurich Financial Services, our recorded losses and loss adjustment expenses were $289.2 million, coming primarily from our aviation and property lines of business. The remainder of the losses were from our workers’ compensation, life and third-party liability lines of business. Zurich Financial Services, through its subsidiaries, agreed to arrangements that cap our net exposure for losses and loss adjustment expenses arising out of the September 11th terrorist attacks at $289.2 million. As part of these arrangements, these subsidiaries of Zurich Financial Services have agreed to take responsibility for non-payment by the retrocessionaires of Converium AG and Converium Rückversicherung (Deutschland) AG with regard to losses arising out of the September 11th terrorist attacks in excess of the $289.2 million cap. While the cap does not cover non-payment by the retrocessionaires of Converium Reinsurance (North America) Inc., our only retrocessionaire for this business is a unit of Zurich Financial Services. This business is fully collateralized in the form of letters of credit. Therefore, we are not exposed to potential non-payments by retrocessionaires for these events in excess of the $289.2 million cap, although we will be exposed to the risk of non-payment

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of Zurich Financial Services’ units and we are exposed to credit risk from these subsidiaries of Zurich Financial Services.

     During 2002, there was no additional development in net reserves for the September 11th terrorist attacks (as losses are capped at $289.2 million by Zurich Financial Services).

     Enron Chapter 11 reorganization: In December 2001, Enron Corp. announced that it and certain of its subsidiaries had filed voluntary petitions for Chapter 11 reorganization in the United States. Converium recorded incurred losses of $67.0 million pre-tax ($48.0 million after-tax) for the year ended December 31, 2001, representing Converium’s aggregate limits under existing reinsurance contracts in connection with Enron. These exposures result principally from credit and surety and, to a lesser extent, liability lines of business. The losses Converium may ultimately incur, and the timing of any loss payment, will be affected by numerous factors including the actions of third parties, possible judicial rulings and other contingencies. In 2002, the ultimate losses related to Enron declined $5.2 million.

     Asbestos and environmental exposures: As of December 31, 2002 and 2001, we had reserves for environmental impairment liability and asbestos-related claims of $44.6 million for both years. Our survival ratio (calculated as the ratio of reserves held, including IBNR, over claims paid over the average of the last three years) for asbestos and environmental reserves was 13.5 years at December 31, 2002, compared to 13.8 years at December 31, 2001.

Converium Consolidated Underwriting Acquisition Costs

     Underwriting acquisition costs primarily relate to commissions on treaty and individual risk business. Our underwriting acquisition costs increased 31.2% in 2002 over 2001. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio for the years ended December 31, 2002 and 2001 was 21.1% and 23.4%, respectively.

Converium Consolidated Operating and Administration Expenses

     Operating and administration expenses increased 18.4% in 2002 over 2001. This increase primarily arose from increases due to additional headcount and related overhead costs, including information technology, needed to support business growth, as well as an increased cost level required for new functions and departments required as an independent company. Operating and administration expenses were also impacted in 2002 by the decrease of the U.S. dollar against the hardening European currencies. Various costs related to the initial public offering increased operating and administration expenses in 2001. Despite the increase in operating and administration expenses, the non-life administration expense ratio declined to 4.4% in 2002, compared to 6.0% in 2001. This decline was due to strong premium growth.

     We fully charge the cost of options to operating expense under the fair value approach of SFAS No. 123, “Accounting for Stock-Based Compensation”, and recorded compensation expense of $5.8 million and $3.5 million in 2002 and 2001, respectively, in connection with our stock option plans.

Converium Consolidated Interest Expense, Amortization of Goodwill and Restructuring Costs

     Our interest expense for the year ended December 31, 2002 was $16.4 million compared to $24.2 million in 2001. Interest expense on our Senior Notes was $14.2 million in each year. The decrease in 2002 versus 2001 is principally due to short-term borrowings from Zurich Financial Services, which had a high average amount outstanding during 2001.

     At January 1, 2002 we adopted SFAS 142, “Goodwill and Other Intangible Assets,” which prohibits the amortization of goodwill. Amortization of goodwill in 2001 was $7.8 million. Restructuring costs were $50.0 million in 2001 and were incurred relating to our initial public offering and related Formation Transactions. No restructuring costs were incurred during 2002.

Converium Consolidated Income Tax Benefit

     Our income tax benefit was $49.4 million and $169.9 million for the years ended December 31, 2002 and 2001, respectively. Our effective tax rate for 2002 was a benefit of 86.1%, compared to an “expected” weighted average tax benefit rate of 24.9%. This rate was derived by calculating the weighted average of the expected statutory income tax in relation to the income (loss) generated in the various territories in which we operate. Our 2002 taxes reflect a one-time benefit of $21.3 million as the result of a ruling received from the Swiss tax authorities regarding a tax loss carryforward. Other differences include the impact from currency translation adjustments and changes in tax rates. Our effective tax rate was 31.6% in 2001.

Results of Operations by Operating Segment

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     Converium’s business is now organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance, which are based principally on global lines of business. In addition to the three segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions. To measure the financial performance of our operating segments, we define segment income as income before other income (loss), interest expense, amortization of goodwill, restructuring costs and income taxes.

     Converium’s financial results for 2003 were primarily driven by profitable growth in Standard Property & Casualty Reinsurance and Specialty Lines, the continued solid performance in non-life underwriting as well as the current conditions in the capital markets. The following discusses Converium’s segment results for the years ended December 31, 2003, 2002 and 2001. A reconciliation of segment results to income before taxes is as follows:

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Segment income (loss):
Standard Property & Casualty Reinsurance	$	183.7		$	55.8		$	(147.3	)
Specialty Lines		115.2			56.0			(277.2	)
Life & Health Reinsurance		(11.9	)		(6.5	)		(17.7	)
Corporate Center		(34.3	)		(30.3	)		(7.3	)
Total segment income (loss)		252.7			75.0			(449.5	)
Other income (loss)		2.7			(1.2	)		(5.8	)
Interest expense		(31.0	)		(16.4	)		(24.2	)
Amortization of goodwill and restructuring costs		—			—			(57.8	)
Income (loss) before taxes		224.4			57.4			(537.3	)
Income tax (expense) benefit		(39.3	)		49.4			169.9
Net income (loss)	$	185.1		$	106.8		$	(367.4	)

Non-Life

     The table below presents information regarding results of operations of our non-life business for the years ended December 31, 2003, 2002 and 2001. This information is further discussed on a segment basis below.

	Year Ended December 31,
	2003			2002			2001
				($ in millions)
Revenues:
Gross premiums written	$	3,817.4		$	3,192.6		$	2,624.7
Net premiums written	$	3,457.5		$	3,007.5		$	2,248.4
Net premiums earned	$	3,293.5		$	2,854.7		$	2,078.1
Net investment income and net realized capital gains (losses)		233.9			223.4			194.5
Total revenues		3,527.4			3,078.1			2,272.6
Losses and expenses:
Losses and loss adjustment expenses		(2,354.6	)		(2,231.9	)		(2,076.6	)
Underwriting acquisition costs		(723.2	)		(602.7	)		(486.3	)
Other operating and administration expenses		(150.7	)		(131.7	)		(134.2	)
Total losses and expenses		(3,228.5	)		(2,996.3	)		(2,697.1	)
Segment income (loss)	$	298.9		$	111.8		$	(424.5	)
Ratios:
Loss ratio		71.5	%		78.2	%		99.9	%(1)
Underwriting expense ratio		22.0	%		21.1	%		23.4	%
Administration expense ratio		4.4	%		4.4	%		6.0	%
Combined ratio		97.9	%		103.7	%		129.3	%(1)

(1) The impact on the non-life loss ratio and combined ratio of the September 11^th terrorist attacks was 13.3%.

Standard Property & Casualty Reinsurance

     The table below presents information regarding the results of operations of our Standard Property & Casualty Reinsurance segment for the years ended December 31, 2003, 2002 and 2001.

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	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Revenues:
Gross premiums written	$	1,795.4		$	1,542.3		$	1,495.6
Net premiums written	$	1,645.6		$	1,452.2		$	1,280.0
Net premiums earned	$	1,629.9		$	1,396.7		$	1,220.5
Net investment income and net realized capital gains (losses)		101.5			98.1			86.2
Total revenues		1,731.4			1,494.8			1,306.7
Losses and expenses:
Losses and loss adjustment expenses		(1,113.6	)		(1,065.0	)		(1,137.9	)
Underwriting acquisition costs		(363.1	)		(310.4	)		(239.6	)
Other operating and administration expenses		(71.0	)		(63.6	)		(76.5	)
Total losses and expenses		(1,547.7	)		(1,439.0	)		(1,454.0	)
Segment income (loss)	$	183.7		$	55.8		$	(147.3	)
Ratios:
Loss ratio		68.3	%		76.3	%		93.2	%
Underwriting expense ratio		22.3	%		22.2	%		19.6	%
Administration expense ratio		4.3	%		4.4	%		6.0	%
Combined ratio		94.9	%		102.9	%		118.8	%

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Standard Property & Casualty Reinsurance Segment Income

     Standard Property & Casualty Reinsurance reported a segment income of $183.7 million in 2003 compared to a segment income of $55.8 million in 2002. The increase in segment income was primarily attributable to:

• The non-life loss ratio improved by 8.0 percentage points for the year ended December 31, 2003, versus the same period in 2002. This improvement resulted from overall solid results in the property line of business, as 2003 was absent any major catastrophe activity.

• The investment results and return for 2003 were positively impacted by the recovery of the global capital markets.

Standard Property & Casualty Reinsurance Premiums

     For the year ended December 31, 2003, gross premiums written increased 16.4% to $1,795.4 million, net premiums written increased 13.3% to $1,645.6 million and net premiums earned increased 16.7% to $1,629.9 million.

     For the year ended December 31, 2003, premium growth in Standard Property & Casualty Reinsurance by line of business included:

• Property (net premiums written in 2003 increased by 25.7% or $161.0 million to $787.0 million); and

• Motor (net premiums written in 2003 increased by 7.7% or $35.0 million to $488.5 million).

The above increases reflect strong market conditions and were offset by a decrease in net premiums written in other miscellaneous standard lines.

Standard Property & Casualty Reinsurance Net Investment Income and Net Realized Capital Gains (Losses)

     Standard Property & Casualty Reinsurance reported net investment income and net realized capital gains of $101.5 million for the year ended December 31, 2003, which was higher by $3.4 million, or 3.5%, compared to net investment income and net realized capital losses of $98.1 million for the same period of 2002. The investment results and return for 2003 were positively impacted by the recovery of the global capital markets.

Standard Property & Casualty Reinsurance Losses and Loss Adjustment Expenses

     Standard Property & Casualty Reinsurance had losses and loss adjustment expenses incurred of $1,113.6 million in 2003, an increase of $48.6 million, or 4.6% over 2002. The non-life loss and loss adjustment expense ratio was 68.3% in 2003 as compared to 76.3% in 2002. This improvement resulted from overall solid results in the property line of business, as 2003 was absent any major catastrophe activity.

     In 2003, segment income was increased by $49.4 million from positive developments of prior years’ reserves. Net positive

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development of prior years’ loss reserves on property lines of $113.5 million (primarily from the 2002 year) was partially offset by net adverse development of the motor and general third party liability lines of $64.1 million (primarily from 2001 and prior years). The Standard Property & Casualty Reinsurance segment’s book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

     In 2002, Standard Property & Casualty Reinsurance experienced $51.1 million (net of reinstatement premiums of $3.1 million) in losses from the European floods and $62.2 million in net adverse loss development on prior years’ business, primarily from the motor, general third party liability and property lines of business.

Standard Property & Casualty Reinsurance Underwriting Acquisition Costs

     Underwriting acquisition costs increased $52.7 million or 17.0% in 2003. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio was 22.3% in 2003 as compared to 22.2% in 2002.

Standard Property & Casualty Reinsurance Operating and Administration Expenses

     Operating and administration expenses increased 11.6% in 2003. The increase primarily arose from expenditures to support the growth in operations. Operating and administration expenses were also impacted in 2003 and 2002 by the decrease of the U.S. dollar against the hardening European currencies. Despite the increase in operating and administration expenses, the non-life administration expense ratio was 4.3% in 2003, compared to 4.4% in 2002. This was due to continued strong premium growth relative to the growth in expenses.

Standard Property & Casualty Reinsurance Combined Ratios

     Standard Property & Casualty Reinsurance’s combined ratio was 94.9% in 2003 and 102.9% in 2002. The improvement in the combined ratio was largely the result of overall solid results in the property line of business, as 2003 was absent of any major catastrophe activity.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Standard Property & Casualty Reinsurance Segment Income (Loss)

     Standard Property & Casualty Reinsurance reported segment income of $55.8 million in 2002 as compared to a segment loss of $147.3 million in 2001. The increase in segment income was primarily attributable to an improvement in the non-life loss ratio by 16.9 percentage points in 2002 over 2001. Losses in 2001 were primarily attributable to the September 11th terrorist attacks, with net losses in the amount of $108.5 million.

Standard Property & Casualty Reinsurance Premiums

     For the year ended December 31, 2002, gross premiums written increased 3.1% to $1,542.3 million, net premiums written increased 13.5% to $1,452.2 million and net premiums earned increased 14.4% to $1,396.7 million.

     For the year ended December 31, 2002, premium growth in Standard Property & Casualty Reinsurance by line of business included:

• Property (net premiums written in 2002 increased by 13.7% or $75.6 million to $626.0 million); and

• General third party liability (net premiums written in 2002 increased by 24.3% or $66.1 million to $337.7 million).

Standard Property & Casualty Reinsurance Net Investment Income and Net Realized Capital Losses

     Standard Property & Casualty Reinsurance reported net investment income and net realized capital losses of $98.1 million for the year ended December 31, 2002, which was higher by $11.9 million, or 13.8%, compared to net investment income and net realized capital losses of $86.2 million for the same period of 2001. The increase is primarily from an increase in net investment income on higher invested assets due to our additional capitalization in late 2001 and the investment of cash flows from operating activities during 2002.

Standard Property & Casualty Reinsurance Losses and Loss Adjustment Expenses

     Standard Property & Casualty Reinsurance’s losses and loss adjustment expenses incurred decreased $72.9 million, or

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6.4% in 2002. The non-life loss and loss adjustment expense ratio was 76.3% in 2002 as compared to 93.2% in 2001. The decrease of 16.9 percentage points for the year ended December 31, 2002 was largely attributable to the losses reported in 2001 related to the September 11th terrorist attacks, with net losses of $108.5 million.

     In 2002, Standard Property & Casualty Reinsurance experienced $51.1 million (net of reinstatement premiums of $3.1 million) in losses from the European floods and $62.2 million in net adverse loss development on prior years’ business, primarily from the motor, general third party liability and property lines of business.

     In 2001, Standard Property & Casualty Reinsurance strengthened reserves for prior years by $46.6 million, primarily for the motor and property lines of business. The strengthening was principally related to accident years 2000 and prior.

Standard Property & Casualty Reinsurance Underwriting Acquisition Costs

     Underwriting acquisition costs increased $70.8 million or 29.5% in 2002. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio was 22.2% in 2002 as compared to 19.6% in 2001.

Standard Property & Casualty Reinsurance Operating and Administration Expenses

     Operating and administration expenses decreased 16.9% in 2002. The decrease was primarily due to relatively small growth in premium in 2002 compared to 2001, as well as more functions and services were allocated to the Corporate Center in 2002. The non-life administration expense ratio was 4.4% in 2002, compared to 6.0% in 2001, reflecting this decrease.

Standard Property & Casualty Reinsurance Combined Ratios

     Standard Property & Casualty Reinsurance’s combined ratio was 102.9% in 2002 compared to 118.8% in 2001. The higher combined ratio in 2001 primarily resulted from losses related to the September 11th terrorist attacks.

Specialty Lines

     The table below presents information regarding results of operations of our Specialty Lines segment for the years ended December 31, 2003, 2002 and 2001.

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Revenues:
Gross premiums written	$	2,022.0		$	1,650.3		$	1,129.1
Net premiums written	$	1,811.9		$	1,555.3		$	968.4
Net premiums earned	$	1,663.6		$	1,458.0		$	857.6
Net investment income and net realized capital gains (losses)		132.4			125.3			108.3
Total revenues		1,796.0			1,583.3			965.9
Losses and expenses:
Losses and loss adjustment expenses		(1,241.0	)		(1,166.9	)		(938.7	)
Underwriting acquisition costs		(360.1	)		(292.3	)		(246.7	)
Other operating and administration expenses		(79.7	)		(68.1	)		(57.7	)
Total losses and expenses		(1,680.8	)		(1,527.3	)		(1,243.1	)
Segment income (loss)	$	115.2		$	56.0		$	(277.2	)
Ratios:
Loss ratio		74.6	%		80.0	%		109.5	%
Underwriting expense ratio		21.6	%		20.0	%		28.8	%
Administration expense ratio		4.4	%		4.4	%		6.0	%
Combined ratio		100.6	%		104.4	%		144.3	%

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Specialty Lines Segment Income

     Specialty Lines reported segment income of $115.2 million in 2003 compared to a segment income of $56.0 million in 2002. In addition to the positive results for 2003, the cash flow generated by the continuing growth in longer tail lines increased total invested assets. Therefore, a substantial part of this segment’s expected profitability will emerge as investment income in future periods. The increase in segment income was primarily attributable to:

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• The non-life loss ratio improved by 5.4 percentage points for the year ended December 31, 2003, versus the same period in 2002.

• The investment results and return for 2003 were positively impacted by the recovery of the global capital markets.

     These improvements were somewhat offset by an increase of 1.6 percentage points in the underwriting expense ratio in 2003, from 20.0% in 2002 to 21.6% in 2003. The 2002 ratio was lowered as a result of a cumulative catch-up on one of our retrocessionaires and certain aviation business.

Specialty Lines Premiums

     For the year ended December 31, 2003, gross premiums written increased 22.5% to $2,022.0 million, net premiums written increased 16.5% to $1,811.9 million and net premiums earned increased 14.1% to $1,663.6 million.

     Specialty Lines’ growth was spread across most lines and primarily resulted from increased rates, increasing the share of clients’ business upon renewing existing business or writing new business.

     For the year ended December 31, 2003, premium growth in Specialty Lines included:

• Professional liability and other special liability (net premiums written in 2003 increased by 11.4% or $61.1 million to $598.0 million), which grew as a result of the improving directors and officers market in the United States and new business written in North America and sourced through the London broker market;

• Workers’ compensation (net premiums written in 2003 increased by 40.9% or $90.3 million to $310.9 million), which grew as a result of the renewal of a large program in 2003;

• Credit and surety (net premiums written in 2003 increased by 17.9% or $35.9 million to $236.0 million); and

• Agribusiness (net premiums written in 2003 increased by 309.1% or $68.0 million to $90.0 million), whose growth reflects the hardening market which resulted from the exit of several insurers and reinsurers in mid-to-late 2002.

     The above increases were offset by a decrease in net premiums written in the aviation and space line of business resulting from an increase in ceded premiums for external reinsurance protection, principally associated with Converium’s increased participation in the GAUM pool, and softening markets as a result of recent low loss activity.

Specialty Lines Net Investment Income and Net Realized Capital Gains (Losses)

     Specialty Lines reported net investment income and net realized capital gains of $132.4 million for the year ended December 31, 2003, an increase of $7.1 million, or 5.7%, compared to net investment income and net realized capital losses of $125.3 million for the same period of 2002. The investment results and return for 2003 were positively impacted by the recovery of the global capital markets.

Specialty Lines Losses and Loss Adjustment Expenses

     Specialty Lines’ losses and loss adjustment expenses incurred increased $74.1 million, or 6.4% in 2003. The non-life loss and loss adjustment expense ratio was 74.6% in 2003 as compared to 80.0% in 2002, a decrease of 5.4 percentage points. This decrease was mostly due to lower reserve development in 2003.

     In 2003, segment income was decreased by $18.1 million from net adverse developments of prior years’ loss reserves. Adverse development on workers’ compensation and professional liability and other special liability lines of $120.3 million (primarily from 2000 and prior years) was largely offset by net positive development of prior years’ loss reserves on aviation and space of $102.2 million (primarily from the 2002 year). As a multi-line reinsurer, there are always likely to be reserve adjustments at the line of business level. The Specialty Lines segment’s book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

     In 2002, Specialty Lines experienced $86.3 million in net adverse loss development on prior years’ business, primarily from the commercial umbrella and medical errors and omissions liability lines of business.

Specialty Lines Underwriting Acquisition Costs

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     Underwriting acquisition costs increased $67.8 million or 23.2% in 2003. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio was 21.6% in 2003 as compared to 20.0% in 2002.

Specialty Lines Operating and Administration Expenses

     Operating and administration expenses increased $11.6 million or 17.0% in 2003. The increase primarily arose from expenditures to support the growth in operations. Operating and administration expenses were also impacted in 2003 and 2002 by the decrease of the U.S. dollar against the hardening European currencies. Despite the increase in operating and administration expenses, the non-life administration expense ratio was 4.4% in 2003, compared to 4.4% in 2002. This was due to continued strong premium growth relative to the growth in expenses.

Specialty Lines Combined Ratios

     Specialty Lines’ combined ratio was 100.6% in 2003 and 104.4% in 2002. The non-life loss ratio improved by 5.4 percentage points for the year ended December 31, 2003, versus the same period in 2002. This improvement was somewhat offset by an increase of 1.6 percentage points in the underwriting expense ratio in 2003.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Specialty Lines Segment Income (Loss)

     Specialty Lines reported segment income of $56.0 million in 2002 as compared to a segment loss of $277.2 million in 2001. The increase in segment income was primarily attributable to an improvement in the non-life loss ratio of 29.5 percentage points for the year ended December 31, 2002. Losses in 2001 were primarily attributable to the September 11th terrorist attacks, with net losses in the amount of $168.7 million, as well as losses related to the Enron Chapter 11 reorganization of $67.0 million.

Specialty Lines Premiums

     For the year ended December 31, 2002, gross premiums written increased 46.2% to $1,650.3 million, net premiums written increased 60.6% to $1,555.3 million and net premiums earned increased 70.0% to $1,458.0 million.

     Specialty Lines’ growth was spread across most lines and primarily resulted from increased rates, increasing the share of clients’ business upon renewing existing business or writing new business.

     For the year ended December 31, 2002, premium growth in Specialty Lines included:

• Professional liability and other special liability (net premiums written in 2002 increased by 122.6% or $295.7 million to $536.9 million),

• Aviation & space (net premiums written in 2002 increased by 99.8% or $182.5 million to $365.3 million),

• Workers’ compensation (net premiums written in 2002 increased by 23.4% or $41.8 million to $220.6 million); and

• Engineering (net premiums written in 2002 increased by 42.5% or $34.6 million to $116.1 million).

Specialty Lines Net Investment Income and Net Realized Capital Losses

     Specialty Lines reported net investment income and net realized capital losses of $125.3 million for the year ended December 31, 2002, an increase of $17.0 million, or 15.7%, compared to net investment income and net realized capital losses of $108.3 million for the same period of 2001. The increase is primarily from an increase in net investment income on higher invested assets due to our additional capitalization in late 2001 and the investment of cash flows from operating activities during 2002.

Specialty Lines Losses and Loss Adjustment Expenses

     Specialty Lines’ losses and loss adjustment expenses incurred increased $228.2 million, or 24.3% in 2002. The non-life loss and loss adjustment expense ratio was 80.0% in 2002 as compared to 109.5% in 2001. The decrease of 29.5 percentage points for the year ended December 31, 2002 was largely attributable to the losses reported in 2001 related to the September

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11th terrorist attacks, with net losses in the amount of $168.7 million, as well as losses related to the Enron Chapter 11 reorganization of $67.0 million.

     In 2002, Specialty Lines experienced $86.3 million in net adverse loss development on prior years’ business, primarily from the commercial umbrella and medical errors and omissions liability lines of business. In 2001, Specialty Lines strengthened reserves for prior years by $77.0 million, primarily related to the excess and surplus, commercial umbrella and marine and energy lines of business, offset by positive development in aviation and space. The strengthening was principally related to accident years 2000 and prior.

Specialty Lines Underwriting Acquisition Costs

     Underwriting acquisition costs increased $45.6 million or 18.5% in 2002. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio was 20.0% in 2002 as compared to 28.8% in 2001.

Specialty Lines Operating and Administration Expenses

     Operating and administration expenses increased 18.0% in 2002. This increase was driven by the large growth in premiums. The non-life administration expense ratio was 4.4% in 2002, compared to 6.0% in 2001, reflecting this premium growth.

Specialty Lines Combined Ratios

     Specialty Lines’ combined ratio was 104.4% in 2002 compared to 144.3% in 2001. The higher combined ratio in 2001 primarily resulted from losses related to the September 11th terrorist attacks and the Enron Chapter 11 reorganization.

Life & Health Reinsurance

     The table below presents information regarding results of operations of our Life & Health Reinsurance segment for the years ended December 31, 2003, 2002 and 2001.

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Revenues:
Gross premiums written	$	406.5		$	343.2		$	256.5
Net premiums written	$	369.5		$	314.7		$	234.2
Net premiums earned	$	383.0		$	310.8		$	217.1
Net investment income and net realized capital gains (losses)		17.5			18.1			15.8
Total revenues		400.5			328.9			232.9
Losses and expenses:
Losses, loss adjustment expenses and life benefits		(319.6	)		(260.1	)		(223.9	)
Underwriting acquisition costs		(80.0	)		(64.0	)		(21.8	)
Other operating and administration expenses		(12.8	)		(11.3	)		(4.9	)
Total benefits, losses and expenses		(412.4	)		(335.4	)		(250.6	)
Segment loss	$	(11.9	)	$	(6.5	)	$	(17.7	)
Ratios:
Underwriting expense ratio		20.9	%		20.6	%		10.0	%
Administration expense ratio		3.5	%		3.6	%		2.1	%

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Life & Health Reinsurance Segment Loss

     Life & Health Reinsurance reported segment loss of $11.9 million in 2003 compared to $6.5 million in 2002. The decrease in segment results in 2003 was primarily attributable to the development on a closed block of Guaranteed Minimum Death Benefit (GMDB) business.

     The Life & Health Reinsurance segment strengthened reserves on a closed block of variable annuity business by $20.5 million (to net $56.0 million) in 2003 and $15.6 million in 2002. As a result of the strong performance of the U.S. stock markets, the GMDB’s net amount at risk further decreased to $809.7 million and $1,243.0 million at December 31, 2003 and 2002, respectively. Although Converium feels that its currently carried reserves for its GMDB exposure are adequate, it has exercised the call option it negotiated in the third quarter of 2003, to access additional reinsurance protection of up to $75.0

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million. This decision was made in light of the current volatility and the valuation of the equity markets in the United States. The annual expense associated with this protection is expected to be less than $0.5 million per year. Based on information available today, this additional reinsurance protection adequately addresses potential adverse deviations to the key assumptions i.e., mortality risks, lapse rate risks, surrenders, and investment risks, such as equity market performance and volatility, incorporated in Converium’s models.

Life & Health Reinsurance Premiums

     For the year ended December 31, 2003, gross premiums written increased 18.4% to $406.5 million, net premiums written increased 17.4% to $369.5 million and net premiums earned increased 23.2% to $383.0 million.

     For the year ended December 31, 2003, premium growth in the Life & Health Reinsurance segment included:

• Accident and health (net premiums written in 2003 increased by 29.6% or $47.4 million to $207.4 million). This growth primarily resulted from the further development of this line of business, which Converium began to underwrite in North America in 2001, as well as growth of business written in Continental Europe.

Life & Health Reinsurance Net Investment Income and Net Realized Capital Gains (Losses)

     Life & Health Reinsurance reported net investment income and net realized capital gains of $17.5 million for the year ended December 31, 2003, which was lower by $0.6 million, or 3.3%, compared to net investment income and net realized capital losses of $18.1 million for the same period of 2002.

Life & Health Reinsurance Losses, Loss Adjustment Expenses and Life Benefits

     Life & Health Reinsurance had losses, loss adjustment expenses and life benefits incurred of $319.6 million, an increase of $59.5 million, or 22.9% in 2003. This increase mainly reflects the growth in the underlying business. The Life & Health Reinsurance segment strengthened reserves on a closed block of variable annuity business by $20.5 million (to net $56.0 million) and $15.6 million in 2003 and 2002, respectively.

Life & Health Reinsurance Underwriting Acquisition Costs

     Underwriting acquisition costs increased $16.0 million or 25.0% in 2003. This increase is mainly related to the increase in net premiums earned. The underwriting expense ratio was 20.9% in 2003 as compared to 20.6% in 2002.

Life & Health Reinsurance Operating and Administration Expenses

     Operating and administration expenses increased $1.5 million or 13.3% in 2003. The increase primarily arose from expenditures to support the growth in operations. Operating and administration expenses were also impacted in 2003 and 2002 by the decrease of the U.S. dollar against the hardening European currencies. Despite the increase in operating and administration expenses, the non-life administration expense ratio was 3.5% in 2003, compared to 3.6% in 2002. This was due to continued strong premium growth relative to the growth in expenses.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Life & Health Reinsurance Segment Loss

     Life & Health Reinsurance reported segment loss of $6.5 million in 2002 as compared to a loss of $17.7 million in 2001. The results included net losses related to the September 11th terrorist attacks of $12.0 million in 2001 and net development on a closed block of variable annuity business of $15.6 million in 2002 and $13.4 million in 2001.

Life & Health Reinsurance Premiums

     For the year ended December 31, 2002, gross premiums written increased 33.8% to $343.2 million, net premiums written increased 34.4% to $314.7 million and net premiums earned increased 43.2% to $310.8 million.

     For the year ended December 31, 2002, premium growth in the Life & Health Reinsurance segment included:

• Accident and health (net premiums written in 2002 increased by 63.6% or $62.2 million to $160.0 million). This growth primarily resulted from the further development of this line of business, which Converium began to underwrite in North

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America in 2001, as well as growth of business written in Continental Europe.

Life & Health Reinsurance Net Investment Income and Net Realized Capital Losses

     Life & Health Reinsurance reported net investment income and net realized capital losses of $18.1 million for the year ended December 31, 2002 which was higher by $2.3 million, or 14.6%, compared to net investment income and net realized capital losses of $15.8 million for the same period of 2001. The increase is primarily from an increase in net investment income on higher invested assets due to our additional capitalization in late 2001 and the investment of cash flows from operating activities during 2002.

Life & Health Reinsurance Losses, Loss Adjustment Expenses and Life Benefits

     Life & Health Reinsurance’s losses, loss adjustment expenses and life benefits incurred increased $36.2 million, or 16.2% in 2002. This increase mainly reflects the growth in the underlying business. The results included net losses related to the September 11th terrorist attacks of $12.0 million in 2001 and net development on a closed block of variable annuity business of $15.6 million in 2002 and $13.4 million in 2001.

Life & Health Reinsurance Underwriting Acquisition Costs

     Underwriting acquisition costs increased $42.2 million or 193.6% in 2002. The underwriting expense ratio was 20.6% in 2002 as compared to 10.0% in 2001. In 2001, $10.6 million in commission benefits were recorded from the commutation of a large contract and a refunding of commissions from our strategic retrocessions, reducing the underwriting expense ratio by 4.9%.

Life & Health Reinsurance Operating and Administration Expenses

     Operating and administration expenses increased 130.6% in 2002. The increase was primarily due to the hiring of staff to support the growth in business. The administration expense ratio was 3.6% in 2002, compared to 2.1% in 2001.

Corporate Center

     The table below presents information regarding results of operations of our Corporate Center for the years ended December 31, 2003, 2002 and 2001. The Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions.

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Other operating and administration expenses	$	(34.3	)	$	(30.3	)	$	(7.3	)
Segment loss	$	(34.3	)	$	(30.3	)	$	(7.3	)

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Corporate Center Operating and Administration Expenses

     The Corporate Center reported operating and administration expenses of $34.3 million in 2003, compared to $30.3 million in 2002. The increases primarily arose from expenditures to support the growth in operations, and the weakening of the U.S. dollar.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Corporate Center Operating and Administration Expenses

     The Corporate Center reported operating and administration expenses of $30.3 million in 2002, compared to $7.3 million in 2001. Corporate Center charges in 2001 were low as global functions were just being established to prepare for the IPO in late 2001.

B. LIQUIDITY AND CAPITAL RESOURCES

     We operate a treasury function responsible for managing our banking relationships, capital raising activities, including equity and debt issues, our overall cash, cash pooling and liquidity positions and the payment of internal and external

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dividends. Individual subsidiaries are responsible for managing local cash and liquidity positions, including the repayment of debt.

Liquidity Requirements

     Our principal cash requirements are for the payment of dividends to shareholders, servicing debt, investment in businesses, capital expenditures, servicing retrocessional arrangements and for paying reinsurance and insurance claims, which could periodically include significant cash requirements related to catastrophic events.

     Interest on debt and short-term borrowings was $31.0 million in 2003, $16.4 million in 2002 and $24.2 million in 2001. We had no scheduled debt repayments in 2003, 2002 or 2001. The carrying value of our outstanding debt was at $390.6 million at December 31, 2003, $390.4 million at December 31, 2002 and $197.0 million at December 31, 2001.

Liquidity Sources

     Our principal liquidity sources consist of premiums, fees, investment income, proceeds from the sale and maturity of investment securities and borrowings. Our business units pay reinsurance and insurance claims and benefits and operating expenses predominantly from their own cash resources. Most of our debt is funded by our businesses from their own cash resources. We have generated combined net cash inflows from operating activities over the last three years. As a reinsurer, our future cash flows are inherently difficult to predict. We do not expect the Funds Withheld Asset to have a material impact on our liquidity, as we will not be required to access our own liquidity sources for claims under the Quota Share Retrocession Agreement. Under the Quota Share Retrocession Agreement, ZIC and ZIB have the right to prepay to us, in whole or in part, the balance of the Funds Withheld Asset. For more detail on cash flows see “— Capital Requirements.”

Dividends from Subsidiaries

     As a holding company, Converium relies in large part on cash dividends and other permitted payments from its subsidiaries to make principal and interest payments on debt, to pay other outstanding obligations and to pay dividends to shareholders. Converium is subject to legal restrictions on the amount of dividends it may pay to its shareholders. Similarly, the company laws of countries in which our entities operate may restrict the amount of dividends payable by such entities to their parent companies. In addition, the ability of our entities to pay dividends may be restricted or influenced by minimum capital and solvency requirements that are imposed by regulators in the countries in which the entities operate. We do not consider current legal and regulatory dividend constraints to be a material limitation on the ability of Converium AG to pay dividends to Converium Holding AG.

     In Switzerland, insurance supervisory regulations require entities to fund their statutory reserves at a minimum level of 20% of net profits until the statutory reserve fund reaches an amount equal to 50% of the statutory share capital, including freely disposable reserves, if any. For regulations applicable to Converium Holding AG, see “Item 8. — Financial Information — Dividends and Dividend Policy.”

     In the United States, restrictions on payment of dividends are imposed by the Insurance Commissioner of the state of domicile. For Converium Reinsurance (North America) Inc., dividends are payable only from earned surplus and are limited annually to the greater of 10% of the previous year’s policyholders surplus or 100% of the previous year’s statutory net income. Dividends paid in excess of these limitations require prior approval of the Insurance Commissioner of the state of domicile.

     In Germany, the minimum amount of statutory capital reserves required is 10% of the nominal value of the common stock. If the 10% criterion is met, dividends of up to 100% of current year’s surplus can be paid. If the 10% criterion is not met, dividends are limited to a maximum of 95% of current year’s surplus less the prior year loss carryover. Under German law, an entity’s executive board in consent with the supervisory board have the authority to reclassify up to 100% of the current year surplus to retained earnings, thereby not allowing dividends to be paid.

     Converium AG may pay a maximum dividend, net of withholding tax, to Converium Holding AG without regulatory approval of approximately $141.7 million as of December 31, 2003. The maximum dividend that Converium Holding AG is able to pay in 2004, before withholding tax, is approximately $142.9 million as of December 31, 2003.

     We do not consider current legal and regulatory dividend constraints to be a material limitation on the ability of Converium AG to pay dividends to Converium Holding AG.

Debt Outstanding

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     As of December 31, 2003, we had total debt outstanding with a principal amount of $400.0 million and a carrying amount of $390.6 million. We had no scheduled debt repayments in 2003, 2002 or 2001.

     In December 2002, Converium Finance S.A. issued $200.0 million principal amount of non-convertible, unsecured, guaranteed subordinated notes, which are irrevocably and unconditionally guaranteed on a subordinated basis by each of Converium Holding AG and Converium AG. These notes mature in full on December 23, 2032 and bear interest at the rate of 8.25%. In 2001, in connection with the Formation Transactions, Converium assumed $200.0 million principal amount of non-convertible, unsecured, unsubordinated senior notes originally during October 1993. These notes mature in full on October 15, 2023 and bear interest at the rate of 7.125%.

     In July 2003, Converium obtained a $900 million unsecured syndicated letter of credit facility. The facility is guaranteed by Converium AG and will be used primarily to collateralize third-party claims related to our underwriting business. As of December 31, 2003, we had outstanding letters of credit of $633.1 million under the facility. In addition to the syndicated letter of credit facility, other irrevocable letters of credit of $390.3 million were outstanding at December 31, 2003 to secure certain assumed reinsurance contracts. Investments of $431.1 million are pledged as collateral related to certain of these letters of credit.

Capital Requirements

     As of December 31, 2003, we had total shareholders’ equity of $2,083.3 million ($52.38 per share) compared to $1,738.0 million ($43.55 per share) as of December 31, 2002, an increase of $345.3 million ($8.83 per share). This increase is mainly comprised of net income of $185.1 million and an increase in net unrealized gains on investments, net of taxes, of $198.6 million, offset by dividends to shareholders of $29.9 million.

Cash Flows

	Year Ended December 31,
	2003			2002			2001
	($ in millions)
Cash flow data:
Cash provided by operating activities	$	1,265.3		$	870.4		$	311.5
Net cash used in investing activities		(1,327.8	)		(1,093.3	)		(627.3	)
Net cash (used in) provided by financing activities		(47.2	)		179.0			627.8
Effect of exchange rate changes on cash and cash equivalents		29.0			(15.1	)		(13.4	)
Change in cash and cash equivalents		(80.7	)		(59.0	)		298.6
Cash and cash equivalents, beginning of period		361.5			420.5			121.9
Cash and cash equivalents, end of period	$	280.8		$	361.5		$	420.5

     We held cash and cash equivalents of $280.8 million at December 31, 2003 compared to $361.5 million at December 31, 2002, representing a decrease of $80.7 million. Our cash balances at the end of both periods include a relatively high level of cash held by our investment managers for duration matching purposes.

     Our cash flows from operating activities result principally from premiums, collections on losses recoverable and investment income, net of paid losses, acquisition costs and underwriting expenses. Our cash provided by operating activities was $1,265.3 million for the year ended December 31, 2003 compared to $870.4 million and $311.5 million for the years ended December 31, 2002 and 2001, respectively. This represented increases of $394.9 million, or 45.4% in 2003, and $558.9 million or 179.4% in 2002. The increase in 2003 was driven by improved operating performance, including strong premium growth. The 2002 cash flow reflects a $136.7 million reimbursement of reinsurance recoverables in dispute received in the second quarter of 2002. Cash provided by financing activities in 2002 was primarily due to the issuance of our guaranteed subordinated notes. Cash provided by financing activities in 2001 was primarily due to a capital contribution we received from Zurich Financial Services.

     As a reinsurer, our future cash flows are inherently difficult to predict. This uncertainty is particularly pronounced with respect to some coverage we provide, such as long-tail lines, where claims information emerges over a relatively long period of time, and property catastrophe coverage, which generally produces losses of low frequency but high severity. Accordingly, it is not possible to predict our future cash flows from operating activities with precision. As a consequence, our cash flows from operating activities may fluctuate, perhaps significantly, from quarter to quarter and from year to year. For example, our cash flows were adversely affected by the events of September 11th. We expect that a significant portion of the cash outflows relating to these events will occur over a period of several years, mainly because of the time involved to determine with accuracy the losses of the primary insurance companies and reporting these losses to reinsurers. Accordingly, our cash flow and investment income will be impacted gradually over the next few years.

     We believe that our capital, liquidity, and borrowing ability are sufficient to support our business and meet our present liquidity requirements.

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New Accounting Standards

     We have or will be required to adopt the following new standards in the future:

SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”

     In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This Statement amends SFAS No. 133 for decisions made as part of the Derivatives Implementation Group process and in connection with implementation issues raised in relation to the application of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. This standard did not have a material impact on the financial condition or results of operations of Converium.

SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. This standard did not have a material impact on Converium.

Statement of Position (“SOP”) 03-1,“Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts”

     In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts.” The SOP provides guidance on accounting and reporting by insurance enterprises for certain non-traditional long-duration contracts and for separate accounts. The SOP is effective for financial statements for fiscal years beginning after December 15, 2003, with earlier adoption encouraged. The SOP may not be applied retroactively to prior years’ financial statements, and initial application should be as of the beginning of an entity’s fiscal year. This statement is not expected to have a material impact on the financial condition or results of operations of Converium.

     C. RESEARCH AND DEVELOPMENT, PATENTS, LICENSES

     Not Applicable

     D. TREND INFORMATION

     See “— A. Operating Results”

     E. OFF-BALANCE SHEET ARRANGEMENTS

     Not Applicable

     F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Contractual Obligations

	Payment due by period
($ thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations - Principal	$	400,000		—		—		—	$	400,000
Long-Term Debt Obligations - Interest		763,500		30,750		61,500		61,500		609,750
Operating Lease Obligations		93,200		12,600		24,800		24,600		31,200
Total	$	1,256,700	$	43,350	$	86,300	$	86,100	$	1,040,950

     The above table excludes estimated future cash flows for losses and loss adjustment expenses, as there is typically no minimum contractual obligation associated with insurance and reinsurance contracts, and the amount and timing of the cash outflows are uncertain. For further detail on our long-term debt principal and interest payments, see Note 10 of our

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consolidated financial statements. For further detail on our operating lease payments, see Note 19 of our consolidated financial statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     A. DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

     Converium’s global strategy is set by its Board of Directors, the body with ultimate responsibility for Converium’s policies and management, including investment, treasury, solvency and liquidity policies. The Board of Directors consists of no less than four and no more than nine members. Currently it comprises seven. With wide-ranging experience in the reinsurance sector, this group represents an appropriate mix of skills for the effective governance of a major international reinsurance organization. The Board of Directors oversees Converium’s affairs and offers regular directives to the Global Executive Committee. All Board members are non-executive, independent of management, and have never held an executive position within Converium or any of its subsidiaries. No interlocking directorships exist between the Board members of Converium and Board members of any other company.

     The composition of the Board of Directors includes a cross section by geography and professional experience, as well as a reasonable age distribution. The members of the Board of Directors are elected for a term of office of not more than three years, after which they become eligible for re-election. In case of the election of a substitute, the new Board member finishes the term of office of the predecessor. The Board of Directors is headed by the Chairman or, following him, the Vice-Chairman. It meets as often as circumstances require, but at least four times per year. In 2003 the Board of Directors met five times. Meetings generally last one day, with Committee meetings preceding Board meetings. Board agendas are set by the Chairman. At each of its meetings the Board of Directors must be informed, through formal reports of the Chief Executive Officer and the members of the Global Executive Committee, about the course of the business and the activity of the business segments and the GEC. In case of important business incidents, the Board of Directors must be informed without delay. Furthermore, each Board member receives appropriate information with respect to any matter to be considered by the Board of Directors. For financial reporting purposes, this includes an appropriate quarterly reporting package comprising financial and investment information including consolidated financial accounts of the company and its business segments.

     The Chief Executive Officer, the Chief Financial Officer and the General Legal Counsel attend Board meetings on a regular basis. Members of the GEC and other executives attend meetings at the Chairman’s invitation. In addition, Board members meet at regularly scheduled sessions without management. Furthermore, teleconferences and meetings between Board members and members of the GEC are held to resolve formal matters or to exchange information. The Board of Directors performs an annual self-evaluation and sets its objectives based upon this evaluation. Annually it reviews the performance of the CEO and approves his objectives. The Head of Internal Audit reports directly to the Audit Committee, and the Board meets regularly with Converium’s external auditors and as may be necessary with outside consultants to review the business, better understand all laws and policies, and support the management in meeting requirements and expectations.

     The members of our Board of Directors, their dates of birth, nationality and terms of office are as follows:

Name	Date of Birth	Nationality	Term Expires in
Peter C. Colombo (Chairman)(1)(2)(4)	June 15, 1934	Swiss		2004
Georg Mehl (Vice-Chairman)(1)(2)(4)	August 11, 1939	German		2006
Terry G. Clarke (1)(2)(3)(4)	October 31, 1941	British		2004
Jürgen Förterer (3)	January 29, 1942	German		2004
Derrell J. Hendrix (3)	August 9, 1953	American		2004
George G. C. Parker (3)(4)	March 29, 1939	American		2006
Anton K. Schnyder (1)(2)	November 29, 1952	Swiss		2006

(1)	Member of the Nominations Committee
(2)	Member of the Remuneration Committee
(3)	Member of the Finance Committee
(4)	Member of the Audit Committee

     Peter C. Colombo started his professional career with Gerling Group in Cologne in 1959 and was Principal Officer of Gerling Global Reinsurance Company in London from 1963 to 1965. From 1965 through 1998 he worked for Union Reinsurance Company in Zurich with various responsibilities. Mr. Colombo served as President and CEO of Union Reinsurance Company from 1989, with appointments as Managing Director in 1996 and as Deputy Chairman of the Board of

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Directors in 1997. He also serves as Deputy Chairman of the Board of Directors of Generali (Schweiz) Holding AG, Zurich, Switzerland, and as a member of the advisory board of the Barmenia Group in Wuppertal, Germany. Mr. Colombo holds a Bachelor of Social Sciences degree (Economics and Politics) from the University of Birmingham, England.

     Georg Mehl served as a consultant for the Wüstenrot & Württembergische Group, Stuttgart, Germany, since 2001 and in addition as a member of the Executive Management Board of Hanse-Marine-Versicherung-AG, Hamburg, Germany, until the end of 2003. Previously, he served in a series of positions with the Württembergische Group, most recently as CEO of Wüstenrot & Württembergische AG. Before, Georg Mehl had worked for almost 30 years for the Allianz Group, Hamburg and Munich, Germany, and currently is a consultant of Caisse Nationale des Prévoyances (CNP) Assurances, Paris, France. He is Chairman of the Board of Sektkellerei Schloss Wachenheim AG, Trier, Germany. Mr. Mehl also serves as a member of the supervisory or advisory boards of several German financial services and commercial companies. He graduated from the German Insurance Academy in Cologne, Germany, in 1961.

     Terry G. Clarke was a consulting actuary with Tillinghast Towers Perrin and a Principal of Towers Perrin. He joined their London office in 1986 and was Managing Principal of Tillinghast’s North America practice. He retired from Tillinghast at the end of 2001. From 1978 until 1986 Mr. Clarke was a member of the Norwich Winterthur Group senior management team. Prior to 1978, he held various positions in the Norwich Union Group. Mr. Clarke qualified as a Fellow of the Institute of Actuaries in 1967, and is co-author of several papers on non-life insurance subjects as well as a tutor and examiner. He is a member of a number of professional committees both in the United Kingdom and in Continental Europe.

     Jürgen Förterer has served as Chairman of the Executive Management Board of R+V Versicherung AG, the holding company of R+V Versicherungsgruppe, since 1997. Previously, Mr. Förterer served as Deputy Chairman of the Executive Management Board of R+V Versicherungsgruppe in Wiesbaden, Germany, beginning in 1996. He was appointed as a member of the Executive Management Board of Allianz Lebensversicherungs-AG, Stuttgart, in 1993. He started his professional career in 1977 with Nord/LB in Hannover and joined Allianz AG in Munich in 1980. Additionally, Mr. Förterer serves as a member of the supervisory boards of Hermes Kreditversicherung AG, Raiffeisen Druckerei GmbH, R+V Pensionsfonds AG, and various other German companies. He graduated from the Ruhr-University in Bochum, Germany, in 1972 and received a doctorate degree from the Technical University of Hannover, Germany, in 1978.

     Derrell J. Hendrix is the Manager and Chief Executive Officer of The RISConsulting Group LLC, a Boston-based risk management consulting company which he founded in 1996 together with Hannover Rückversicherungs AG (through its United States subsidiary, Insurance Corporation of Hannover). Mr. Hendrix served from 1995 to 1996 as Managing Director and Head of Derivatives at the Bank of Boston. He began his career at Citibank in 1977 and from 1980 through 1995 he held various department head positions in Citicorp’s banking and investment banking operations in Toronto, Hong Kong and London. Mr. Hendrix holds a Master of Arts from the Fletcher School of Law and Diplomacy, Medford, Massachusetts, and a Bachelor of Arts from Amherst College, Amherst, Massachusetts.

     George G. C. Parker is the Dean Witter Distinguished Professor of Finance and Management, Graduate School of Business, Stanford University, Stanford, California. From 1993 to 2001, Professor Parker was Senior Associate Dean for Academic Affairs and Director of the MBA Program at Stanford. Professor Parker served as Director for Executive Education, Stanford Business School, between 1979 and 1988, and from 1973 to 1979 he was Director of the Stanford Sloan Program for Executives. He is currently a Board member of California Casualty Group of Insurance Companies, San Mateo, California; Continental Airlines Inc., Houston, Texas, and various other US-based companies. He graduated from Haverford College, Pennsylvania, with a degree in economics in 1960, and received an MBA in finance in 1962 and a doctorate in finance in 1967, both from Stanford.

     Anton K. Schnyder served as a full professor for private law at the University of Basel, Switzerland, from 1993 to 2003. As of summer term 2003 he has been appointed to Zurich University as a full professor for private and international as well as comparative law. In 1994 he was appointed Vice President of the Federal Appeal Commission supervising private insurance. From 1987 to 1993, Professor Schnyder served as a corporate legal adviser to the Zurich Insurance Group and from 1992 as a member of the executive staff. He graduated from Zurich University, Switzerland, in 1978 and received his doctorate degree in 1981, being awarded the Professor-Walther-Hug-Prize for his doctoral thesis. Additionally, he holds a Master of Laws from the University of California, Berkeley. For many years he has been a special adviser to the governments of Switzerland and Liechtenstein for insurance legislation. Currently Professor Schnyder is Chairman of the working party for a revision of the Swiss Insurance Contract Law.

     The business address for each member of our Board of Directors is Converium Holding AG, Baarerstrasse 8, CH-6300 Zug, Switzerland.

Global Executive Committee (GEC)

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     The Board of Directors has delegated the management of Converium to the CEO, subject to the powers and duties delegated to the Committees of the Board of Directors, the Chairman and Vice-Chairman, the GEC, the business segments and the Corporate Center as described in the Organizational By-Laws. The GEC comprises an executive management team of eight members. It is responsible for implementing Converium’s global strategy, ensuring effective collaboration between each subsidiary, the business segments, and reviewing progress against financial and operating plans as approved by the Board of Directors.

     On September 23, 2003 the Board of Directors appointed four new members to the GEC in connection with the changes to Converium’s organizational and financial reporting structures and its Organizational By-Laws. They are Hans Peter Boller, Christian Felderer, Christoph Ludemann and Gary Prestia. The Board of Directors also approved changes to the assigned responsibilities of the GEC. At the same time Richard Smith, CEO of Converium Reinsurance (North America) Inc. and a member of the GEC, stepped down, as planned, from his responsibilities. Converium has not entered into management contracts with other companies which transfer key management functions.

     The members of our Global Executive Committee, their dates of birth, nationality and positions held are as follows:

Name	Date of Birth	Nationality	Position Held
Dirk Lohmann	November 8, 1958	German	Chief Executive Officer
Frank Schaar	April 16, 1960	German	Executive Vice President for Standard Property & Casualty Reinsurance
Benjamin Gentsch	April 21, 1960	Swiss	Executive Vice President for Specialty Lines
Christoph Ludemann	January 12, 1956	German	Executive Vice President for Life & Health Reinsurance
Gary Prestia	May 7, 1962	American	Chief Technical Officer
Hans Peter Boller	October 25, 1962	German	Chief Risk Officer
Martin Kauer	January 20, 1959	Swiss	Chief Financial Officer
Christian Felderer	January 5, 1954	Swiss	General Legal Counsel

     Dirk Lohmann is the Chief Executive Officer of Converium. He joined Zurich Financial Services in September 1997 as Chief Executive Officer of its reinsurance operations in Zurich and of its German operating subsidiary, Zürich Rückversicherung (Köln) AG. In July 1998 Mr. Lohmann was appointed as a member of the Group Executive Board of Zurich Financial Services, serving as the Chief Executive Officer of its global reinsurance operations. Before joining Zurich Financial Services, he held various management positions at Hannover Re between 1980 and 1997, most recently as a member of the Executive Board of Management. He is a non-executive director of Global Aerospace Underwriting Managers Ltd. (GAUM) and a director and chairman of the Medical Defence Union Services Ltd. (MDU), both located in London, United Kingdom. Mr. Lohmann received a Bachelor of Arts degree in economics and political science from the University of Michigan, Ann Arbor.

     Frank Schaar is the Executive Vice President for Standard Property & Casualty Reinsurance. He joined Zürich Rückversicherung (Köln) AG as Chief Executive Officer in 2000. Previously he was employed by Hannover Re for 17 years through 1999, most recently serving as a Managing Director and a member of the extended board in charge of Asia, Australia and Africa. From 1982 until 1997, Mr. Schaar served in various capacities, most recently as Senior Vice President with responsibility for Germany. Mr. Schaar holds a degree in insurance economics and worked as a lecturer in reinsurance at the Institute for Professional Development of the Insurance Association in Hannover for ten years.

     Benjamin Gentsch is the Executive Vice President for Specialty Lines. In 1998, he joined Zurich Re as the Chief Underwriting Officer Overseas where he was given the task of strengthening the company’s position in the Asian, Australian, African and Latin American markets. In addition, he took charge of the Global Aviation reinsurance department and built up the Professional Risk and Global Marine reinsurance departments. In September 2002, Mr. Gentsch was appointed Chief Executive Officer of Converium AG. Previously, between 1986 and 1998, he held various positions at Union Reinsurance Company, Zurich, where from 1990 he was responsible for treaty reinsurance business in Asia and Australia. He is an alternate director of Global Aerospace Underwriting Managers Ltd. (GAUM). Mr. Gentsch has a degree in business administration from the University of St. Gallen, with a focus on risk management and insurance.

     Christoph Ludemann is the Executive Vice President for Life & Health Reinsurance. He joined Converium in September 2002, bringing to the company 20 years experience in the reinsurance market. From 1990 until 2002 Mr. Ludemann was responsible for General Cologne Re’s European and Latin American life and health markets, and from 1995 until 2002 he was also a member of the Executive Board of Management of General Cologne Re of Vienna. Previously, between 1983 and 1990, he worked as General Cologne Re’s Marketing Manager for the Netherlands, Scandinavia and Austria. Mr. Ludemann has a degree in mathematics and insurance economics from the University of Cologne.

     Gary Prestia is the Chief Technical Officer and an Executive Vice President of Converium. He has overall responsibility for Underwriting Controlling and Cycle Management, Global Risk Pooling and Retention Management, Global Claims and Strategic Planning. Mr. Prestia joined Zurich Reinsurance (North America) Inc. in 1998. Previously, he held management

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positions in several insurance and reinsurance companies, most recently as Senior Vice President for Transatlantic Re. Mr. Prestia is a Chartered Property Casualty Underwriter and Associate in Reinsurance and holds a Bachelor of Business Administration degree in property/casualty insurance from the College of Insurance, New York.

     Hans Peter Boller is the Chief Risk Officer and an Executive Vice President of Converium. He is responsible for Risk Management, Pricing, Reserving, Asset and Liability Management (ALM) and Natural Hazard Modeling. He joined the company in 1999 as the Chief Actuary for Zurich Re, Zurich. Prior to 1999, he was a consultant with Tillinghast Towers Perrin. Mr. Boller is a fellow of the German Actuarial Society (DAV) and the Swiss Actuarial Society (SAV), and a member of the International Actuarial Association (IAA). He serves as Chairman of the Reinsurance Subcommittee of the IAA and is a member of the Insurance Committee of the Groupe Consultatif Actuariel Européen and of the Risk-Based Capital Solvency Structure Working Party of IAA, advising the European Commission and supranational bodies on actuarial matters. He also advises the Swiss Regulatory Authority on the emerging Swiss Solvency Regulation. Mr. Boller holds a Master’s degree in economics and engineering and a doctorate in actuarial science from the University of Karlsruhe.

     Martin Kauer is the Chief Financial Officer and an Executive Vice President of Converium. He served as Chief Financial Officer of Zurich Financial Services’ global reinsurance operations from July 1998. From 1996 to 1998 Mr. Kauer managed the demutualization of Rentenanstalt/Swiss Life, where he was also responsible for Strategic Planning and Controlling. Previously, he worked for Union Bank of Switzerland as an investment banker. Mr. Kauer holds a degree in economics from the University of Zurich.

     Christian Felderer is the General Legal Counsel and an Executive Vice President of Converium. He joined Zurich Re in 1997 and has 20 years experience in the insurance and reinsurance industry, most recently as Senior Legal Counsel for Zurich Re and General Counsel for Converium. Between 1990 and 1997 Mr. Felderer had various management responsibilities within the Zurich Group’s International Division, including the establishment and management of the Captives and Financial Risk Management department and management of the Claims organization of the International Division. From 1986 to 1990 he was Corporate Legal Counsel in the General Counsel’s Office of the Zurich Insurance Group, and from 1983 to 1986 he was an underwriter in the Casualty department of the International Division. Mr. Felderer has a law degree from the University of Zurich and is admitted to the Bar of the Canton of Zurich.

     The standard notice period for termination of members of the Global Executive Committee is six months, with the exception of the Chief Executive Officer who has a notice period of twelve months, reflecting the traditional practice of Swiss-based companies. However, there are certain exceptions to this standard, reflecting prevailing local practices in the jurisdictions where the executives are currently employed.

     The business address for each member of our Global Executive Committee is Baarerstrasse 8, CH-6300 Zug, Switzerland.

     B. COMPENSATION

Compensation of Directors

     Directors’ fees have been determined to ensure that we can attract and retain high caliber individuals appropriate to serve a global reinsurance organization. We also grant equity-based compensation to our directors.

     During 2003 the Board of Directors reviewed its overall compensation structure in consideration of its increased workload and emphasis on enlarged Committee work and more complex corporate governance rules. For the term beginning with the Ordinary General Meeting 2003 on May 27, 2003 the Board of Directors resolved to increase its cash compensation, to include the grant of restricted shares as part of its equity compensation and to introduce compensation for the work performed in Board Committees. For the office term 2003/2004, basic cash compensation for an ordinary Board member, set at $74,000, includes compensation for one Committee membership. Board members are entitled to receive an equity compensation granted at the end of the respective period for which it is due, which shall comprise Converium shares equal to a value of $18,500 with a restriction period of three years, and share options equal to a value of $18,500 calculated on the Black Scholes formula on the basis of Converium’s share price at the beginning of the period. The Chairman is entitled to an increase of 50% and the Vice-Chairman to one of 25% of the individual elements of the compensation package. The following compensation was agreed for membership in a second and third Committee:

• $2,960 for membership of a second Committee

• $2,200 for membership of a third and any subsequent Committee and additionally,

• $3,700 if the member holds one or more chairmanships in the Committees

     The table below illustrates the compensation paid to each Board member in 2003. Cash compensation paid at the date of

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each Ordinary General Meeting comprises 50% of the cash compensation due for the ending annual period and 50% for the commencing annual period.

			Shares		Shares held at
			allocated in		December 31,			Options allocated		Options held at
Board Member	Cash Compensation		2003		2003 (1)			in 2003 (2)		December 31, 2003
Peter C. Colombo	$	92,274		—		310			2,797		4,203
Georg Mehl		77,635		—		200			2,237		3,362
Terry G. Clarke		62,996		—		—			1,864		2,545
Jürgen Förterer		58,556		—		—			1,864		2,801
Derrell J. Hendrix		58,556		—		—			1,864		2,801
George G.C. Parker		61,886		—		600	*		1,864		2,801
Anton K. Schnyder		60,036		—		—			1,864		2,801

(1) Includes shares personally bought.

(2) Options vest immediately, have a term of 10.5 years and an exercise price equal to fair market value at the beginning of the period for which they were granted.

  * American Depository Shares (ADS)

     In addition, Converium has retained The RISConsulting Group LLC, of which Mr. Hendrix is Manager and Chief Executive Officer, for certain consulting services. For 2003 Converium paid total fees of $251,817 to RISConsulting. In 2003 neither Converium nor any of its subsidiaries granted loans, advance payments or credit lines to Board members, senior management or parties closely related to them. As of the end of December 2003 no such loans, advance payments or credit lines are outstanding. No shares and options are held by closely linked parties of the members of the Board.

Compensation of Senior Management

GEC Remuneration

     The Remuneration Committee sets compensation levels for members of the Global Executive Committee (GEC) and proposes to the Board the remuneration of the Chief Executive Officer. The total aggregate compensation of all officers of the GEC in 2003, including the compensation of the newly appointed members for October, November and December, and taking into account the resignation of Richard Smith as of September 23, 2003, was $6.1 million. This total includes base salary and cash awards made under short- and long-term incentive plans paid during 2003 and the estimated value of other compensation-related items. In addition, a compensation payment of $750,000 was made to Mr. Smith. He will be available as consultant to Converium in 2004. GEC members held shares and options at the end of December 2003. Some were awarded under Converium’s share and stock option plans, some converted to Converium shares and options from employee participation plans of Converium’s former parent, Zurich Financial Services, and others bought in conjunction with the Initial Public Offering or otherwise. No options are held by closely linked parties. The GEC members participate in local pension plans.

Employee Incentive and Benefit Plans

     An important component of our compensation program is the provision of additional employee benefits designed to encourage our employees to pursue our annual and longer-term objectives. These incentive plans are designed to attract, retain and motivate executives and staff to achieve performance-related targets and align the interests of our employees with those of our shareholders.

     Accordingly, we have established incentive programs where benefits are linked to both corporate, financial and business as well as individual performance targets. Additionally, our long-term incentive plans include equity participation and stock option plans or their equivalent. These plans took effect at the time of the Formation Transactions. Their terms are summarized below.

Share Plan

     Converium has adopted a standard stock option plan for our non-U.S. employees, a standard stock purchase plan for our non-U.S. employees, and an omnibus share plan for our U.S. employees. These arrangements, which we refer to collectively as the Share Plan, establish the framework by which we grant awards to selected executives, employees and consultants of Converium and its subsidiaries. In addition, our subsidiaries are able to establish so-called “sub-plans” under the Share Plan in order to address local law and competitive practice concerns. However, we intend that the terms of these sub-plans will be substantially the same as the Share Plan.

     Pursuant to Article 3a of our Articles of Incorporation, our share capital can be increased by the issuance of up to

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4,000,000 of our shares, 3,200,000 of which is reserved under the Share Plan for the grant of options, restricted shares, restricted share units, and other share-based awards. A total of 6,217 shares have been issued from the contingent capital, while the remainder of the shares required under the plans thus far have been purchased in the open market.

     Awards are granted at the discretion of our Remuneration Committee. Generally, the size of a participant’s award is based on the level of responsibility and position, market conditions and the extent of the executive or employee’s prior participation in the Converium plans described above.

     New options granted have an exercise price equal to the market value of the shares or ADSs on date of grant, vest 25% immediately on the grant date and 25% each year thereafter and will have a 10.5 year term. For 2001 and 2002, most restricted shares granted vest in their entirety after six years, subject to acceleration after year three based on the achievement of certain performance objectives. Beginning in 2003, most restricted shares granted vest ratably over three years. Shares also vest upon retirement.

     In connection with these plans, we incurred approximately $10.0 million of incentive compensation expense in 2003.

Grants to Global Executive Committee

     Global Executive Committee members held shares and options at the end of December 2003. Some were awarded under Converium’s new Share Plan, some converted to Converium shares and options from Converium’s former parent, Zurich Financial Services, and others bought in conjunction with the IPO or otherwise.

			Shares held at		Shares vested of						Options vested of
	Shares granted		December 31,		shares held at		Options granted in		Options held at		options held at
GEC member	in 2003 (1)		2003 (2)		December 31, 2003		2003 (3)		December 31, 2003		December 31, 2003
Dirk Lohmann		17,079		41,837		22,648		56,148		256,067		156,816
Frank Schaar		4,066		7,933		814		15,105		76,381		47,670
Benjamin Gentsch		5,328		12,359		7,332		16,182		46,433		25,318
Martin Kauer		5,705		14,098		8,192		17,770		81,659		50,072
Gary Prestia		4,157		14,539		8,230		15,135		54,370		30,751
Hans Peter Boller		3,564		5,270		1,992		9,755		36,759		21,533
Christian Felderer		2,381		3,821		1,360		7,808		12,348		4,459
Christoph Ludemann		1,150		1,150		—		5,049		5,049		1,262
Richard E. Smith (4)		7,021		32,413		32,413		47,651		160,486		160,486

(1) Shares granted in 2003 include shares awarded under the Share Plan, which are subjected to various vesting schedules, and shares purchased through the employee stock purchase and annual incentive plans.

(2) Includes shares held by closely linked parties

(3) Options have an exercise price equal to the market value of the shares or ADSs on date of grant, vest 25% immediately on the grant date and 25% each year thereafter, and have a 10.5-year term.

(4) Resigned on September 23, 2003

     As of the date of this 20-F filing, none of the members of Global Executive Committee beneficially owns more than 1% of our shares.

Annual Incentive Plan

     We have also established annual incentive plans, whose primary purpose is to provide direct annual financial incentive to employees who achieve corporate performance goals established under our annual operating plan. Our subsidiaries are able to establish separate plans to address local law and competitive practice concerns, but we intend that the terms will be substantially the same and refer to these plans collectively as the Annual Incentive Plan. Employees are eligible for target awards under the Annual Incentive Plan ranging from 5% to 100% of base salary. The size of the target award is determined by the employee’s position and competitive data for similar positions at peer companies. We set performance goals for participating employees and, in keeping with our performance-based philosophy, the resulting awards decrease or increase substantially if our actual corporate performance fails to meet or exceeds target levels. The awards may range from below or above the target amounts. The performance goals include both financial and non-financial measures.

     Participants in our Annual Incentive Plan are permitted to defer a portion of their bonus into restricted shares or units under our Annual Incentive Deferral Plan. Unless otherwise determined by Converium, employees who determine to do so

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will receive a 25% premium, paid in restricted shares or bookkeeping units representing shares, on the amount deferred that will vest in their entirety in three years. We have reserved 400,000 shares for issuance of restricted shares under this plan.

Employee Stock Purchase Plan

     We adopted, effective January 1, 2002, employee stock purchase plans for the purpose of providing employees with an opportunity to participate in equity ownership of Converium by purchasing our shares at a discount. As with the Share Plan and the Annual Incentive Plan, our subsidiaries adopt disparate plans on substantially the same terms, which we refer to collectively as the Employee Stock Purchase Plan. One plan adopted for employees of U.S. subsidiaries is designed to meet the requirements of Section 423 of the U.S. Internal Revenue Code which affords favorable tax treatment to U.S. employees. We reserved 400,000 shares for issuance under the U.S. plan and 200,000 shares for issuance under other employee share purchase plans. The price of our shares under this plan, for each plan offering period, will be the lower of 85% of the fair market value of the shares on the offering commencement date or 85% of the fair market value of the shares on the offering termination date. One or more other stock purchase plans have been adopted to cover selected Converium employees outside the United States subject to and in accordance with applicable local law. Our Board of Directors will authorize from time to time the number of shares that are available under these other employee stock purchase plans.

Retention Awards and IPO Share Grant

     In conjunction with the Formation Transactions, we granted retention awards to certain employees of Converium in the form of Converium restricted shares. Employees other than those who were granted retention awards received Converium restricted shares. All shares vested pro rata on the first and second anniversary of the completion of the global offering. The number of our shares granted was calculated based upon the offering price of the global offering.

Long Term Incentive Plan

     Under the Long-Term Incentive Plan (the “LTIP”), certain employees were awarded restricted shares and/or options to purchase shares in Converium Holding AG. Restricted Shares granted vest ratably over a three-year period. Options were granted with an exercise price equal to the market value of the shares or ADSs on the grant date, 25% vest immediately on the grant date and 25% each year thereafter, and have a 10.5 year term. Restricted Shares and options also rest upon retirement.

Executive IPO Option Plan

     In connection with the Formation Transactions, Converium granted certain executives options to purchase shares in Converium Holding AG (the “Executive IPO Option Plan”). Under the Executive IPO Option Plan, 420,000 options to purchase shares in Converium Holding AG were awarded. The exercise prices were equal to the market value of the shares or ADSs on the grant date. Of the options awarded under the Executive IPO Option Plan, 25% vested immediately on the grant date of December 11, 2001, and 25% will vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

     For further information on our share-based incentive plans, see Footnote 13 to our consolidated financial statements.

C. BOARD PRACTICES

Board Committees

     The Board of Directors has four Committees, which meet in conjunction with or prior to Board meetings, as necessary, and regularly report and submit proposals to the Board of Directors. Each Committee has a Chairman who directs the meetings according to a set agenda, and a secretary, currently being the General Legal Counsel.

The Nomination Committee

     Our nomination committee comprises at least three Board members and currently comprises four. It appoints and dismisses the Head of Internal Audit and outside directors of Converium companies, unless such appointment or dismissal is required by regulatory law or order, in which case such appointment or dismissal lies in the responsibility of the CEO. The Committee proposes to the Board of Directors the appointment of Board members and the members of its Committees and their Chairmen, the Chairman and Vice-Chairman of the Board of Directors and the members of the GEC. It defines and implements procedures for the annual self-evaluation of the Board of Directors’ and the Committees’ performance; for the annual statement of independence of the Board of Directors and disclosure of any conflict of interests and any agreements concluded with the company or any of its subsidiaries; and for the orientation program for new Board members. Standing invitees are the CEO and the Chief Human Resources Officer. In 2003 the Nomination Committee held six meetings.

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The Remuneration Committee

     Our remuneration committee comprises at least three Board members and currently comprises four. It sets the compensation levels for the GEC and the Head of Internal Audit and proposes to the Board of Directors the remuneration for the CEO, as well as the principles of compensation, of the incentive schemes, and bonus payments to employees. Standing invitees are the CEO and the Chief Human Resources Officer. In 2003 the Remuneration Committee held five meetings.

The Finance Committee

     Our finance committee comprises at least three Board members and currently comprises four. It approves Converium’s quarterly and half-year results (*) (except fourth-quarter results, which is the responsibility of the Board of Directors) and capital increases in subsidiaries between $5 million and $20 million. It submits to the Board of Directors for its approval the accounting standards framework for Converium, the annual budget and forecast, investment and treasury policy, solvency and liquidity planning, strategic asset allocation, tax planning, the allocation of Corporate Office expenses to business segments, capital increases and the use of contingent or other alternative capital structures, year-end results and dividend policy, as well as exchange listings and de-listings. Standing invitees are the CEO and the CFO. In 2003 the Finance Committee held six meetings.

     (*) This responsibility was transferred to the Audit Committee as of February 2004.

The Audit Committee

     Our audit committee comprises the Chairman of the Board of Directors and the Chairmen of the Finance, Nomination and Remuneration Committees. Only independent and financial literate Directors are eligible to serve on the Audit Committee. In order to qualify as independent, a member may not accept any consulting, advisory or compensatory fee from the company. In addition, an Audit Committee member may not be a person affiliated with the company or any of its subsidiaries. In 2003 all Audit Committee members took part in a U.S. GAAP training session arranged with the assistance of our external auditor. The Audit Committee approves and supervises the implementation of Converium’s Audit Charter, including the review of internal control systems and Converium’s risk management and auditing processes; reviews and assesses significant accounting and reporting issues; oversees external and internal auditors and the external and internal audit process; assesses the accuracy of the annual financial statements and determines that appropriate accounting principles have been applied; and liaises with Converium’s Risk Management functions to identify Converium’s areas of greatest risk and to assess management’s role in mitigating the risks. Standing invitees are the CEO, the Head of Internal Audit and the external auditor. In 2003 the Audit Committee held seven meetings.

     The Audit Committee is supported in its supervisory task by Internal Audit, which reports directly to the Audit Committee. Internal Audit is committed to the Standards for Professional Practice of Internal Auditing set out by the Institute of Internal Auditors. The strategic goals of the Internal Audit department, which were formally approved by the Audit Committee, are as follows:

• To evaluate the reliability and controls of the financial and risk reporting systems and to provide reasonable assurance that material errors and irregularities will be detected on a timely basis.

• To evaluate the integrity of financial information.

• To evaluate compliance with policies, plans, procedures, regulations, laws and contracts.

• To safeguard company assets.

• To evaluate and promote efficient use of resources.

• To coordinate and manage, on behalf of the Audit Committee, the relationships with the public accounting firms working for Converium.

     The Internal Audit department currently consists of eight persons and covers all operations of Converium worldwide. Internal Audit has unrestricted access to all relevant information and documents.

     As of February 13, 2004, the Audit Committee assumed the responsibility of reviewing and approving the quarterly financial statements, which was transferred from the Finance Committee. The approval of our year-end financials is the responsibility of the full Board of Directors.

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     The Board of Directors has determined that a member of our Audit Committee, George G.C. Parker, is an audit committee financial expert and is “independent” under the rules of the New York Stock Exchange.

Indemnification of Officers and Directors

     We maintain customary directors’ and officers’ insurance for our directors and officers. Otherwise, neither our Articles of Incorporation nor any contract or other arrangement contains any provision under which any of our directors is indemnified in any manner against any liability that he or she may incur in his or her capacity as such.

     D. EMPLOYEES

     As of December 31, 2003, Converium employed 847 people globally, including 359 at our offices in Switzerland, 226 at our offices in the United States, 168 at our offices in Germany, 22 in other European countries, 33 in the Asia-Pacific region and 39 in other regions.

     A relatively small number of our employees are represented by unions. We have not experienced any material work stoppages in recent years and we believe that our relations with our employees are excellent.

     The following is the distribution of the persons employed.

	As of December 31,
	2003		2002		2001
Number of employees		847		813		740
Breakdown by geographic location
Switzerland		359		332		274
United States		226		231		237
Germany		168		160		148
Asia-Pacific region		33		31		29
Other regions		61		59		52
Breakdown by main category of activity
Underwriting		289		290		274
Finance		222		200		176
Actuarial		84		77		69
Other		252		246		221

     E. SHARE OWNERSHIP

     As of the date of this annual report, none of the members of our Board of Directors or Global Executive Committee beneficially owns more than 1% of our shares. In addition, none of the members of our Board of Directors or Global Executive Committee have an ownership interest in a company that is a major client or broker of Converium. For an explanation of shares and options, see Item 6. “Directors, Senior Management and Employees – B. Compensation”.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

     As of March 31, 2004, 28,023,914 shares were registered in our share register. These shares were owned by 3,586 shareholders, of which 2,915 were private individuals holding 3.72% of total outstanding shares, 283 were foundations and pension funds holding 6.58% of total outstanding shares and 388 were other legal entities holding 59.75% of total outstanding shares.

     As of March 31, 2004, 26 holders with registered addresses in the United States, including nominees with registered addresses in the United States, held 5,263,484 of our registered shares and 1,300 holders with registered addresses in the United States, including nominees with registered addresses in the United States, held 6,107,994 ADSs. These holdings represented 20.79% of the total number of shares outstanding as of March 31, 2004. Brokers and other nominees hold certain of our registered shares and ADSs. In addition, some holders of our registered shares have not or may not register their holdings. Consequently, the above figures may not state the actual number of U.S. beneficial holders or the number of registered shares or ADSs beneficially held by persons in the United States.

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     As of the date of this annual report, and in accordance with the notification requirements as set by the SWX Swiss Stock Exchange, the following are direct or indirect owners of 5% or more of our outstanding shares:

• Fidelity International Limited (“Fidelity”), Hamilton, Bermuda: 9.87% (date of notification April 28, 2003).

• Wellington Management Company LLP (“Wellington”), Boston, Massachusetts, United States: 7.68% (date of notification January 11, 2002).

     Only one shareholder, European Growth SICAV Luxembourg: 6.01% (a fund managed by Fidelity), is registered in Converium’s share register with an individual shareholding exceeding the 5% threshold specified in article 663c of the Swiss Code of Obligations.

     Fidelity is an investment advisor, which provides investment advisory and management services to non-US investment companies, trusts and institutions. Wellington is an investment advisor and portfolio manager with voting authority for 47 clients, none of which has an individual shareholding in excess of 5%. Converium does not hold any interlocking shareholdings with any other joint-stock companies.

     As of April 1, 2004, members of our Global Executive Committee held an aggregate of 136,188 of our shares and options to purchase 663,457 shares representing approximately 2% of our shares. As of the date of this annual report, the members of our Board of Directors were granted options to purchase 21,314 shares. See “Item 6. — Directors, Senior Management and Employees — B. Compensation.”

B. RELATED PARTY TRANSACTIONS

     There were no unpaid loans, including guarantee commitments, granted to the Converium directors and members of the Converium Global Executive Committee as of December 31, 2003.

     In March 2003, upon receipt of all regulatory approvals, Converium finalized an agreement to acquire a 25% stake in Global Aerospace Underwriting Managers Limited (GAUM), a leading international aviation-underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and satellite business. In March 2003, Converium as a shareholder provided a loan to GAUM in the amount of £12.6 million ($19.8 million). In addition, Converium entered into a pool members agreement for the 2003 underwriting year under which it became a member of the aviation and aerospace pools run by GAUM and its subsidiary, Associated Aviation Underwriters Inc. For the 2003 underwriting year, Converium has committed 25% of the overall pools capacity. Previously, Converium had indirectly reinsured 9% of the pools managed by GAUM.

     In February 2004, Converium AG finalized a Sale and Purchase Agreement with Royal and Sun Alliance (“RSA”), to acquire a further 5.1% stake in GUAM, which increased its overall stake in GUAM to 30.1%. Included within the Sale and Purchase agreement is a requirement for Converium AG to replace an existing loan from RSA in the amount of £ 2.5 million ($4.5 million). For the 2004 underwriting year, Converium has committed 27.25% of the overall pools capacity.

     Converium has entered into a strategic alliance with the Medical Defence Union (MDU) that resulted in a 49.9% participation in MDU Services Ltd. MDU Services Ltd distributes medical malpractice insurance policies to the members of the Medical Defence Union. As a result of the initial FSA approval in respect of general liability business, insurance policies underwritten by Converium Insurance (UK) Ltd were issued to members of the Medical Defence Union beginning July 1, 2003. These insurance polices replaced policies formerly issued in the United Kingdom by Zurich Financial Services’ entities, the majority of which were reinsured by Converium. Gross premiums from MDU were $137.3 million, $140.0 million and $57.0 million for 2003, 2002 and 2001, respectively.

     Converium has a 48% participation in SATEC, a leading global space underwriting agency based in Venice, Italy. Gross premiums assumed through the pool managed by SATEC were $5.9 million, $5.0 million and $3.2 million for 2003, 2002 and 2001, respectively.

     C. INTERESTS OF EXPERTS AND COUNSEL

     Not applicable.

ITEM 8. FINANCIAL INFORMATION

     A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

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Financial Statements

     See the consolidated financial statements beginning on page F-1.

Legal Proceedings

     Converium Holding AG and its subsidiaries are continuously involved in various legal proceedings, claims and litigation arising, for the most part, in the ordinary course of its business operations as a reinsurer. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of management these matters are not material to Converium’s financial position, with the exception of the matters described below:

Amerisafe Matters

     In September 2003, the parties settled the March 2001 litigation initiated by American Interstate Insurance Company (“Amerisafe”) against Converium Reinsurance (North America) Inc., (“CRNA”), Guy Carpenter & Company Inc. (“Guy Carpenter”) and ZFS in the United States District Court for the Western District of Louisiana. ZFS and Guy Carpenter had previously been dismissed from the suit. Based on the terms of the settlement agreement and on the basis of the aggregate excess of loss protection from ZIC (see Note 15 to our consolidated financial statements), CRNA believes that it is fully protected through reinsurance agreements for all potential liability in respect of this action.

     Since late fall of 2000, CRNA had received a series of inquires from the Louisiana Department of Insurance (“LDI”) investigating CRNA’s disputes with Amerisafe in response to a complaint filed by Amerisafe. As part of the September 2003 settlement with Amerisafe, Amerisafe has withdrawn the complaint and the LDI has officially closed the file with respect to the complaint.

Superior National Matters

     On January 16, 2002, the California Insurance Commissioner (the “Commissioner”), filed a complaint against a subsidiary of ZFS, Centre Insurance Company (“CIC”) and affiliates, as well as CRNA and Converium Insurance (North America) Inc. (“CINA”), on behalf of the Superior National Insurance Companies in Liquidation (“SNICIL”), in a proceeding in the Superior Court of the State of California, County of Los Angeles. The complaint alleges several counts, including voidable preferences and fraudulent transfers, seeking the recovery of transfers totalling $202.9 million, damages for breach of contract in the amount of $59.8 million, additional damages in an amount to be proved at trial, and punitive damages. The overwhelming bulk of the damages sought appear to arise out of CIC transactions, not CRNA or CINA transactions. As part of the Formation Transactions, ZFS has agreed to indemnify Converium for liabilities arising out of or related to the assets not assumed by or transferred to Converium in the separation from ZFS. The principal claim brought against CRNA appears to arise from CRNA’s commutation of certain reinsurance obligations. In that connection, however, while the Complaint does in fact reference the commutation, the payment involved was a commutation payment made by CRNA, not to CRNA. The liquidator, however, is apparently claiming that the amount paid by CRNA was inadequate consideration for the reinsurance obligations commuted and thus, this commutation constituted a fraudulent transfer. The Commissioner’s pending complaint in the SNICIL action does not assign a value to the reinsurance obligations that were commuted, repeatedly stating that their value is “undetermined”, however, he has indicated that he may seek to recover some portion of the difference between the amount paid by CRNA ($17.8 million) and the amount purportedly owed under the commuted reinsurance contracts (informally asserted by certain counsel for the liquidator to be approximately $41.0 million with no further clarification as to the basis for this amount). CRNA and CINA intend to defend this litigation vigorously and to assert various setoffs. Based on the limited information available to date, we are unable to predict CRNA’s and CINA’s chances of prevailing in this action. While Converium believes that it has a strong case, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the litigation.

     No discovery relating to any transaction in which CRNA or CINA was involved is ongoing and any such discovery is not likely to commence until at least late 2004.

US Life Insurance Co. Arbitration

     On November 29, 1999, US Life Insurance Company (“US Life”) initiated an arbitration proceeding against SNICIL, CINA and CIC. US Life seeks to rescind a multi-year quota share reinsurance contract effective May 1, 1998 on the basis that material misrepresentations and omissions were allegedly made in procuring that contract. Inception-to-date amounts ceded by Converium to the contract through December 31, 2003 are $54.0 million premiums earned, $18.1 million commissions earned and $110.7 million losses incurred. All discovery in this matter closed in November 2002, and arbitration hearings

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commenced in late 2002 and continued in 2003. The arbitration has not concluded at this time and the arbitrators have currently advised that additional dates necessary to conclude the arbitration will not be available until the second half of 2004. Based on the limited information available to date, we are unable to predict CINA’s chances of prevailing in this action. While Converium believes that it has a strong case against US Life for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

All American Life Insurance Company Arbitration

     On December 23, 2002, CRNA and CINA initiated an arbitration against All American Life Insurance Company (“All American”). The dispute arises from a quota share reinsurance contract provided by All American. Because All American has failed and refused to make payments under the quota share contract, CRNA and CINA demanded arbitration to collect all outstanding balances due under the contract. In the arbitration, All American is now seeking to rescind the contract on the basis of certain alleged misrepresentations and omissions made by SNICIL, who is also now a party to the arbitration as a reinsured under the contract. As of this date, the arbitration panel has been constituted and hearings are scheduled for June 2004. Inception-to-date amounts ceded by Converium to the contract through December 31, 2003 are $41.1 million premiums earned, $14.2 million commissions earned and $62.3 million losses incurred. Based on the limited information available to date, we are unable to predict CRNA’s and CINA’s chances of prevailing in this action. While Converium believes that it has a strong case against All American for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

Continental Casualty Company Arbitration

     On December 16, 2002, Continental Casualty Company (“Continental”) and CRNA served cross demands for arbitration on each other. The dispute arises from a retrocessional contract pursuant to which Continental reinsured CRNA for 50% of the accident and health exposures CRNA assumed from a third-party insurer pursuant to a reinsurance agreement. In October 2002, Continental advised CRNA that it had identified issues concerning the third-party insurer business that Continental believes might give rise to defenses under the reinsurance agreement. CRNA offered to permit Continental to assert those defenses directly against the third-party insurer and, in addition, advised Continental that, if Continental did not agree to do so, CRNA would conduct its own investigation with respect to the putative defenses identified by Continental. However, Continental instead asserted that CRNA has somehow breached a duty of utmost good faith to Continental, which justifies rescission of the retrocessional contract. At arbitration, CRNA would be seeking enforcement of the retrocessional contract and Continental would be seeking rescission of the same contract. Inception-to-date amounts ceded to the contract through December 31, 2003 are $20.8 million premiums earned, no commissions earned and $56.4 million losses incurred. The parties have each selected their party-appointed arbitrators, but at this stage an umpire has not yet been selected. Based on the limited information available to date, we are unable to predict CRNA’s chances of prevailing in this action. While Converium believes that it has a strong case against Continental for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

Canada Life

     On December 21, 2001, The Canada Life Assurance Company, Toronto (“Canada Life”), brought action against Converium Rückversicherung (Deutschland) AG in the U.S. District Court of the Southern District of New York. Canada Life alleged that Converium breached certain quota share retrocession agreements with Canada Life by failing to indemnify its full percentage of Canada Life’s September 11th losses and by failing to post an $82.4 million letter of credit for its liability pursuant to the ISA facilities’ underlying agreements. Converium is disputing this claim on the grounds that its liability under the pertinent contracts is limited and is also raising other contracts defenses. In its decision of April 11, 2002, the U.S. District Court of the Southern District of New York dismissed Canada Life’s action, ruling that The Air Transportation Safety and System Stabilization Act, which Canada Life claimed to give the court jurisdiction over the subject matter, is not applicable. The court ruled that the Act applies broadly to the actions filed by individual victims of the September 11th attacks but does not apply to disputes among reinsurers. The Second Circuit Court of Appeal affirmed the dismissal. As a result of the decision of the U.S. District Court of the Southern District of New York, Converium sent Canada Life a request to arbitrate. The organizational meeting of the arbitrators took place on October 8, 2003. The hearing is expected to take place in the first quarter of 2005.

     Converium has fully reserved this matter. However, arrangements entered into with Zurich Financial Services provide for this matter to be covered by the agreed-to cap for September 11th related losses provided to Converium by Zurich Financial Services in conjunction with Converium’s global offering.

Dividends and Dividend Policy

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     The Board of Directors will propose at the Annual General Meeting an appropriation of the available earnings for the 2003 fiscal year. If this proposal meets the approval of the General Meeting of shareholders in Zug, Switzerland on April 27, 2004, a cash dividend of CHF 1.50 per share, or CHF 60,009,326, will be paid on Thursday, April 29, 2004.

     We intend to distribute dividends to our shareholders on an annual basis, but cannot assure you that we will do so. Our dividend policy in future periods will depend on a number of factors including our results of operations, our financial condition, our capital and cash requirements, general business conditions, legal, contractual and regulatory restrictions regarding the payment of dividends by us and other factors. Holders of shares and ADSs with respect to the underlying shares, are entitled to receive payment in full of any dividends declared in respect of the 2003 fiscal year and following years.

     As a holding company, we are dependent on dividends, interests and royalty fees from our subsidiaries to pay cash dividends. The payment of dividends by our subsidiaries to their parent companies is restricted by applicable laws and regulations. To the extent our subsidiaries are restricted from paying dividends to Converium Holding AG, we may be unable to pay dividends to our shareholders. For further information on the restrictions on our ability to pay dividends, see Note 14 to our consolidated financial statements.

     Under Swiss law, we may only pay dividends if we have either sufficient profits available for distribution or if we have sufficient free reserves pursuant to our statutory (non-consolidated) balance sheet and the provisions of Swiss law to allow for distributions from that reserve.

     As long as the general reserves amount to less than 20% of our nominal share capital, Swiss law requires at least 5% of our annual net profits to be retained as general reserves. Any net profits remaining after this retention are eligible to be distributed as dividends, subject to approval by our shareholders at a shareholders’ meeting, and our auditors must confirm that a dividend proposal by our Board of Directors complies with our Articles of Incorporation and Swiss law.

     Our dividends will be due and payable after the shareholders’ resolution authorizing the payment of such dividends has been passed or at a later date as determined by the shareholders’ dividend resolution. Under Swiss law, the statute of limitations in respect of dividend payments is five years. All of our shares rank pari passu in relation to the right to dividends.

     Dividends paid in respect of our ADSs and shares are subject to a deduction of Swiss withholding tax, which currently is at a rate of 35%. In the event of any dividend being paid, the withholding tax will be deducted from any dividend payments. A Swiss resident may be entitled to a full refund of such withholding if such resident is the beneficial owner of the payment and duly reports the dividend received on his personal tax return. Non-Swiss-resident holders of our ADSs and shares may be entitled to a full or partial refund of such withholding tax under the terms and conditions of an applicable double taxation treaty. See “Item 10. Additional Information — E. Taxation — Swiss Taxation — Obtaining a Refund of Swiss Withholding Tax for U.S. Residents.”

     We will pay our dividends in Swiss francs. Owners of our ADSs will be entitled to receive dividends, if any, payable in respect of the underlying shares. Our ADS depositary agreement provides that the ADS depositary will promptly convert the dividends that it receives into U.S. dollars on behalf of the ADS holders according to the prevailing market rate on the date that the ADS depositary actually receives the dividends. Fluctuations in the exchange rate between the Swiss franc and the U.S. dollar will affect the U.S. dollar amounts received by the holders of ADSs from the date a dividend is paid to the date U.S. dollars are received by ADS holders.

     B. SIGNIFICANT CHANGES

     Except as otherwise disclosed in this annual report, there has been no significant change in our financial position since December 31, 2003.

ITEM 9. THE OFFER AND LISTING

     A. OFFER AND LISTING DETAILS

Market Price Information

Trading on the SWX Swiss Exchange

     The table below presents the highest and lowest reported sale price for our registered shares on the SWX Swiss Exchange for the periods indicated, expressed in Swiss francs. On April 6, 2004, the latest practicable day before the printing of this annual report, the last reported sale price of our registered shares on the SWX Swiss Exchange was CHF 63.80 per registered share.

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	High		Low
	CHF		CHF
Calendar Year 2001 (from December 11, 2001)		82.10		79.00
Calendar Year 2002		89.75		54.85
First Quarter		88.45		75.00
Second Quarter		89.75		72.40
Third Quarter		79.00		56.15
Fourth Quarter		69.60		54.85
Calendar Year 2003		74.50		49.60
First Quarter		69.85		49.60
Second Quarter		74.50		55.45
Third Quarter		67.00		59.10
Fourth Quarter		69.10		60.05
Calendar Year 2004 (until March 31, 2004)		73.75		60.25
First Quarter		73.75		60.25
Last 6 Months
October 2003		67.10		60.05
November 2003		69.10		60.65
December 2003		66.00		62.00
January 2004		68.10		63.00
February 2004		73.75		65.00
March 2004		68.10		60.25

Trading on the New York Stock Exchange

     The table below presents the highest and lowest reported sale price for our ADSs on the New York Stock Exchange. On April 6, 2004, the latest practicable day before the printing of this annual report, the last reported sale price of our ADSs on the New York Stock Exchange was $24.43 per ADS.

	High		Low
	$		$
Calendar Year 2001 (from December 11, 2001)		27.40		23.02
Calendar Year 2002		28.52		18.30
First Quarter		26.50		21.77
Second Quarter		28.52		24.25
Third Quarter		26.05		18.96
Fourth Quarter		24.10		18.30
Calendar Year 2003		26.63		19.15
First Quarter		25.15		19.15
Second Quarter		26.42		20.52
Third Quarter		24.20		21.55
Fourth Quarter		26.63		22.77
Calendar Year 2004 (until March 31, 2004)		29.57		23.55
First Quarter		29.57		23.55
Last 6 Months
October 2003		25.10		22.77
November 2003		25.45		23.50
December 2003		26.63		24.30
January 2004		27.30		25.80
February 2004		29.57		25.56
March 2004		27.01		23.55

     B. PLAN OF DISTRIBUTION

     Not applicable.

     C. MARKETS

     Converium registered shares have a listing on the SWX Swiss Exchange under the symbol “CHRN.” Converium ADSs are listed in the United States on the New York Stock Exchange, or NYSE, under the symbol “CHR”. The NYSE is the only trading market for our ADSs in the United States. Each of our ADSs represents one-half of one of our registered shares. We expect that the SWX Swiss Exchange will remain the principal trading market for our registered shares.

     The 8.25% Guaranteed Subordinated Notes due 2032 are securities of Converium Finance S.A., a société anonyme incorporated under the laws of Luxembourg, and a wholly-owned subsidiary of Converium AG, and have a listing under the symbol “CHF” on the New York Stock Exchange.

     D. SELLING SHAREHOLDERS

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     Not applicable.

     E. DILUTION

     Not applicable.

     F. EXPENSES OF THE ISSUE

     Not applicable.

ITEM 10. ADDITIONAL INFORMATION

     A. SHARE CAPITAL

Not applicable.

     B. MEMORANDUM AND ARTICLES OF INCORPORATION

     See “Description of Shares and Share Capital” in the Registration Statement on Form F-1, file number 333-14106, filed with the SEC under the Securities Act of 1933 on December 10, 2001. There was no modification in the Articles of Incorporation with the exception of the amount of issued share capital which has been adjusted in order to reflect the shares actually issued in 2002 in conjunction with Converium’s employee compensation plans from contingent share capital. Following this increase, the actual issued share capital amounts to CHF 400,062,170 and is divided into 40,006,217 shares with a par value of CHF 10 each. The respective contingent share capital for the participation of employees (article 3a of our Articles of Incorporation) has consequently been reduced by an equal amount.

Information Policy

     In conjunction with the invitation for the Annual General Meeting, all registered shareholders are provided with an invitation and a summary report on Converium’s financial results for the current financial year. Upon request, a full annual report with the financial statements can be ordered. Additionally, all ADS holders, upon request, receive a copy of the current annual report including financial statements, through their brokers. Furthermore, all financial and other information released by Converium is accessible on Converium’s web page as well as through the SEC.

Statutory Quorums

     According to Article 13 of Converium’s Articles of Incorporation, resolutions at the General Meetings of Shareholders are taken with the majority of votes cast.

     In accordance with the provisions of Swiss law (Article 704 Swiss Code of Obligations) Converium’s Articles of Incorporation require two thirds of votes to be represented and the absolute majority of the nominal values of the shares represented is required for resolution on the following:

• an alteration of the purpose of Converium

• the creation of super-voting shares

• restrictions on the transfer of registered shares and the removal of such restrictions as well as restrictions to vote and the removal of such restrictions

• an authorized or contingent increase of share capital

• an increase of share capital by conversion of capital surplus, by contribution in kind or for the purpose of an acquisition of assets and the grant of special rights

• a restriction or exclusion of the subscription right or advance subscription right

• a change of Converium’s registered office

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• the dissolution of Converium without liquidation

Convocation of the General Meeting of the Shareholders

     According to Article 9 of Converium’s Articles of Incorporation, the General Meetings are convened at least twenty days prior to the meetings. This is in accordance with the provision of Swiss company law (Article 700 Code of Obligations).

     Article 10 of the Articles of Incorporation provides for shareholders whose combined share holdings represent an aggregate nominal amount of at least CHF one million to be able to demand an item to be included on the agenda of a General Meeting. Such demand must be made at least 45 days prior to the meeting. This is in accordance with the provision of Swiss company law (Article 699 paragraph 2 Code of Obligations).

Registration in the Share Register

     The date by which holders of registered shares can be registered in Converium’s share register in connection with attending the General Meeting of shareholders is set by the Board of Directors in its preparatory Board Meeting prior to the General Meeting.

     For 2004, the date by which a shareholder has to be registered in the share register is April 23, 2004, in order to be invited to the Annual General Meeting of April 27, 2004, at the Casino in Zug.

Shareholder Votes on Equity-Based Compensation plans

     The NYSE rules require that shareholders must vote on all equity based compensation plans and any material revisions to the terms of such plans. Converium does not comply with this requirement, as under Swiss Company Law, the approval of compensation plans is not an authority of the General Meeting, but of the Board of Directors. The reason for not providing for approval of equity based compensation plans is the fact that the capital of a Swiss company is determined in the Articles of Incorporation and, therefore, each increase of capital has to be submitted for shareholders’ approval. If equity based compensation plans result in a need for a capital increase, the shareholders’ approval is mandatory. If, however, shares for such plans are purchased in the open market, shareholders do not have the authority to vote.

     C. MATERIAL CONTRACTS

The Master Agreement

     The Master Agreement sets out the overall principles and the rights and obligations of the parties in connection with the Formation Transactions. It also addresses the relationship between Zurich Financial Services and Converium following the Formation Transactions. In particular, the Master Agreement provides for:

• the separation of substantially all of the third-party reinsurance business from the businesses of Zurich Financial Services, and

• the consolidation of this business under Converium Holding AG.

     The third-party reinsurance business that has been retained by Zurich Financial Services includes the Zurich Centre Group business as described below and the reinsurance business written by ZIC with inception or renewal dates prior to January 1, 1987.

     In the Master Agreement, Zurich Financial Services and Converium made certain representations and warranties with respect to matters including the assets of and titles to the assumed business. In addition, each of Zurich Financial Services and Converium made certain covenants, principally intended to effect our separation from the other businesses of Zurich Financial Services.

     Further, each of Zurich Financial Services and Converium has agreed, following the completion of the Formation Transactions:

• to execute the agreements, and to cooperate and act in accordance with the arrangements described below

• not to, and to cause its subsidiaries not to, until March 31, 2004, interfere with any contractual relationship existing on or at any time during the period of two years prior to the first trading day on the SWX Swiss Exchange between the other

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party and its customers or other commercial counterparties

• not to, and to cause its subsidiaries not to, within a period of two years after the first trading day on the SWX Swiss Exchange, actively solicit for employment or hire any person employed by the other party or its subsidiaries, and

• not to, except for certain specified exceptions, disclose confidential information of the other party or an entity of such party’s group which is not known to third parties but which is known by the parties due to the fact that the parties were previously part of the same group of companies or as a result of the Formation Transactions contemplated by the Master Agreement.

     In addition, the Master Agreement provided that we bear up to a maximum of $50 million of the costs and expenses related to the consummation of the Formation Transactions, including advisors’ fees, retention costs and stamp duty taxes. Zurich Financial Services reimbursed us for costs and expenses in excess of this amount. For a discussion of the impact of the Formation Transactions-related costs and expenses on our results of operations, cash flows and financial position see “Item 5. — A. Operating Results — Restructuring Charge.”

     The Master Agreement is governed by, and will be construed in accordance with, the laws of Switzerland.

September 11th Coverage

     Zurich Financial Services, through its subsidiaries, has agreed to arrangements that cap our net exposure for losses and loss adjustment expenses arising out of the September 11th terrorist attacks at $289.2 million, the amount of net loss and loss adjustment expenses we recorded as of September 30, 2001. As part of these arrangements, these subsidiaries of Zurich Financial Services have agreed to take responsibility for non-payment by the retrocessionaires of Converium AG and Converium Rückversicherung (Deutschland) AG with regard to losses arising out of the September 11th attacks in excess of the $289.2 million cap. While the cap does not cover non-payment by the retrocessionaires of Converium Reinsurance (North America) Inc., our only retrocessionaire for this business is a unit of Zurich Financial Services. Therefore, we are not exposed to potential non-payments by retrocessionaires for these events in excess of the $289.2 million cap, although we will be exposed to the risk of non-payment of Zurich Financial Services units and we will be exposed to credit risk from these subsidiaries of Zurich Financial Services. See — Note 8 to our financial statements, and “Item 4. — Information on the Company — B. Business Overview — Retrocessional Reinsurance.”

Acquisition of the Converium AG Business

     Certain Converium AG reinsurance business was acquired from ZIC and ZIB via the Quota Share Retrocession Agreement, described in more detail below and the Asset Purchase and Assumption of Liability Agreement between ZIC and Converium AG, dated September 28, 2001. Under this Agreement, ZIC transferred to Converium AG tangible assets, marketable securities and liabilities relating to the business written by the Zurich operations.

Quota Share Retrocession Agreement

     In connection with the Formation Transactions, the transfer of certain business to Converium AG by ZIC and ZIB was effected by means of the Quota Share Retrocession Agreement effective July 1, 2001. The covered business consists of the business historically managed by Converium AG which has an inception or renewal date on or after January 1, 1987, and consists of substantially all of the third-party reinsurance assumed business written by ZIC and ZIB, under the “Zurich Re” brand name. The liabilities Converium assumed include all net unearned premiums, net losses and loss adjustment expenses and experience account balances relating to this business.

     The Quota Share Retrocession Agreement provides for the payment of premiums to Converium by ZIC as consideration for assuming the covered liabilities. The Quota Share Retrocession Agreement provides that these premiums are on a “funds withheld” basis, whereby the premium is not immediately paid, but is rather retained by ZIC and credited to a funds withheld account, which is referred to as the Funds Withheld Asset.

     Because the business subject to the Quota Share Retrocession Agreement consists of business that was historically managed by Converium, this business is already reflected in our financial statements. Any reinsurance business written by ZIC or ZIB that is not part of the historically managed and operated third-party reinsurance business of Converium AG is not covered by the Quota Share Retrocession Agreement, and all related legal rights and obligations of this business have been retained by ZIC and ZIB. Accordingly, this business is excluded from our financial statements. Therefore, execution of this Quota Share Retrocession Agreement has no impact on results of operations as reported for 2003, 2002, or 2001.

     Converium will receive the surplus remaining with respect to the Funds Withheld Asset, if any, after all liabilities have

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been discharged. Additionally, Zurich Financial Services has the right to prepay to Converium the full amount or a portion thereof of the Funds Withheld Asset prior to termination of the agreement. Any surplus will be recorded in the financial statements in the period when it occurs.

     Converium will continue to administer the transferred business on behalf of ZIC and ZIB, which remain liable to the original cedents of the business. Additionally, Converium will manage third-party retrocessions related to the business transferred. Converium will bear the credit risk for uncollectible reinsurance balances excluding those related to the September 11th terrorist attacks. Converium will have a broad right of offset under the Quota Share Retrocession Agreement so that reinsurance balances owed to ZIC and ZIB may be offset against the Funds Withheld Asset account directly.

     The Quota Share Retrocession Agreement provides for commutation and termination for special reasons, such as insolvency of a party or loss of its authorization to do business or a change of control of Converium. Each of the parties agrees to indemnify the other against liability or expense incurred by reason of its conduct or failure to act in appropriate circumstances. The Quota Share Retrocession Agreement contains other provisions that are customary for an agreement of this nature.

Acquisition of the Converium Reinsurance (North America) Inc. Business

     The Converium Reinsurance (North America) Inc. reinsurance business was acquired through the transfer by a subsidiary of Zurich Financial Services of all of the voting securities of Converium Reinsurance (North America) Inc. to Converium Holdings (North America) Inc., pursuant to a Stock Purchase Agreement between Zurich Reinsurance Centre Holdings, Inc. and Converium, dated November 20, 2001.

Assumption of $200 Million Public Notes

     On October 20, 1993, Zurich Reinsurance Centre Holdings, Inc., or ZRCH, issued $200 million principal amount of 7.125% Senior Notes due October 15, 2023, referred to as the Notes. In connection with the issuance of the Notes, ZRCH executed an Indenture. As partial consideration for the transfer to Converium Holdings (North America) Inc. of Converium Reinsurance (North America) Inc., Converium Holdings (North America) Inc. has executed a First Supplemental Indenture, dated November 20, 2001, assuming all of the rights and obligations of ZRCH under the Indenture. The Bank of New York acts as Trustee under the Supplemental Indenture. Accordingly, this indebtedness is reflected in our financial statements for all periods presented. The Notes are general unsecured obligations of Converium Holdings (North America) Inc. and rank on a parity with all other unsecured and unsubordinated indebtedness of Converium Holdings (North America) Inc.

CENY Arrangements

     Prior to the Formation Transactions, the Converium Reinsurance (North America) Inc. balance sheet reflected business originally written by Centre Reinsurance Company of New York, or CENY. Prior to the establishment of separate Zurich Centre Group legal entities, CENY wrote new or renewal business on the Converium Reinsurance (North America) Inc. balance sheet. CENY was originally part of the Zurich Centre Group of companies, a business unit of Zurich Financial Services. Zurich Financial Services has historically operated and managed CENY separately from Converium. In 1997, the CENY legal entity was merged into Zurich Reinsurance Centre, Inc., or ZRC, a predecessor of Converium Reinsurance (North America) Inc. in connection with a going private transaction involving ZRC’s parent. As a result of this merger, certain liabilities of CENY, referred to below as “CENY Business,” became direct obligations of Converium Reinsurance (North America) Inc., but continued to be managed by Zurich Centre management and were not part of the independently managed and operated third-party reinsurance business of Converium. Nevertheless, prior to our separation from Zurich Financial Services, we had primary legal responsibility for the CENY Business.

     In connection with the Formation Transactions, we have extinguished our legal responsibility for substantially all of the CENY Business pursuant to the Master Novation and Indemnity Reinsurance Agreement with certain insurance subsidiaries of Zurich Financial Services, including Converium Reinsurance (North America) Inc., Centre Insurance Company, or CIC, Centre Solutions (U.S.) Limited, or CSUS, a Bermuda domiciled insurance company, and Zurich Insurance Company, Bermuda branch, a Bermuda branch of a company organized under the laws of Switzerland, dated as of October 21, 2001. Under this agreement, Converium Reinsurance (North America) Inc. has assigned and transferred to insurance subsidiaries of Zurich Financial Services, and these insurance subsidiaries have assumed, pursuant to a novation, substantially all of the insurance contracts related to the CENY Business. Accordingly, the novated contracts are excluded from our financial statements. However, a portion of the CENY Business was not novated because necessary consents could not be obtained from the reinsureds by the effective date of the agreement. This portion of the CENY Business has been 100% retroceded to CIC and CSUS on an indemnity reinsurance basis and is reflected in our financial statements as 100% retroceded business for all periods presented.

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     Converium Reinsurance (North America) Inc. historically obtained stop-loss reinsurance coverage on the CENY Business from members of the Zurich Centre Group. In connection with the Formation Transactions, Converium Reinsurance (North America) Inc. has commuted these policies pursuant to the Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1991 through December 31, 1993) between Converium Reinsurance (North America) Inc. and Centre Reinsurance Limited, dated as of October 1, 2001, the Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1994 through December 31, 1994) between Converium Reinsurance (North America) Inc. and Centre Reinsurance International Company, dated as of October 1, 2001, the Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1995) between Converium Reinsurance (North America) Inc. and Centre Reinsurance Limited, dated as of October 1, 2001, the Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective October 1, 1995) between Converium Reinsurance (North America) Inc. and Centre Reinsurance Limited, dated as of October 1, 2001 and the Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective November 6, 1992) between Converium Reinsurance (North America) Inc. and Centre Reinsurance International Company, dated as of October 1, 2001. Because we no longer have any legal rights of coverage under these policies, they have been excluded from our financial statements for all periods presented.

Supplementary Agreements and Arrangements

     Converium Reinsurance (North America) Inc. and its wholly owned subsidiary, Converium Insurance (North America) Inc., terminated certain existing affiliate arrangements and settled balances due under certain existing arrangements in preparation for the transfer of Converium Reinsurance (North America) Inc. to Converium pursuant to the Agreement Amending and Terminating Centre Reinsurance Dublin Affiliated Group Tax Allocation Agreement, between Orange Stone Delaware Holdings Limited, Orange Stone Reinsurance, Centre Reinsurance Holdings (Delaware) Limited, Centre Reinsurance (US) Limited, ZRCH, Converium Reinsurance (North America) Inc., ZCIC, ZC Specialty Insurance Company, Centre Risk Advisors, Inc., Constellation Reinsurance Company, Centre Re Services, Inc., Zurich Global Assets LLC, formerly known as BDA/US Services Limited, ZC Management Corporation, ZC Resource LLC, ZC Property Management, Inc. and Claims Solutions Group, dated October 1, 2001.

     Converium Reinsurance (North America) Inc. entered into a sublease with ZC Resource LLC (“ZC Resource”), a subsidiary of Zurich Financial Services in July 2001. The sublease has a term of approximately eleven years, ending in 2012. As part of the Formation Transactions, Converium Reinsurance (North America) Inc. entered into an agreement to indemnify Global Asset Holdings Limited (“GAHL”) (an indirect parent of ZC Resource and a co-guarantor of the prime lease) for losses under the prime lease or the guaranty caused by Converium Reinsurance (North America) Inc.’s default under the sublease that results in a default under the prime lease; GAHL, in turn, will indemnify Converium Reinsurance (North America) Inc. for any losses under the guaranty caused by a default by ZC Resource under the prime lease. Centre Insurance Company, a subsidiary of Zurich Financial Services, will guaranty the punctual payment of all amounts due by GAHL under the guaranty and all expenses incurred by Converium Reinsurance (North America) Inc. enforcing the guaranty.

     All of the above supplementary transactions were recorded in our financial statements on the date they occurred.

Acquisition of the Converium Rückversicherung (Deutschland) AG Business

     The Converium Rückversicherung (Deutschland) AG reinsurance businesses were acquired through the transfer by Zurich Financial Services to Converium AG of its 98.63% interest in ZRK pursuant to the Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln) Aktiengesellschaft, dated September 28, 2001.

GRI Retained Business

     GRI is an internal operating unit of Zurich Financial Services whose principal role is to accumulate risks underwritten by primary and direct providers of insurance in a manner which allows GRI to access the third-party reinsurance market. GRI’s internal operations were wholly autonomous from the third-party reinsurance business conducted by Converium. Moreover, Converium never used GRI to access external reinsurance markets.

     Prior to the Formation Transactions, the GRI operation was partially conducted through policies issued by Converium Reinsurance (North America) Inc. and ZRK. However, the GRI operation was managed exclusively by GRI’s management team. Additionally, Zurich Financial Services did not alter the capital ascribed to support Converium’s business as a result of the GRI business formerly written on our balance sheets. As a consequence of the Formation Transactions, all GRI business previously written on our balance sheets has been assigned and assumed pursuant to a Group Reinsurance Business Master Novation and Indemnity Reinsurance Agreement, among Converium Reinsurance (North America) Inc., ZIC and ZIB, dated as of October 1, 2001. Any related rights and obligations of ours have been extinguished. Accordingly, all of this business is excluded from our financial statements.

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Other Indemnity Matters

     Pursuant to the Master Agreement, we and Zurich Financial Services will indemnify each other for certain matters, such as liabilities arising out of our respective businesses, and for breaches of our respective representations and warranties and other customary matters.

     In particular, we have agreed to indemnify Zurich Financial Services and its affiliates for:

• liabilities assumed by or transferred to us in the separation;

• liabilities incurred by Zurich Financial Services or its affiliates (other than Converium) while carrying on business on our behalf pursuant to the terms of agreements entered into in connection with the Formation Transactions before and after the dates of the separation of U.S. and non-U.S. business from Zurich Financial Services;

• liabilities incurred by us on our own behalf at any time, which are deemed to be or become a liability of Zurich Financial Services or any of its affiliates (other than Converium); and

• losses suffered by Zurich Financial Services or any of its affiliates (other than Converium) that relate to any reasonable action to avoid, resist or defend against liabilities assumed by or indemnified against by us; and

Zurich Financial Services has correspondingly agreed to indemnify us for:

• liabilities retained by Zurich Financial Services and its affiliates and not assumed by or transferred to us in the separation;

• liabilities arising out of or relating to the assets not assumed by or transferred to us in the separation;

• liabilities arising out of specified contracts we have not assumed pursuant to the terms of the Quota Share Retrocession Agreement; and

• losses suffered by Converium or any of our affiliates that relate to any reasonable action to avoid, resist or defend against liabilities not relating to our business.

     Moreover, we have agreed with Zurich Financial Services to allocate amongst ourselves liabilities that may arise under relevant securities laws as a result of any misstatements or omissions contained in the various annual report documentation to be distributed to Converium shareholders or as a result of the Formation Transactions themselves.

     In addition, pursuant to the tax sharing and indemnity agreements described below, we and Zurich Financial Services will indemnify each other for certain tax liabilities arising out of the Formation Transactions and certain other potential liabilities that arose while we were affiliated with Zurich Financial Services.

     We have further agreed with Zurich Financial Services to indemnify Zurich Financial Services or ZIC against liabilities to counterparties or third parties arising in connection with ZIC’s participation in establishing the TRINOM transaction, including, but not limited to, the offering circular and any ancillary documentation related thereto, ZIC’s exercise or performance of any of its rights and obligations under the TRINOM agreements and ZIC’s acting based on our information and/or instructions.

     Also, we have agreed to indemnify Zurich Financial Services and its subsidiaries for losses arising from Zurich Financial Services’ involvement in the MDU joint venture to the extent such indemnifiable losses had been caused by the misconduct or negligence of our employees or arising out of our business.

     As described above, subsidiaries of Converium and Zurich Financial Services will indemnify each other with respect to losses arising out of our lease arrangements at Converium Reinsurance (North America) Inc’s New York City office. See “— Acquisition of the Converium Reinsurance (North America) Inc. Business.”

Tax Sharing Agreements

     We entered into Tax Sharing and Indemnification Agreements with:

• ZRCH, in respect of the U.S. Converium entities, which we refer to as the U.S. Tax Sharing Agreement, and

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• Zurich Financial Services in respect of the non-U.S. Converium entities, which we refer to as the Non-U.S. Tax Sharing Agreement.

     The tax allocation agreement in effect involving Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. was terminated as to those parties. Converium Reinsurance (North America) Inc. and Converium Insurance (North America) Inc. paid $54.9 million due under the tax allocation agreement through the date of sale of Converium Reinsurance (North America) Inc., to Converium Holdings (North America) Inc. Under the U.S. Tax Sharing Agreement, these settlements will be adjusted to the extent necessary based on tax returns filed for years 2000 and 2001. The U.S. Tax Sharing Agreement provides we will generally be liable for taxes imposed on our U.S. entities in respect of periods prior to and after the transfer. However, ZRCH will be liable to us for specified taxes, which will include any taxes arising out of the transfer of the U.S. entities to us, any taxes imposed in respect of the stop loss reinsurance policy from ZIC from 1997 to 2001 and certain other matters.

     The Non-U.S. Tax Sharing Agreement provides, in general, that we will be liable for all taxes arising from the business previously conducted by ZIC and Converium Rückversicherung (Deutschland) AG, whether arising prior to or subsequent to the transfer to Converium. We are also liable for branch taxes arising from the Converium branches located in Malaysia, Singapore and Australia and representative offices in Buenos Aires, London, Mexico City, Sao Paolo and Tokyo. As described above, under the Master Agreement we will be liable for all taxes related to the consummation of the Formation Transactions together with all other costs and expenses of the global offering, up to an aggregate of $50 million. In addition, all taxes relating to the Formation Transactions but incurred after the Formation Transactions will be borne by Converium. See “— The Master Agreement.”

     The tax sharing agreements also set forth the responsibilities for filing tax returns affecting the Converium entities, and the conduct of audits and similar proceedings. The obligations of ZRCH under the U.S. Tax Sharing Agreement are guaranteed by ZIC.

Swiss Tax Consequences to Converium of the Formation Transactions

     Under the terms of the Swiss tax rulings obtained by Zurich Financial Services and granted by the Swiss Federal and Zurich Cantonal Tax Administrations, the Swiss tax treatment of the Formation Transactions relating to the formation of Converium will be as described below, provided the Formation Transactions were effected in the manner described to the Swiss Tax Administrations and the conditions described further below are satisfied:

• The offering of Converium shares to the public in the global offering will retroactively trigger Swiss stamp duty at the rate of 1% of the fair market value of Converium at the level of Converium Holding AG.

     As part of the Master Agreement, Zurich Financial Services has agreed to reimburse us for certain costs and expenses related to the Formation Transactions, including the stamp duty taxes described above. See “— The Master Agreement”.

     The Swiss tax treatment of the Formation Transactions set forth above is subject to the following condition:

• If a shareholder or a group of shareholders acting in concert were to acquire directly or indirectly more than one-third of the voting rights of Converium AG within five years from the completion of the Formation Transactions, then Converium AG would have to pay Swiss stamp duty in the amount of 1% of the fair market value of all of the issued Converium AG shares as of the date of the completion of the Formation Transactions. If, however, more than one-third of the voting rights of such company were transferred in the course of another tax-privileged transaction, such as a merger, taking place within the described five-year period, such retroactive taxation would not be triggered upon the fulfillment of certain conditions. This stamp duty will be borne by us.

Continuing Relationships with Zurich Financial Services

     In addition to the agreements described above, we have certain continuing relationships with Zurich Financial Services, including those described below.

Continuing Aggregate Excess of Loss Agreements

1993 Aggregate Excess of Loss Agreement

     In 1993, ZIC and ZRC entered into an Excess of Loss Reinsurance Agreement under which ZIC agreed to reinsure adverse

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loss development on ZRC’s revenues as of December 31, 1992. As we described above under “CENY Arrangements”, ZRC was a predecessor of Converium Reinsurance (North America) Inc., and we remain liable for its continuing obligations. Also, ZIC and ZRC entered into a Stop Loss Reinsurance Agreement as of March 5, 1993 for losses occurring between January 1, 1993 and May 31, 1993. In addition, under this second agreement, we are reimbursed for incurred losses and allocated loss adjustment expenses in excess of 75% of earned premiums for losses occurring after May 31, 1993 on business written by ZRC prior to June 1993. Recoveries under each of these agreements, which we refer to collectively as the 1993 Aggregate Excess of Loss Agreement, are on an incurred basis (rather than as any such losses are paid). As of December 31, 2003, there were no recoverables under the 1993 Aggregate Excess of Loss Agreement.

1997 Aggregate Excess of Loss Agreement

     Converium Reinsurance (North America) Inc. had an intra-Converium aggregate excess of loss reinsurance agreement in place since July 1,1997 (“1997 Aggregate Excess of Loss Agreement”). This agreement provided protection to Converium Reinsurance (North America) Inc. for losses that exceeded a net retention after amounts recoverable from its outside retrocessionaires. Because the 1997 Aggregate Excess of Loss Agreement pre-dated the Formation Transactions, ZIC was the formal counterparty to Converium Reinsurance (North America) Inc. In October 2001, the 1997 Aggregate Excess of Loss Agreement was amended as follows:

• Converium Reinsurance (North America) Inc.’s coverage for net losses of $320.4 million with respect to all Amerisafe business retroceded to the Unicover Pool remains in effect, with ZIC as counterparty,

• Converium Reinsurance (North America) Inc.’s coverage for net losses of $307.5 million from the September 11th terrorist attacks that exceed $58.2 million remains in effect, with ZIC as counterparty; and

• the remainder of the coverage under the agreement is commuted.

     As part of the Formation Transactions, ZIC has also provided Converium Reinsurance (North America) Inc. with coverage for all its net losses with respect to the Amerisafe business ceded to the Unicover Occupational Accident Reinsurance Pool and the September 11th terrorist attacks that exceed the coverage limits described above under each of two Indemnity Agreements, each dated as of October 1, 2001. In addition, under the Master Agreement, Converium has agreed to indemnify ZIC for up to $58.6 million of losses in connection with the Amerisafe business ceded to the Unicover Pool for non-performance of the retrocessionaire.

Other Agreements and Arrangements

     As described in more detail above, the separation of our business from that of Zurich Financial Services, in part pursuant to reinsurance agreements, including the Quota Share Retrocession Agreement and the Master Novation and Indemnity Agreement, will entail us and Zurich Financial Services and its affiliates having continuing obligations to reinsure each other and to provide services in connection with the administration of the run-off of the business we transferred to each other.

     In June 2001, ZIC entered into the TRINOM transaction that provides ZIC with specific high limit catastrophe protection. As part of the Formation Transactions, ZIC and Converium AG have entered into a CAT Retrocession Reinsurance Agreement, dated December 1, 2001, which we refer to as the Catastrophe Agreement. This agreement provides for Converium to receive payments from ZIC for certain catastrophic events on terms similar to ZIC’s protection under the TRINOM transaction. We will pay ZIC amounts at least equal to the payments made by ZIC to TRINOM. The catastrophe agreement was effective as of June 18, 2001, and will remain in effect for the same period as ZIC’s agreement with TRINOM, together with any extension thereto. See “Item 4. — Information on the Company — B. Business Overview — Catastrophe Protection.”

     In September 2002, Converium AG granted to MDU Investments Ltd. a put option enabling MDU Investments Ltd. to require Converium (or a person nominated by Converium AG) to subscribe up to an aggregate of 20.0 million preferred shares on the terms of the pertinent agreement, with such option to be exercised in tranches of one million shares with a value of £1 each. On the same date Converium AG granted to the Medical Defence Union Ltd. a call option enabling the Medical Defence Union Ltd. to purchase some or all of the preferred shares which Converium AG or a subsidiary thereof may from time to time hold in MDU Investments Ltd.

     In December 2002, in conjunction with the issue by Converium Finance S.A. of the Guaranteed Subordinated Notes, Converium Holding AG and Converium AG, as guarantors, have issued an unconditional irrevocable subordinated guarantee which will constitute the direct, unsecured and subordinated joint and several obligations of each of the guarantors subordinate to all Senior Creditors (as defined in the Indenture), and will rank equally without preference among themselves and at least

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equally with any existing or future unsecured, subordinated obligations of either guarantor that are expressed to rank equally with the subordinated guarantee and prior to all holders of the guarantors’ share capital and to all holders of the guarantors’ existing or future securities or obligations that are expressed to rank junior to the subordinated guarantee. See “Item 3. — Key Information — B. Capitalization and Indebtedness”.

     On December 27, 2002, Converium Finance S.A. purchased from Converium AG the $150.0 million loan previously granted by Converium AG to Converium Holding AG on December 19, 2001, for a total purchase price of $150.8 million.

     In March 2003, upon receipt of all regulatory approvals, Converium finalized an agreement to acquire a 25% stake in Global Aerospace Underwriting Managers Limited (GAUM), a leading international aviation-underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and satellite business. In March 2003, Converium as a shareholder provided a loan to GAUM in the amount of £ 12.6 million ($19.8 million). In addition, Converium entered into a pool members agreement for the 2003 underwriting year under which it became a member of the aviation and aerospace pools run by GAUM and its subsidiary, Associated Aviation Underwriters Inc. For the 2003 underwriting year, Converium has committed 25% of the overall pools capacity. Previously, Converium had indirectly reinsured 9% of the pools managed by GAUM.

     In July 2003, Converium entered into arrangements by which various banks, led by ABN AMRO Bank N.V., Barclays Capital and Commerzbank Aktiengesellschaft are providing Converium AG and its approved subsidiaries an $ 900 million unsecured letter of credit facility allowing Converium AG or its approved subsidiaries to draw upon this facility in conjunction with Converium’s need for letters of credit where, for regulatory purposes or otherwise, collateral is required.

     In February 2004, Converium AG finalized a Sale and Purchase Agreement with Royal and Sun Alliance (“RSA”), to acquire a further 5.1% stake in GUAM, which increased its overall stake in GUAM to 30.1%. Included within the Sale and Purchase agreement is a requirement for Converium AG to replace an existing loan from RSA in the amount of £ 2.5 million ($4.5 million). For the 2004 underwriting year, Converium has committed 27.25% of the overall pools capacity. See “Item 7. — Major Shareholders and Related Party Transactions — B. Related Party Transactions”.

Lease Arrangements

     Converium AG leases office space from Zurich Financial Services. The lease term is fixed until 2011, with two renewal options for three-year terms each. The lease payments are fixed with annual rent escalations based on a cost of living index.

     Converium Rückversicherung (Deutschland) AG leases office space from Zurich Financial Services. The lease term is for a period of ten years, with an option to renew for up to two additional ten-year terms. Lease payments have bi-annual rent escalations based on changes in local real estate price indices.

     Converium Reinsurance (North America) Inc. entered into a sublease with ZC Resource LLC (“ZC Resource”), a subsidiary of Zurich Financial Services in July 2001. The sublease has a term of approximately eleven years, ending in 2012. As part of the Formation Transactions, Converium Reinsurance (North America) Inc. entered into an agreement to indemnify Global Asset Holdings Limited (“GAHL”) (an indirect parent of ZC Resource and a co-guarantor of the prime lease) for losses under the prime lease or the guaranty caused by Converium Reinsurance (North America) Inc.’s default under the sublease that results in a default under the prime lease; GAHL, in turn, will indemnify Converium Reinsurance (North America) Inc. for any losses under the guaranty caused by a default by ZC Resource under the prime lease. Centre Insurance Company, a subsidiary of Zurich Financial Services, will guaranty the punctual payment of all amounts due by GAHL under the guaranty and all expenses incurred by Converium Reinsurance (North America) Inc. enforcing the guaranty.

     D. EXCHANGE CONTROLS AND OTHER LIMITATIONS

     Other than in connection with government sanctions imposed on Iraq, Yugoslavia, UNITA (Angola), Myanmar, parts of Afghanistan and Libya (currently suspended), there are currently no governmental laws, decrees, or regulations in Switzerland that restrict the export or import of capital, including, but not limited to, Swiss foreign exchange controls on the payment of principal, interest or liquidation proceeds, if any, to non-resident holders of shares or notes.

     There are currently no laws, decrees or regulations in Luxembourg that restrict the export or import of capital, including, but not limited to, Luxembourg foreign exchange controls on the payment of principal, interest or liquidation proceeds, if any, to non-resident holders of notes.

     E. TAXATION

     The following is a summary of the principal U.S. Federal income tax and Swiss tax consequences to a holder of shares or

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ADSs. This discussion does not purport to address all tax consequences of the acquisition, ownership and disposition of shares or ADSs and does not take into account the specific circumstances of any particular holders (such as tax-exempt entities, certain insurance companies, broker-dealers, traders in securities that elect to mark to market, holders liable for alternative minimum tax, holders that actually or constructively own 10% or more of the voting shares of Converium, holders that hold shares or ADSs as part of a straddle or a hedging or conversion transaction or holders whose functional currency is not the U.S. dollar, etc.), some of which may be subject to special rules. This summary is based on the tax laws of Switzerland and the United States (including the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations thereunder, published rulings and court decisions as in effect on the date hereof), as well as the Convention Between the United States of America and the Swiss Confederation, which we call the U.S./Switzerland Treaty, all of which are subject to change (or change in interpretation), possibly with retroactive effect. We have not, and will not, request a ruling from the U.S. Internal Revenue Service concerning the tax consequences of any aspect of the transactions described herein. This discussion does neither generally address any aspects of Swiss taxation other than income and capital taxation and Swiss stamp duties nor of U.S. taxation other than federal income taxation. Holders are urged to consult their tax advisors regarding the Swiss and other tax consequences of owning and disposing of shares or ADSs as well as the U.S. federal, state and local and other tax consequences of owning and disposing of shares or ADSs.

Swiss Taxation

     Generally, holders of ADSs will be treated as owners of the registered shares underlying the ADSs for Swiss tax purposes. Accordingly, except as noted, the Swiss tax consequences discussed below apply equally to holders of the registered shares and ADSs.

     This discussion does not, as already mentioned above, generally address any aspects of Swiss taxation other than income and capital taxation and Swiss stamp duties. Holders are urged to consult their tax advisors regarding the Swiss and other tax consequences of owning and disposing of shares or ADSs.

Withholding Tax on Dividends and Distributions

     Dividends paid and similar in-kind distributions (including dividends of liquidation proceeds and share dividends) made by Converium to a holder of shares or ADSs are subject to a federal withholding tax at a rate of 35%. The withholding tax must be withheld by Converium from the gross distribution, and paid over to the Swiss Federal Tax Administration. The withholding tax is refundable in full to a Swiss resident who receives a distribution if such resident is the beneficial owner of the payment and duly reports the gross distribution received on his personal tax return.

Obtaining a Refund of Swiss Withholding Tax for U.S. Residents

     Article 10 of the U.S./Switzerland Treaty provides for a reduced 15% withholding tax rate for U.S. individual and corporate shareholders who are entitled to claim treaty benefits, which may be further reduced to 5% in the case of a corporate shareholder owning at least 10% of the voting rights. Relief under the U.S./Switzerland Treaty is granted by way of a refund. Under the ADS program in effect through The Bank of New York, a U.S. holder of ADSs that qualifies for U.S./Switzerland Treaty benefits will not be required to undertake any action with respect to the partial or full refund of the Swiss withholding tax. On the payment date of the dividend, Converium will pay 65% of the gross dividend to The Bank of New York on behalf of the ADS holders. The Bank of New York will file a Form 82 accompanied by a shareholder list and a DTC participant list for each program. Based on this refund application, the refundable withholding tax will be refunded by the Swiss Federal Tax Administration to The Bank of New York on behalf of the eligible U.S. holders of ADSs. The Bank of New York will pay 85% or 95% of the dividend to the eligible U.S. holders of ADSs, depending on the applicable U.S./Switzerland Treaty rate. Such holders should receive the ADS dividend within approximately one month of the payment of the dividend by Converium. Relief under the U.S./Switzerland Treaty is granted for holders of shares by way of a refund of the withholding tax. A U.S. holder of shares may obtain the applicable refund of Swiss withholding tax by filing a Swiss Federal Tax Administration Form 82 with the Swiss Federal Tax Administration.

Income Tax on Dividends

     A Swiss resident or a foreign resident subject to Swiss taxation who receives a dividend or similar distribution (including liquidation proceeds in excess of the nominal value of the shares) from us is required to include such amounts in his personal income tax return. A Swiss shareholder which itself is a company or a cooperative may, under certain circumstances, benefit from an exemption of the dividend from income taxation (participation exemption/Beteiligungsabzug).

     For purposes of the above paragraph and the discussion under “Capital Gains Tax upon Disposal of Shares,” a foreign resident subject to Swiss taxation refers to a non-Swiss resident person that maintains in Switzerland a permanent establishment or fixed place of business to which the shares are attributable.

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Capital Gains Tax upon Disposal of Shares

     A Swiss resident who holds shares as part of such resident’s private, non-business assets will not be subject to any Swiss federal, cantonal or municipal income taxation on gains realized upon the sale or other disposal of shares. However, under certain conditions, shares can be deemed to be part of the business assets of an individual, i.e. an individual may be treated as a professional trader in securities, with the consequence of taxation of any capital gains as business income. Furthermore, private gains realized upon a repurchase of shares by us may be re-characterized as taxable dividend income if some conditions are met. In the case of such re-characterization of capital gains into dividend income, income tax will be levied on the difference between the repurchase price and the underlying nominal value of the shares. Capital gains realized on shares held as part of the business assets of a Swiss resident or a foreign resident subject to Swiss taxation are included in the taxable income of such persons.

     Persons who are not resident in Switzerland for tax purposes are not subject to any Swiss taxes with respect to gains realized upon a sale of shares or ADSs, unless the shares or ADSs are attributable to a permanent establishment or fixed place of business maintained by such non-resident person in Switzerland. However, under some conditions, dividend withholding tax will become due if shares are repurchased by Converium.

     A Swiss resident or a foreign resident subject to Swiss taxation which is a shareholder and which itself is a company or a cooperative may, under certain circumstances, be eligible for relief from taxation with respect to capital gains (participation exemption/Beteiligungsabzug). However, the participation exemption on capital gains applies only in the case of a shareholding quota sold of at least 20% held over an uninterrupted period of at least one year.

Stamp Duties upon Transfer of Shares

     The sale or purchase of shares or ADSs, whether by Swiss resident or non-resident holders, may be subject to a Swiss securities transfer stamp duty, calculated on the sale proceeds, if it occurs through or with a Swiss bank or other Swiss securities dealer as defined in the Swiss Federal Stamp Tax Act.

United States Federal Income Taxation

     For purposes of this discussion, a “U.S. holder” is either (1) a citizen or resident of the United States, (2) a corporation organized under the laws of the United States or any political subdivision thereof, (3) an estate the income of which is subject to U.S. federal income tax without regard to its source, or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.

     This discussion does not, as already mentioned above, generally address any aspects of U.S. taxation other than federal income taxation. Holders are urged to consult their tax advisors regarding the U.S. federal, state and local and other tax consequences of owning and disposing of shares or ADSs.

     U.S. holders of ADSs will be treated as owners of the shares underlying the ADSs for U.S. federal income tax purposes. Accordingly, except as noted, the U.S. federal income tax consequences discussed below apply equally to U.S. holders of ADSs and shares. This discussion is based in part upon representations of The Bank of New York and assumes that each obligation provided for in, or otherwise contemplated by, the deposit agreement and any related agreement will be performed in accordance with its respective terms. This discussion assumes that U.S. holders will hold their shares or ADSs as capital assets.

Taxation of Dividends

     Under the U.S. federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules discussed below, U.S. holders will include in gross income the gross amount of any distribution, other than certain pro rata distributions of common shares, paid (before reduction for Swiss withholding taxes) by Converium out of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) as foreign source ordinary income when the dividend is actually or constructively received by the U.S. holder. The dividend will not be eligible for the dividends-received deduction. Dividends paid to a non-corporate US holder after 31 December 2002 and before 1 January 2009 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15% provided that the shares or ADSs are held for more than 60 days during the 120 day period beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. Dividends paid by us with respect to our shares or ADSs will be qualified dividend income. The amount of the dividend paid in Swiss francs will be the U.S. dollar value of the Swiss francs received, including the amount of any Swiss tax withheld, determined at the spot Swiss franc/U.S. dollar rate on the date such dividend is

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received, which for holders of ADSs would be the date such dividend is received by The Bank of New York, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations will be treated as ordinary income or loss. Such gain or loss will generally be income from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a return of capital to the extent of the U.S. holder’s basis in the shares or ADSs and thereafter as capital gain.

     Subject to certain limitations, the Swiss tax withheld in accordance with the U.S./Switzerland Treaty and paid over to Switzerland will be creditable against the U.S. holder’s U.S. federal income tax liability. One such limitation is that a foreign tax credit is only allowed for withholding tax on a dividend if the shareholder has held the shares with respect to which the dividend is paid for more than fifteen days during the thirty-day period beginning on the date which is fifteen days before the date on which the shares become ex-dividend with respect to the dividend. To the extent a refund of the tax withheld is available to a U.S. holder under the U.S./Switzerland Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the U.S. holder’s U.S. federal income tax liability. See “— Swiss Taxation — Obtaining a Refund of Swiss Withholding Tax for U.S. Residents” above for the procedures for obtaining a refund of tax.

     The ability of a U.S. holder to utilize foreign taxes as a credit to offset U.S. taxes is affected by complex limitations and conditions. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends paid by Converium will generally constitute “passive income” or, in the case of certain U.S. holders, “financial services income.”

     The U.S. Treasury Department has expressed concern that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming by U.S. holders of ADSs of foreign tax credits for U.S. federal income tax purposes. Accordingly, the discussion of the creditability of foreign taxes could be affected by future actions that may be taken by the U.S. Treasury Department.

     A U.S. holder may elect to claim all foreign taxes paid as an itemized deduction in lieu of claiming a foreign tax credit. A deduction does not reduce U.S. tax on a dollar-for-dollar basis like a tax credit, but the availability of the deduction is not affected by the conditions and limitations applicable to foreign tax credits. U.S. holders should consult their tax advisors to determine whether and to what extent a foreign tax credit would be available to them.

Sale or Exchange

     Gain or loss recognized by a U.S. holder on the sale, exchange or other disposition of shares or ADSs will, subject to the discussion of the PFIC rules below, be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the U.S. holder’s adjusted tax basis in the shares or ADSs and the amount realized on the disposition. Capital gain of a non-corporate US holder that is recognized on or after 6 May 2003 and before 1 January 2009 is taxed at a maximum rate of 15% where the property is held more than one year. Any gain or loss recognized will generally be treated as U.S. source gain or loss. U.S. holders are urged to consult their own tax advisors about the treatment of capital gains, which may be taxed at lower rates than ordinary income for non-corporate taxpayers, and capital losses, the deductibility of which may be limited.

     The surrender of ADSs in exchange for shares, or vice versa, will not result in the realization of gain or loss for U.S. federal income tax purposes.

PFIC Rules

     Converium does not expect to be a PFIC for its current or future taxable years; however, since this is a factual determination made annually, there can be no assurance that Converium will not be considered a PFIC for any taxable year. In general, Converium will be a PFIC with respect to a U.S. holder, if, for any taxable year in which the U.S. holder held Converium shares or ADSs, either (1) at least 75% of the gross income of Converium for the taxable year is “passive income” or (2) at least 50% of the value (determined on the basis of a quarterly average) of Converium’s assets is attributable to assets that produce or are held for the production of passive income. In general, passive income for this purpose does not include income derived in the active conduct of an insurance business by a corporation predominantly engaged in an insurance business. If Converium were to be treated as a PFIC, in general, unless a U.S. holder makes a mark-to-market election, gain realized on the sale or other disposition of shares or ADSs and certain “excess distributions” would be allocated on a straight-line basis over the holder’s holding period for the shares or ADSs. The gain so allocated would be taxed as ordinary income at the highest rate in effect for each year in the holder’s holding period, other than the year of sale or disposition and years prior to the year in which Converium first met the definitional criteria of a PFIC, and an interest charge would be imposed in respect of the tax attributable to each such year subject to the same exceptions; gain allocable to the year of sale or disposition and years prior to the year in which Converium first met the definitional criteria of a PFIC would be treated as ordinary

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income.

Backup Withholding

     A U.S. holder may, under certain circumstances, be subject to “backup withholding” with respect to dividends paid on the shares or ADSs or the proceeds of sale, exchange, or other disposition of shares or ADSs unless such holder (1) is a corporation or comes within certain other exempt categories, and, when required, demonstrates this fact or (2) provides a correct taxpayer identification number, certifies that it is not subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under these rules will be creditable against the U.S. holder’s federal income tax liability, provided appropriate information is furnished to the IRS. A U.S. holder who does not provide a correct taxpayer identification number may be subject to penalties imposed by the IRS.

     F. DIVIDENDS AND PAYING AGENTS

     Not applicable.

     G. STATEMENT BY EXPERTS

     Not applicable.

     H. DOCUMENTS ON DISPLAY

     It is possible to read and copy documents referred to in this annual report that have been filed with the SEC at the SEC’s public reference room located at:

451 Fifth Street, NW
Washington DC 20549, USA

     Please call the SEC at 1-800-SEC-0330 for further information on the public reference room and their copy charges.

     In addition, documents referred to above are available from Converium at its headquarters, located at:

     Baarerstrasse 8 CH-6300 Zug Switzerland

     I. SUBSIDIARY INFORMATION

     Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As a provider of reinsurance solutions, effective risk management is fundamental to our ability to protect both the interests of our clients and shareholders. We have consequently established risk and investment management processes and procedures to actively manage our exposure to qualitative and quantitative market risks. Our risk and investment management procedures focus on ensuring that all of our operating units consistently follow suitable, structured and controlled processes and procedures, with specific guidelines and limits tailored to the characteristics of each business. See “Item 15. — Controls and Procedures”

     We consider our market risk to consist primarily of our exposure to adverse market value changes in our assets, across both short and long-term periods. Our market risk includes multiple sources of market price fluctuations, including credit risks, prepayment risks, liquidity risks, sector risks and other risks. Short-term market risks relate primarily to our exposure to adverse market value changes in our assets and the potential inability to realize asset values on a timely basis.

     We principally manage our long-term market risks through a procedure we refer to as asset/liability management, or ALM, through which we seek to understand and manage the dynamic interactions between our assets and liabilities. We utilize and continually develop firm-wide ALM processes and models to manage our aggregate financial risks. The primary goal of our ALM procedures is to match, in terms of timing and currency, anticipated claims payments to our cedents with investment income generated by our investment assets. Because fixed income securities generally provide more stable investment income than equity securities, the preponderance of our investments are in fixed income instruments. Although our ALM techniques are based on theoretical and empirical models and can lead to incorrect assumptions, we believe that the careful use of these ALM techniques leads to a better understanding of the risks inherent in our assets and liabilities and is therefore an important element of our risk and investment management process. Our principal ALM techniques include cash flow analysis, scenario

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testing and stochastic modelling.

     To help manage our aggregate exposure to concentration and credit risks, we analyze the concentration of our risk by entity, risk category (asset, underwriting, retrocession), industry and credit rating. These concentrations and credit risks are reviewed on a quarterly basis by our Finance Committee as a part of the review and approval of our quarterly financial statements.

Sensitivity Analyses for Invested Assets

     Approximately 90.9% of our investment securities are classified for accounting purposes as available-for-sale. These securities are carried at their fair market value as of the balance sheet date with movements in fair value recorded in shareholders’ equity. In contrast to these assets, certain liability reserves, particularly non-life reinsurance reserves, are not shown at fair market values as of the balance sheet date. Therefore, U.S. GAAP accounting practices typically result in more volatile assets than liabilities. This, in turn, may lead us to report more volatile shareholders’ equity on our balance sheet than we believe may economically be the case.

     The following risk analyses do not take into account that there are strategies in place to minimize the exposures to market fluctuations. These strategies include, among others, changes in asset allocation and the sale of investments. These analyses assume that the change in value of assets is temporary and that the liability reserves would not change.

     We have based our computations of prospective effects of hypothetical interest rate changes on numerous assumptions. Because these computations are based on assumptions, they should not be relied on as indicative of future results.

     Certain shortcomings are inherent in the method of analysis presented in the computation of the fair value of fixed rate instruments. Actual values may differ from those projections presented should market conditions vary from assumptions used in the calculation of the fair value of individual securities, including non-parallel shifts in the term structure of interest rates and changing individual issuer credit spreads.

Equity Market Risk

     We hold approximately 11.2% of our invested assets in equity securities, which are subject to equity market risk. Our equity market risk is concentrated in the United States and Europe and is highly sensitive to general economic and stock market conditions. The estimated potential exposure of our consolidated net assets to a 10% decline in all stock markets as of December 31, 2003, would be an after-tax reduction in net assets of $68.4 million, which represents approximately 3.3% of our total shareholders’ equity as of December 31, 2003.

     Our strategic asset allocation combines a large percentage of investments in high-quality bonds with investments in equity securities. This allocation seeks to generate strong positive returns with acceptable risks over the long term, while protecting against excessive risks in periods of severe market distress. During a severe stock market correction associated with a weak economy, recession or depression, losses in the fair market value of equity securities tend to be partially offset by gains on high-quality bonds arising from falling interest rates. We seek to match our investments with our underlying liabilities in the countries and territories in which we operate. Consequently, we strive to keep our equity portfolio diversified so as to provide a broad exposure across major sectors of individual stock markets. We restrict our maximum investment in any one equity security or equity sector by reference to local benchmarks and insurance regulations.

Interest Rate Risk

     Our investments are subject to interest rate risks. Our interest rate risk is concentrated in the United States and Europe and is highly sensitive to many factors, including governmental monetary policies, and domestic and international economic and political conditions. The estimated potential exposure of our consolidated net assets to a one percentage point increase of the yield curve would be an after-tax reduction in net assets of $126.4 million, which represents approximately 6.1% of our total shareholders’ equity as of December 31, 2003. This reduction would be offset by higher investment income earned on newly invested funds.

     To protect our balance sheet from a possible rise of the yield curves, we stabilized the modified duration of our bond portfolio, excluding held-to-maturity securities, at 3.6. Additionally, we created a portfolio of held-to-maturity government bonds totalling $500.4 million (10.2% of our fixed maturities portfolio, excluding the Funds Withheld Asset).

     As of December 31, 2003, all of our debt outstanding was at fixed interest rates. Thus, an increase in interest rates would currently have no effect on our annual interest expense or reported shareholders’ equity, as we account for debt at amortized cost, not fair value.

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Foreign Exchange Risk

     Our general practice is to invest in assets that match the currency in which we expect related liabilities to be paid. We tend thus to invest our assets with the same currency allocation as our technical liabilities. This results in the same currency split for the assets backing our shareholders’ equity. This practice enables sound currency asset/liability management, but implies a translation risk of currency rate changes against the U.S. dollar that may result in adverse effects on our reported shareholders’ equity when expressed in U.S. dollars.

     Shareholders’ equity held in local insurance units is primarily kept in local currencies to the extent that shareholders’ equity is required to satisfy regulatory and self-imposed capital requirements. This facilitates our efforts to ensure that capital held in local insurance units will be able to support the local insurance business irrespective of currency movements. In line with our functional currency concept, the differences resulting from the currency rate changes are recorded in shareholders’ equity as cumulative currency translation adjustments.

     The table below shows the approximate effect on shareholders’ equity of instantaneous adverse movements in currency exchange rates of 10% on our major currency exposures at December 31, 2003 against the U.S. dollar.

	Adverse exchange rate
	movement against the U.S.			Approximate decline in
	dollar			shareholders’ equity
Euro		10	%	$42 million
Swiss franc		10	%	$35 million
UK pound		10	%	$  3 million

     As of December 31, 2003 and 2002, we had unrealized cumulative translation gains of $116.1 million and $113.9 million, respectively.

     Our reported premiums, losses and expenses are also affected by exchange rate fluctuations. Business written in currencies other than the U.S. dollar is translated at average exchange rates for the period, and therefore exchange rate movements from period to period can have a significant effect on our U.S. dollar reported premiums, losses and expenses.

     The table below shows the percentage of key income statement and balance sheet items, denominated by our main currencies as of and for the year ended December 31, 2003:

	U.S.						U.K			Swiss			Japanese
	Dollar			Euro			pound			franc			yen			Other			Total
Income statement
Net premiums written		52	%		22	%		13	%		1	%		2	%		10	%		100	%
Net investment income		71	%		14	%		12	%		1	%		—			2	%		100	%
Losses, loss adjustment expenses and life benefits		58	%		20	%		13	%		—			1	%		8	%		100	%
Underwriting acquisition costs		50	%		23	%		14	%		—			3	%		10	%		100	%
Other operating and administration expenses		39	%		11	%		4	%		45	%		—			1	%		100	%
Interest expense		100	%		—			—			—			—			—			100	%
Balance sheet
Total invested assets		66	%		15	%		13	%		3	%		—			3	%		100	%
Reinsurance assets		84	%		6	%		8	%		2	%		—			—			100	%
Losses and loss adjustment expenses, gross		61	%		17	%		16	%		1	%		1	%		4	%		100	%
Unearned premiums, gross		60	%		12	%		19	%		1	%		1	%		7	%		100	%
Future life benefits, gross		49	%		47	%		—			2	%		—			2	%		100	%
Debt		100	%		—			—			—			—			—			100	%

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not applicable.

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ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

     Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

     Converium Holding AG’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form 20-F, have concluded that, as of such date our disclosure controls and procedures were effective to ensure that material information relating to Converium Holding AG was made known to them by others within the company, particularly during the period in which this Form 20-F was being prepared.

     There were no changes to our internal controls over financial reporting that occurred during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Whistleblower Procedure

     An anonymous “whistleblower” procedure has been established, allowing confidential reporting and evaluation of complaints regarding questionable accounting methods or fraudulent practices, as well as other risk-related operational hazards such as inadequate controls or organizational shortcomings. Through Group Internal Audit, such anonymous reporting goes directly to the Audit Committee of the Board of Directors.

ITEM 16. [RESERVED]

Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     Our Board of Directors has determined that a member of our Audit Committee, George G.C. Parker, is an audit committee financial expert and is “independent” under the rules of the New York Stock Exchange.

Item 16B. CODE OF ETHICS

     The Board of Directors of Converium Holding AG approved the Code of Business Conduct and Ethics (the “Code”) for Converium on May 27, 2003.

     The details of the Code is accessible on our Internet website at:

     http://www.converium.com/3152.asp

Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Duration of the Mandate and Terms of Office of the Independent Auditors

     PricewaterhouseCoopers Ltd, our principal independent auditor, began serving as our auditor upon the formation of Converium in 2001. The head auditors responsible for our audit, Andrew Hill and Martin Frei, began serving in their roles in 2002 and 2003, respectively.

     Policy on Pre-Approval and Non-Audit Services of Independent Auditors

     Our Audit Committee comprises the Chairman of the Board of Directors and the Chairmen of the Finance, Nomination and Remuneration Committees. Only independent and financial literate Directors are eligible to serve on the Audit Committee. In order to qualify as independent, a member may not accept any consulting, advisory or compensatory fee from us. In addition, an Audit Committee member may not be a person affiliated with the company or any of its subsidiaries. The Audit Committee approves and supervises the implementation of Converium’s Audit Charter, including the review of internal control systems and Converium’s risk management and auditing processes; reviews and assesses significant accounting and reporting issues; oversees external and internal auditors and the external and internal audit process; assesses the accuracy of the annual financial statements and determines that appropriate accounting principles have been applied; and liaises with Converium’s Risk Management functions to identify Converium’s areas of greatest risk and to assess management’s role in mitigating the

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risks. Standing invitees are the CEO, the Head of Internal Audit and the external auditor. In 2003 the Audit Committee held seven meetings.

     The Audit Committee has the responsibility to pre-approve all audit fees, fees for audit related services, tax advisory fees provided by Converium’s external auditors and all non-audit related fees. Converium implemented protocols and guidelines to ensure that only pre-approved services are provided by Converium’s external auditors.

     Independent Auditor Fees

     We paid the following fees for professional services to PricewaterhouseCoopers Ltd, for the twelve-month periods ended December 31:

			2003
			%
			Approved
($ thousands)	2003		(1)			2002
Audit fees	$	2,296		100.0	%	$	1,892
Audit related fees		374		61.5			555
Tax advisory fees		161		82.3			143
Other non-audit fees		7		100.0			136
Total fees	$	2,838		91.5	%	$	2,726

(1) Represents percentage of 2003 fees approved by the Audit Committee.

     Audit fees are defined as the standard audit work that needs to be performed each year in order to issue an opinion on the consolidated financial statements of the Company and to issue reports on the local statutory financial statements. It also includes services that can only be provided by the Group auditor such as auditing of non-recurring transactions and application of new accounting policies, audits of significant and newly implemented system controls, pre-issuance reviews of quarterly financial results, consents and comfort letters and any other audit services required for US Securities and Exchange Commission or other regulatory filings.

     Audit related fees include those other assurance services provided by auditors but not restricted to those that can only be provided by the auditor signing the audit report. They comprise amounts for services such as consultation on the Sarbanes-Oxley project, systems reviews, U.S. GAAP training, pension and benefit plan audits and other accounting consultation.

     Tax advisory fees represent tax compliance and fees related to transfer pricing analysis.

     Other non-audit fees consist of fees related to a PricewaterhouseCoopers Ltd accounting and reporting database that Converium subscribes to.

Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     Not applicable.

Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

     Not applicable

ITEM 17. FINANCIAL STATEMENTS

     Not applicable.

ITEM 18. FINANCIAL STATEMENTS

     See the consolidated financial statements beginning on page F-1.

ITEM 19. EXHIBITS

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Exhibit Number	Description
1.1	Articles of Incorporation of Converium Holding AG, adopted November 8, 2001.*
1.2	Bylaws of Converium Holding AG, adopted November 16, 2001.*
1.3	Articles of Incorporation of Converium Holding AG, revised February 5, 2003. ^
2.1	Form of Deposit Agreement among Converium Holding AG, The Bank of New York, as Depositary, and all owners and beneficial owners from time to time of ADSs issued thereunder (including the form of ADS), incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially 2filed with the Commission on November 19, 2001.*
2.2	Indenture, dated as of October 20, 1993 between Zurich Reinsurance Centre Holdings, Inc. and The Bank of New York, as Trustee, relating to $200,000,000 principal amount of 7 1/8% Senior Notes due 2023 (and assumed by Converium Holdings (North America) Inc. pursuant to the Supplement Indenture included as Exhibit 2.3 hereto).* (Previously filed as Exhibit 3.1)
2.3	First Supplemental Indenture among Zurich Reinsurance Centre Holdings, Inc., as Issuer, Converium Holdings (North America) Inc., as Guarantor, and The Bank of New York, as Trustee, dated as of November 20, 2001.* (Previously filed as Exhibit 3.2)
2.4	Form of Indenture between Converium Finance, S.A., as Issuer, Converium AG and Converium Holding AG as Guarantors and JPMorgan Chase Bank as Trustee, Calculation Agent and Paying Agent.+
2.5	Form of the $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032 (included in Exhibit 2.4 hereto).+
2.6	Subordinated Guarantee by Converium Holding AG and Converium AG relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^
2.7	Indenture, dated December 23, 2002 between Converium Finance S.A., Converium Holding AG, Converium AG and JP Morgan Chase Bank, as trustee, relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^
4.1	Master Agreement by and among Zurich Financial Services and Converium Holding AG, dated December 1, 2001.*
4.2	Stock Purchase Agreement between Zurich Reinsurance Centre Stock Purchase Agreement between Zurich Reinsurance Centre Holdings, Inc. and Converium Holdings (North America) Inc., dated as of October 1, 2001.*
4.3	Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln) Aktiengesellschaft, dated September 28, 2001.*
4.4	Quota Share Retrocession Agreement between Zurich Insurance Company (including its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1, 2001.*
4.5	Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd. and Converium AG, dated October 1, (and effective as of July 1, 2001).*
4.6	Asset purchase and Assumption of Liability Agreement between Zurich Insurance Company and Converium AG, dated September 28, 2001.*
4.7	Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*
4.8	Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*
4.9	Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung (Köln)

Exhibit Number	Description
	Aktiengesellschaft and Zurich Insurance Company, dated as of October 1, 2001.*
4.10	Partial Commutation Agreement between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*
4.11	Master Novation and Indemnity Reinsurance Agreement among Zurich Reinsurance (North America), Inc., Centre Insurance Company, Centre Solutions (U.S.) Limited and Zurich Insurance Company, Bermuda Branch, dated as of October 1, 2001.*
4.12	Group Reinsurance Business Master Novation and Indemnity Reinsurance Agreement by and among Zurich Reinsurance (North America), Inc., Zurich Insurance Company and Zurich International (Bermuda) Ltd., dated as of October 1, 2001.*
4.13	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1991 through December 31, 1993) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.14	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1994 through December 31, 1994) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.*
4.15	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.16	Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective October 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.17	Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective November 6, 1992) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.*
4.18	Agreement Amending and Terminating Centre Reinsurance Dublin Affiliated Group Tax Allocation Agreement among Orange Stone Delaware Holdings Limited, Orange Stone Reinsurance, Centre Reinsurance Holdings (Delaware) Limited, Centre Reinsurance (U.S.) Limited, Zurich Reinsurance Centre Holdings, Inc., Zurich Reinsurance (North America), Inc., ZC Insurance Company, ZC Specialty Insurance Company, Centre Risk Advisors, Inc., Constellation Reinsurance Company, Centre Re Services, Inc., Zurich Global Assets LLC, formerly known as BDA/US Services Limited, ZC Management Corporation, ZC Resource LLC, ZC Property Management, Inc. and Claims Solutions Group, dated October 1, 2001.*
4.19	Catastrophe Cover Retrocession Agreement by and between Converium AG and Zurich Insurance Company, dated December 1, 2001.*
4.20	Stock Purchase Agreement between Zurich Reinsurance (North America), Inc. and Centre Strategic Investments Holdings Limited, dated August 23, 2001.*
4.21	Run-off Services and Management Agreement between Zurich Insurance Company and Converium AG, dated December 3, 2001.*
4.22	Tax Sharing and Indemnification Agreement among Zurich Reinsurance Centre Holdings, Inc., Orange Stone Delaware Holdings Limited, Converium Holdings (North America) Inc., Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001. *
4.23	Tax Sharing and Indemnification Agreement between Zurich Financial Services, Zurich Insurance Company, Converium Holding AG and Converium AG dated December 3, 2001. *
4.24	Form of Converium Standard Stock Option Plan for Non-U.S. Employees. *
4.25	Form of Converium Standard Stock Purchase Plan for Non-U.S. Employees. *

Exhibit Number	Description
4.26	Omnibus Share Plan for U.S. Employees. *
4.27	Converium Employee Stock Purchase Plan for U.S. Subsidiaries.*
4.28	Form of Converium Annual Incentive Deferral Plan.*
4.29	Lease, between Zurich Insurance Company and Converium AG, dated August 29, 2001.*
4.30	Sublease Support Agreement among Zurich Reinsurance (North America), Inc., Global Asset Holdings Limited and Centre Insurance Company, dated as of October 1, 2001.*
4.31	Sublease between ZC Resource LLC and Zurich Reinsurance (North America), Inc., dated as of June 20, 2001.*
4.32	Form of Letter Agreement between Converium Holding AG and The Bank of New York, relating to the pre-release of the ADRs, incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.*
4.33	Agreement dated September 2, 2002, between Converium AG and MDU Investments Ltd, regarding subscription of up to 20 million shares at £1 each. ^
4.34	Share Purchase Agreement dated November 27, 2002, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
4.35	Shareholder’s Agreement dated March 12, 2003, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
4.36	Sale and Purchase Agreement and Assignment between Converium AG and Converium Finance S.A. regarding the transfer of a $150 million loan granted to Converium Holding AG. ^
4.37	Amendment to Share Purchase Agreement dated November 27, 2002 between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
4.38	Agreement dated December 30, 2003, for the sale and purchase of 5.1% of Royal and Sun Alliance Insurance PLC’s shareholding in Global Aerospace Underwriting Managers Limited (GAUM).
4.39	Agreement dated July 24, 2003 $900,000,000 Credit Facility for Converium AG, Zurich arranged by ABN Amro Bank N.V., Barclay’s Capital and Commerzbank Aktiengesellschaft.
7.1	Computation of ratio of earnings to fixed charges.
8.1	Subsidiaries of the Registrant.
12.1	Consent of PricewaterhouseCoopers Ltd, independent accountants.
31.1	302 Certification of Chief Executive Officer.
31.2	302 Certification of Chief Financial Officer.
32.1	906 Certification of Chief Executive Officer.
32.2	906 Certification of Chief Financial Officer.

*	Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 10, 2001.
+	Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 18, 2002.
^	Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2002, filed on April 18, 2003.

CONVERIUM
INDEX TO CONSOLIDATED AND HISTORICAL COMBINED
FINANCIAL STATEMENTS AND SCHEDULES

			Page
Report of the independent Group Auditors on the Financial Statements			F-2
Consolidated and Historical Combined Statements of Income for the years ended December 31, 2003, 2002 and 2001			F-3
Consolidated and Historical Combined Balance Sheets as of December 31, 2003 and 2002			F-4
Consolidated and Historical Combined Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001			F-5
Consolidated and Historical Combined Statements of Changes in Equity for the years ended December 31, 2003, 2002 and 2001			F-6
Notes to the Consolidated and Historical Combined Financial Statements			F-7
Schedules
Report of the Group Auditors on the Financial Statement Schedules			S-1
I	Summary of Investments Other than Investments in Related Parties as of December 31, 2003 and 2002		S-2
II	Condensed Financial Information of the Registrant
		Statements of Income for the years ended December 31, 2003 and 2002 and for the period June 19, 2001 to December 31, 2001	S-3
		Balance Sheets as of December 31, 2003 and 2002	S-4
		Statements of Cash Flows for the years ended December 31, 2003 and 2002 and for the period June 19, 2001 to December 31, 2001	S-5
IV	Reinsurance for the years ended December 31, 2003, 2002 and 2001		S-6

Schedules other than those listed above are omitted for the reason that they are not applicable or the information is otherwise contained in the financial statements.

F-1

Converium Holding AG and Subsidiaries
Report of the independent Group auditors

To the General Meeting of Shareholders of Converium Holding AG, Zug

We have audited the accompanying consolidated balance sheets of Converium Holding AG as of December 31, 2003 and 2002 and the related consolidated and historical combined statements of income, cash flows and changes in equity for each of the three years in the period ended December 31, 2003, included on pages 28 through 69, all expressed in United States dollars.

The consolidated and historical combined financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated and historical combined financial statements based on our audits. We confirm that we meet the Swiss legal requirements concerning professional qualifications and independence.

Our audits were conducted in accordance with auditing standards promulgated by the Swiss profession and with auditing standards generally accepted in the United States of America. Those standards require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated and historical combined financial statements are free from material misstatement. We have examined on a test basis, evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated and historical combined financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated and historical combined financial statements referred to above present fairly, in all material respects, the financial position of Converium Holding AG at December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America and comply with Swiss law.

We recommend that the consolidated and historical combined financial statements submitted to you be approved.

PricewaterhouseCoopers Ltd

A. Hill M. Frei

Zurich, February 13, 2004

F-2

Converium Holding AG and Subsidiaries
Consolidated and historical combined statements of income

(US$ million, except per share information)

Year ended December 31	Notes		2003		2002		2001
Revenues
Gross premiums written				4,223.9		3,535.8		2,881.2
Less ceded premiums written				-396.9		-213.6		-398.6
Net premiums written		9		3,827.0		3,322.2		2,482.6
Net change in unearned premiums				-150.5		-156.7		-187.4
Net premiums earned		9		3,676.5		3,165.5		2,295.2
Net investment income		6		233.0		251.8		228.7
Net realized capital gains (losses)		6		18.4		-10.3		-18.4
Other income (loss)				2.7		-1.2		-5.8
Total revenues				3,930.6		3,405.8		2,499.7
Benefits, losses and expenses
Losses, loss adjustment expenses and life benefits		8,9		-2,674.2		-2,492.0		-2,300.5
Underwriting acquisition costs		9		-803.2		-666.7		-508.1
Other operating and administration expenses				-197.8		-173.3		-146.4
Interest expense		10		-31.0		-16.4		-24.2
Amortization of goodwill		7		—		—		-7.8
Restructuring costs		3		—		—		-50.0
Total benefits, losses and expenses				-3,706.2		-3,348.4		-3,037.0
Income (loss) before taxes				224.4		57.4		-537.3
Income tax (expense) benefit		11		-39.3		49.4		169.9
Net income (loss)				185.1		106.8		-367.4
Basic earnings (loss) per share		21		4.65		2.68		-9.18
Diluted earnings (loss) per share		21		4.59		2.64		-9.18

The notes to the consolidated and historical combined financial statements are an integral part of these financial statements.

F-3

Converium Holding AG and Subsidiaries
Consolidated balance sheets

(US$ million, except share information)

Year ended December 31	Notes		2003		2002
Assets
Invested assets
Held-to-maturity securities:
Fixed maturities		6		500.4		—
Available-for-sale securities:
Fixed maturities		6		4,428.2		3,443.1
Equity securities		6		840.2		530.8
Other investments		6		173.5		177.3
Short-term investments				55.8		318.0
Total investments				5,998.1		4,469.2
Funds Withheld Asset		6		1,530.6		1,648.1
Total invested assets				7,528.7		6,117.3
Other assets
Cash and cash equivalents				280.8		361.5
Premiums receivable:
Current				182.8		131.9
Accrued				1,825.5		1,589.4
Reinsurance assets:
Underwriting reserves		9		1,718.6		1,627.7
Insurance balances receivable, net				224.0		239.9
Funds held by reinsureds				1,374.0		935.9
Deferred policy acquisition costs				380.1		264.9
Deferred income taxes		11		345.1		391.8
Other assets		7		495.0		390.7
Total assets				14,354.6		12,051.0
Liabilities and equity
Liabilities
Losses and loss adjustment expenses, gross		8		7,842.8		6,821.3
Unearned premiums, gross		9		1,467.4		1,170.7
Future life benefits, gross		9		483.5		371.7
Other reinsurance liabilities				1,087.3		661.6
Funds held under reinsurance contracts				529.8		429.5
Deferred income taxes		11		158.3		133.9
Accrued expenses and other liabilities				311.6		333.9
Debt		10		390.6		390.4
Total liabilities				12,271.3		10,313.0
Equity
Common stock CHF 10 nominal value, 40,006,217 and 40,006,217 shares issued, respectively (39,775,620 and 39,904,647 shares outstanding, respectively)		14		253.0		253.0
Additional paid-in capital				1,326.7		1,330.9
Treasury stock (230,597 and 101,570 shares, respectively)				-10.0		-3.3
Unearned stock compensation		13		-6.1		-10.0
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on investments, net of taxes		6		145.3		-53.3
Cumulative translation adjustments				116.1		113.9
Total accumulated other comprehensive income				261.4		60.6
Retained earnings				258.3		106.8
Total equity				2,083.3		1,738.0
Total liabilities and equity				14,354.6		12,051.0

The notes to the consolidated and historical combined financial statements are an integral part of these financial statements.

F-4

Converium Holding AG and Subsidiaries
Consolidated and historical combined statements of cash flows

(US$ million)

Year ended December 31	2003		2002		2001
Cash flows from operating activities
Net income (loss)		185.1		106.8		-367.4
Adjustments for
Net realized capital (gains) losses on investments		-18.4		10.3		18.4
Amortization of premium/discount		43.9		20.6		6.2
Depreciation and amortization		30.5		38.2		37.0
Premium for September 11 coverage		—		—		28.5
Total adjustments		56.0		69.1		90.1
Changes in operational assets and liabilities
Deferred policy acquisition costs		-90.5		-47.0		-33.3
Reinsurance assets		13.6		331.1		-433.8
Funds held by reinsureds		-307.8		-311.2		158.4
Funds Withheld Asset		230.6		100.0		—
Premiums receivable		-162.2		-565.1		-77.8
Unearned premiums, gross		204.2		139.0		194.3
Losses and loss adjustment expenses, gross		603.7		744.5		1,251.6
Future life benefits, gross		85.0		119.7		90.0
Funds held under reinsurance contracts		72.7		-38.2		-81.6
Other reinsurance liabilities		329.0		280.2		-175.9
Income taxes, net		40.3		-32.8		-203.9
Net changes in all other operational assets and liabilities		5.6		-25.7		-99.2
Total changes in operational assets and liabilities		1,024.2		694.5		588.8
Cash provided by operating activities		1,265.3		870.4		311.5
Cash flows from investing activities
Purchases of fixed maturities held-to-maturity		-192.4		—		—
Proceeds from sales and maturities of fixed maturities available-for-sale		3,813.4		4,573.3		1,892.2
Purchases of fixed maturities available-for-sale		-5,054.0		-5,375.3		-1,969.7
Cash flows from investing activities (fixed maturities)		-1,433.0		-802.0		-77.5
Proceeds from sales of equity securities		94.3		599.2		288.6
Purchases of equity securities		-244.2		-651.1		-425.7
Cash flows from investing activities (equity securities)		-149.9		-51.9		-137.1
Net decrease (increase) in short-term investments		277.1		-228.5		25.6
Proceeds from sales of other assets		47.4		33.0		34.5
Purchases of other assets		-69.4		-43.9		-42.8
Purchase of real estate held for investment		—		—		-139.4
Net change in Funds Withheld Asset/Zurich Financing Agreement		—		—		-290.6
Cash flows from investing activities (other)		255.1		-239.4		-412.7
Net cash used in investing activities		-1,327.8		-1,093.3		-627.3
Cash flows from financing activities
Net transfers from Zurich Financial Services		—		—		861.2
Payable to Zurich Financial Services		—		—		-233.4
Cash flows from financing activities with Zurich Financial Services		—		—		627.8
Issuance of guaranteed subordinated notes		—		193.7		—
Net purchases of common shares		-17.3		-14.7		—
Dividends to shareholders		-29.9		—		—
Cash flows from financing activities (debt and shares)		-47.2		179.0		—
Net cash (used in) provided by financing activities		-47.2		179.0		627.8
Effect of exchange rate changes on cash and cash equivalents		29.0		-15.1		-13.4
Change in cash and cash equivalents		-80.7		-59.0		298.6
Cash and cash equivalents as of January 1		361.5		420.5		121.9
Cash and cash equivalents as of December 31		280.8		361.5		420.5

The notes to the consolidated and historical combined financial statements are an integral part of these financial statements.

F-5

Converium Holding AG and Subsidiaries
Consolidated and historical combined statements of changes in equity

(US$ million)

											Net
							Unearned		Accumulated		investment
			Additional				stock		other		by Zurich
	Common		paid-in		Treasury		compen-		comprehensive		Financial		Retained		Total
	stock		capital		stock		sation		income (loss)		Services		earnings		equity
Balance, December 31, 2000		—		—		—		—		59.3		1,029.1		—		1,088.4
Net loss		—		—		—		—		—		-367.4		—		-367.4
Change in net unrealized gains (losses) on investments, net of taxes		—		—		—		—		11.5		—		—		11.5
Translation adjustments		—		—		—		—		-62.4		—		—		-62.4
Total comprehensive loss																-418.3
Net transfers from Zurich Financial Services		—		—		—		—		—		889.7		—		889.7
Net issuance of stock compensation		—		38.1		—		-27.1		—		—		—		11.0
Transfer of net investment by Zurich Financial Services		253.0		1,298.4		—		—		—		-1,551.4		—		—
Balance, December 31, 2001		253.0		1,336.5		—		-27.1		8.4		—		—		1,570.8
Net income		—		—		—		—		—				106.8		106.8
Change in net unrealized gains (losses) on investments, net of taxes		—		—		—		—		-83.6				—		-83.6
Translation adjustments		—		—		—		—		135.8				—		135.8
Total comprehensive income																159.0
Purchases of common shares		—		—		-14.7		—		—				—		-14.7
Releases of common shares from treasury		—		-12.9		11.4		—		—				—		-1.5
Net amortization of stock compensation		—		7.3		—		17.1		—				—		24.4
Balance, December 31, 2002		253.0		1,330.9		-3.3		-10.0		60.6				106.8		1,738.0
Net income		—		—		—		—		—				185.1		185.1
Change in net unrealized gains (losses) on investments, net of taxes		—		—		—		—		198.6				—		198.6
Translation adjustments		—		—		—		—		2.2				—		2.2
Total comprehensive income																385.9
Dividends to shareholders		—		—		—		—		—				-29.9		-29.9
Transfer to general legal reserve		—		3.7		—		—		—				-3.7		—
Purchases of common shares		—		—		-17.3		—		—				—		-17.3
Releases of common shares from treasury		—		-14.0		10.6		—		—				—		-3.4
Net amortization of stock compensation		—		6.1		—		3.9		—				—		10.0
Balance, December 31, 2003		253.0		1,326.7		-10.0		-6.1		261.4				258.3		2,083.3

The notes to the consolidated and historical combined financial statements are an integral part of these financial statements.

F-6

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements

Schedule of segment data
(US$ million)

	Standard
	Property & Casualty
	Reinsurance									Specialty Lines
Year ended December 31	2003			2002			2001			2003			2002			2001
Gross premiums written		1,795.4			1,542.3			1,495.6			2,022.0			1,650.3			1,129.1
Less ceded premiums written		-149.8			-90.1			-215.6			-210.1			-95.0			-160.7
Net premiums written		1,645.6			1,452.2			1,280.0			1,811.9			1,555.3			968.4
Net change in unearned premiums		-15.7			-55.5			-59.5			-148.3			-97.3			-110.8
Net premiums earned		1,629.9			1,396.7			1,220.5			1,663.6			1,458.0			857.6
Total investment results		101.5			98.1			86.2			132.4			125.3			108.3
Revenues		1,731.4			1,494.8			1,306.7			1,796.0			1,583.3			965.9
Losses, loss adjustment expenses and life benefits		-1,113.6			-1,065.0			-1,137.9			-1,241.0			-1,166.9			-938.7
Underwriting acquisition costs		-363.1			-310.4			-239.6			-360.1			-292.3			-246.7
Other operating and administration expenses		-71.0			-63.6			-76.5			-79.7			-68.1			-57.7
Benefits, losses and expenses		-1,547.7			-1,439.0			-1,454.0			-1,680.8			-1,527.3			-1,243.1
Segment income (loss)		183.7			55.8			-147.3			115.2			56.0			-277.2
Other income (loss)
Interest expense
Amortization of goodwill and restructuring costs
Income (loss) before taxes
Income tax (expense) benefit
Net income (loss)
At December 31
Reinsurance assets — underwriting reserves		553.2			622.8						989.9			926.5
Losses and loss adjustment expenses, gross		3,231.3			2,774.7						4,427.2			3,898.9
Future life benefits, gross		—			—						—			—
Ratios
Loss ratio (Losses divided by net premiums earned)		68.3	%		76.3	%		93.2	%		74.6	%		80.0	%		109.5	%
Underwriting expense ratio (Underwriting acquisition costs divided by net premiums earned)		22.3	%		22.2	%		19.6	%		21.6	%		20.0	%		28.8	%
Administration expense ratio (Other operating and administration expenses divided by net premiums written)		4.3	%		4.4	%		6.0	%		4.4	%		4.4	%		6.0	%
Combined ratio (Sum of the loss, underwriting expense and administration expense ratios)		94.9	%		102.9	%		118.8	%		100.6	%		104.4	%		144.3	%

F-7

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements

										Life & Health
	Total Non-life consolidated									Reinsurance									Corporate Center						Total consolidated
	2003			2002			2001			2003			2002			2001			2003		2002		2001		2003		2002		2001
Gross premiums written		3,817.4			3,192.6			2,624.7			406.5			343.2			256.5			—		—		—		4,223.9		3,535.8		2,881.2
Less ceded premiums written		-359.9			-185.1			-376.3			-37.0			-28.5			-22.3			—		—		—		-396.9		-213.6		-398.6
Net premiums written		3,457.5			3,007.5			2,248.4			369.5			314.7			234.2			—		—		—		3,827.0		3,322.2		2,482.6
Net change in unearned premiums		-164.0			-152.8			-170.3			13.5			-3.9			-17.1			—		—		—		-150.5		-156.7		-187.4
Net premiums earned		3,293.5			2,854.7			2,078.1			383.0			310.8			217.1			—		—		—		3,676.5		3,165.5		2,295.2
Total investment results		233.9			223.4			194.5			17.5			18.1			15.8			—		—		—		251.4		241.5		210.3
Revenues		3,527.4			3,078.1			2,272.6			400.5			328.9			232.9			—		—		—		3,927.9		3,407.0		2,505.5
Losses, loss adjustment expenses and life benefits		-2,354.6			-2,231.9			-2,076.6			-319.6			-260.1			-223.9			—		—		—		-2,674.2		-2,492.0		-2,300.5
Underwriting acquisition costs		-723.2			-602.7			-486.3			-80.0			-64.0			-21.8			—		—		—		-803.2		-666.7		-508.1
Other operating and administration expenses		-150.7			-131.7			-134.2			-12.8			-11.3			-4.9			-34.3		-30.3		-7.3		-197.8		-173.3		-146.4
Benefits, losses and expenses		-3,228.5			-2,966.3			-2,697.1			-412.4			-335.4			-250.6			-34.3		-30.3		-7.3		-3,675.2		-3,332.0		-2,955.0
Segment income (loss)		298.9			111.8			-424.5			-11.9			-6.5			-17.7			-34.3		-30.3		-7.3		252.7		75.0		-449.5
Other income (loss)																										2.7		-1.2		-5.8
Interest expense																										-31.0		-16.4		-24.2
Amortization of goodwill and restructuring costs																										—		—		-57.8
Income (loss) before taxes																										224.4		57.4		-537.3
Income tax (expense) benefit																										-39.3		49.4		169.9
Net income (loss)																										185.1		106.8		-367.4
At December 31
Reinsurance assets — underwriting reserves		1,543.1			1,549.3						175.5			78.4												1,718.6		1,627.7
Losses and loss adjustment expenses, gross		7,658.5			6,673.6						184.3			147.7												7,842.8		6,821.3
Future life benefits, gross		—			—						483.5			371.7												483.5		371.7
Ratios
Loss ratio (Losses divided by net premiums earned)		71.5	%		78.2	%		99.9	%
Underwriting expense ratio (Underwriting acquisition costs divided by net premiums earned)		22.0	%		21.1	%		23.4	%		20.9	%		20.6	%		10.0	%
Administration expense ratio (Other operating and administration expenses divided by net premiums written)		4.4	%		4.4	%		6.0	%		3.5	%		3.6	%		2.1	%
Combined ratio (Sum of the loss, underwriting expense and administration expense ratios)		97.9	%		103.7	%		129.3	%

F-8

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

1. Organization and nature of operations

Converium Holding AG and subsidiaries (“Converium”) is a leading global professional reinsurer, which offers a full range of traditional non-life and life reinsurance products as well as innovative “non-traditional” solutions to help clients manage capital and risk. Our principal lines of non-life reinsurance include general third party liability, motor, personal accident, property, agribusiness, aviation and space, credit and surety, engineering, marine and energy, professional liability and other special liability and workers’ compensation. The principal life reinsurance products are ordinary life and disability reinsurance, including quota share, surplus coverage and financing contracts, and accident and health.

Converium was formed through the restructuring and integration of substantially all of the third-party assumed reinsurance business of Zurich Financial Services through a series of transactions (“Transactions”). On December 1, 2001, Converium entered into a Master Agreement with Zurich Financial Services (the “Master Agreement”), which set forth the terms of the separation from Zurich Financial Services. In December 2001, Zurich Financial Services sold 87.5% of its interest in Converium through an initial public offering (“IPO”), which date represented the legal separation (the “Separation Date”) from Zurich Financial Services. Zurich Financial Services’ remaining 12.5% interest in Converium was sold in January 2002.

Subsequent to the initial public offering, Converium has operated as an independent company. However, under the Master Agreement, Converium has several ongoing business relationships with Zurich Financial Services. These include the Quota Share Retrocession Agreement, the Catastrophe Agreement, aggregate excess of loss reinsurance coverage for losses from the Unicover Pool and September 11th terrorist attacks, as well as certain operating relationships (see Notes 9 and 15).

2. Summary of significant accounting policies

Converium’s financial statements have been prepared on the basis of accounting principles generally accepted in the United States (“US GAAP”) and comply with Swiss law.

(a) Basis of preparation
Converium’s financial statements present the financial condition as of December 31, 2003 and 2002 and the related statements of income, cash flows and changes in equity for each of the three years in the period ended December 31, 2003. For periods prior to the Separation Date, the financial statements were prepared on a carve-out basis to represent the net assets and related historical results of the third party assumed reinsurance business owned by Zurich Financial Services and that now comprise Converium. Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation.

A subsidiary is an entity in which Converium owns, directly or indirectly, more than 50% of the outstanding voting rights, or has a controlling financial interest. The results of Converium entities are included in the financial statements from the effective date of acquisition. All intercompany balances, profits and transactions have been eliminated. Entities where Converium has the ability to exercise significant influence are accounted for using the equity method. See Note 20 for the entities included in the financial statements.

Prior to the Transactions, changes in equity represent movements in Zurich Financial Services’ net investment in Converium. For periods prior to July 1, 2001, certain expenses reflected in the financial statements include allocations of corporate expenses incurred by Zurich Financial Services related to general and administrative services for Converium. Additionally, investment income in 2001 includes interest earned on the Zurich Financing Agreement (see Note 6).

Management believes that the foregoing adjustments and allocations were made on a basis that is a reasonable reflection of the historical results of Converium. However, these results do not necessarily represent what the income statement, changes in equity or cash flows would have been if Converium had been a separate stand-alone entity during the periods presented.

(b) Foreign currency translation and transactions
Foreign currency translation: In view of the international nature of Converium’s business and the fact that more of its business is transacted in US dollars than in any other currency, the financial statements are reported in US dollars. Other functional currencies include the Swiss franc, the UK pound, the Euro and the Japanese yen. Assets and liabilities of all of Converium’s branches and subsidiaries expressed in currencies other than US dollars are translated at the end of period exchange rates, whereas statements of income and cash flows are translated at average exchange rates for the period. Translation differences on functional currencies are recorded directly in equity as cumulative translation adjustments, net of any related deferred taxes, if applicable.

F-9

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Foreign currency transactions: Outstanding balances in foreign currencies arising from foreign currency transactions other than the functional currencies are translated at end of period exchange rates. Revenues and expenses are translated using the exchange rate at the date of the transaction or a weighted average rate. The resulting exchange differences are recorded in the statements of income.

(c) Non-life reinsurance
Premiums: Premiums from short-duration insurance and reinsurance contracts are recorded as written and are earned primarily on a pro-rata basis over the term of the related insurance or reinsurance coverage. However, for those contracts for which the period of risk differs significantly from the contract period, premiums are earned over the period of risk in proportion to the amount of insurance or reinsurance protection provided. The unearned premium reserve represents the portion of the premiums written relating to the unexpired terms of coverage. Such reserves are computed by pro-rata methods based on statistical data or reports received from ceding companies.

Reinsurance contracts are assessed to determine if underwriting risk, defined as the reasonable possibility of a significant variation in the amount of payments and the reasonable possibility that the reinsurer will realize a significant loss, and timing risk, defined as the reasonable possibility of a significant variation in the timing of cash flows, is transferred by the ceding company. Those contracts that do not transfer both risks, referred to in total as insurance risk, are accounted for using the deposit method. A deposit asset or liability is recognized based on the consideration paid or received less any explicitly identified premiums or fees to be retained by the ceding or assuming company. Deposits for contracts that transfer only significant underwriting risk are subsequently measured based on the unexpired portion of coverage until a loss is incurred, after which the present value of expected future cash flows under the contract is also accrued. Changes in the deposit amount are recorded in the statement of income as a loss or loss adjustment expense. Deposits for contracts that transfer only timing risk, or deposits for contracts that transfer neither significant timing nor underwriting risk, are accounted for using the interest method. Future cash flows are estimated to calculate the effective yield, and revenue and expense are recorded as interest income or expense. The effect of contracts with indeterminate risk is not included in the determination of net income until sufficient information becomes available to reasonably estimate the impact.

Converium recognizes a liability or an asset to the extent that there is an obligation to pay or receive cash or other consideration that would not have been required absent experience under the contract.

Deferred policy acquisition costs: Acquisition costs, principally representing commissions and brokerage expenses, premium taxes and other underwriting expenses, net of allowances from retrocessionaires, which vary with and are directly related to the production of new business, are deferred and amortized over the period in which the related written premiums are earned. Deferred policy acquisition costs are periodically reviewed to determine that they do not exceed recoverable amounts after considering future investment income.

Losses: Losses and loss adjustment expenses are charged to expenses as incurred. Unpaid losses and loss adjustment expenses represent the accumulation of estimates for ultimate losses based on reports and individual case estimates received from ceding companies. An amount is included for losses and loss adjustment expenses incurred but not reported (“IBNR”) on the basis of past experience of Converium and its ceding companies. Converium does not discount its loss reserves, other than for settled claims with fixed payment terms.

The methods of determining such loss and loss adjustment expense estimates and establishing the resulting reserves are continually reviewed and updated and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Resulting adjustments are reflected as current expense in the period in which they become known. Since the reserves are based on estimates, the ultimate settlement may vary from the amount provided.

(d) Life reinsurance
Recognition of reinsurance revenue and related expenses: Premiums from short-duration life reinsurance contracts are recognized as revenue over the remaining contract period in proportion to the amount of reinsurance protection provided. Premiums from long-duration life reinsurance contracts are recognized as revenue in a manner consistent with the underlying reinsured contracts. Benefits and commissions are provided against such revenue to recognize profits over the estimated life of the reinsurance contract.

Deferred policy acquisition costs: Acquisition and commission costs incurred in acquiring new business are deferred. Deferred policy acquisition costs are amortized over the expected life of the contracts as a constant percentage of expected premiums. Expected premiums are estimated at the effective date of the contract and are consistently applied throughout the life of the contract unless a premium deficiency occurs. Deferred policy acquisition costs are subject to recoverability testing at the time of contract issue and at the end of each accounting period.

F-10

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Future life benefits reserves and contract deposits: Liabilities for future life benefit reserves and contract deposits are estimated on bases consistent with those used for the original policies issued and with the terms of the reinsurance contracts.

(e) Retrocessions
Converium cedes reinsurance to retrocessionaires in the normal course of business. The cost of short duration retrocessional contracts is amortized over the remaining contract period in proportion to the amount of reinsurance protection provided consistent with the underlying assumed contracts. The cost of long-duration retrocessional contracts is amortized over the estimated remaining life of the underlying assumed contracts. The difference, if any, between the amounts paid for the retrocessional contract and the amount of the liability for contract benefits relating to the underlying reinsured contracts is part of the estimated cost to be amortized. Reinsurance is recorded gross in the balance sheet. Reinsurance assets include the balances due from retrocessionaires for paid and unpaid losses and loss adjustment expenses, ceded unearned premiums, and ceded future life benefits. Amounts recoverable from retrocessionaires are estimated in a manner consistent with the liabilities associated with the reinsured contract.

Converium establishes an allowance for potentially uncollectible recoverables from retrocessionaires. In addition, Converium immediately charges operations for any recoverable balances that are deemed to be uncollectible. Collateral and other offsets are considered in determining the allowance or expense.

(f) Invested assets
The majority of Converium’s fixed maturities and equity securities are classified as available-for-sale; these investments are carried at fair value. Fixed maturities for which Converium has the intent and ability to hold to maturity are classified as held-to-maturity. Held-to-maturity securities are carried at amortized cost, if purchased, or carrying value, if transferred from the available-for-sale category to the held-to-maturity category. The difference between the fair value and amortized cost at the date of transfer of such securities is amortized over the life of the respective securities. The carrying value of transferred securities is the fair value at the date of transfer less unamortized net unrealized gains. Fixed maturities and equity securities which Converium buys with the intention to resell in the near term, are classified as trading and are carried at fair value.

Unrealized gains or losses on investments carried at fair value, except those designated as trading, are recorded in other comprehensive income, net of deferred income taxes. Unrealized gains or losses on investments designated as trading are recognized in current period income.

When declines in values of securities below cost or amortized cost are considered to be other than temporary, an impairment charge is recorded as a realized capital loss in the statement of income for the difference between cost or amortized cost and estimated fair value. “Other than temporary declines” are declines in value of the security that exceed 20% over a period of six months, or that exceed of 50% regardless of the period of decline. To continue to adhere to emerging asset impairment standards, beginning in the second quarter of 2003, Converium revised its impairment policy to also record as realized capital losses any declines in value of equity securities over a period of more than twelve months. The same policy applies to fixed maturities securities when the decline in value is attributable to the deteriorating credit-worthiness of the issuer. At management’s judgment, Converium impairs additional securities based on prevailing market conditions by considering various factors such as the financial condition of the issuer, the market value and the expected future cash flows of the security.

Realized gain or loss on disposals is based on the difference between the proceeds received and the cost or amortized cost of the investment using the specific identification method. The amortization of premium and accretion of discount on investments in fixed maturities is computed using the effective interest method and is recorded in current period income. Dividends on equity securities are recorded as revenue on the ex-dividend date, the date that the dividends become payable to the holders of record.

Real estate held for investment, which is included in the balance sheet under the caption, “Other investments”, is recorded at depreciated cost and is depreciated on a straight-line basis over 30 years. The gain or loss on disposal is based on the difference between the proceeds received and the carrying value of the investment.

Certain partnerships in which Converium has an interest are engaged exclusively in making investments in direct private equity, private equity funds and hedge funds. In the partnerships, these investments are carried at fair value as determined by the fund manager, with changes in fair value being recorded as other income or loss.

Short-term and other investments are recorded at cost, which approximates fair value. Short-term investments are those with a maturity of greater than three months but less than one year from date of purchase.

The Funds Withheld Asset is carried at the principal balance plus accrued interest. See Notes 6 and 15 for further description.

F-11

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

(g) Derivative instruments
Derivative financial instruments include swaps, futures, forwards and option contracts, which all derive their value from underlying interest or foreign exchange rates, commodity values or equity prices. Derivatives are subject to various risks similar to those related to the underlying financial instruments, including market, credit and liquidity risk.

Derivative instruments are recognized on the balance sheet at fair value. The recognition of changes in the fair value of a derivative depends on its intended use. Derivatives and other financial instruments are used to hedge exposures or modify exposures to interest rate and foreign currency risks. Changes in the fair value of derivatives used in hedging activities are, depending on the nature of the hedge, either recognized in earnings together with the change in fair value of the hedged item attributable to the risk being hedged, or recognized in other comprehensive income until the hedged item affects earnings. For all hedging activities, the ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. Derivatives not used in hedging activities are adjusted to fair value through earnings.

Embedded derivatives in insurance contracts and investment contracts are separated from their host contracts and accounted for as derivative instruments under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

(h) Obligation to repurchase securities
Sales of securities under agreements to repurchase are accounted for as collateralized transactions and are recorded at their contracted repurchase amount plus accrued interest. Converium minimizes the credit risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring customer credit exposure and collateral value and generally requiring additional collateral to be deposited with Converium when deemed necessary.

(i) Cash and cash equivalents
Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments with original maturities of three months or less.

(j) Fixed assets
Fixed assets, which are included in the balance sheet under the caption “Other assets”, are carried at cost less accumulated depreciation and any necessary write-downs for impairment. The costs of fixed assets are depreciated principally on a straightline basis over the following estimated useful economic lives: furniture and fixtures five to ten years; computer equipment and software three to five years. Maintenance and repair costs are charged to income as incurred; costs incurred for major improvements are capitalized and depreciated. Gains and losses on disposal of fixed assets are based upon their carrying amount.

(k) Goodwill
Converium adopted SFAS No. 142, “Goodwill and Other Intangible Assets” on January 1, 2002. This standard prohibits the amortization of goodwill and intangible assets that have indefinite useful lives, and requires impairment testing of goodwill annually or if any event occurs which would indicate an impairment of goodwill. Except for the reduction of amortization of goodwill, adoption of SFAS No. 142 did not impact Converium’s financial condition or results of operations.

SFAS No. 142 requires that goodwill be tested annually for impairment using a two-step process. The first step is to identify a potential impairment. The second step of the goodwill impairment test measures the amount of the impairment loss, if any, and must be completed by the end of the fiscal year. Intangible assets deemed to have an indefinite life are tested for impairment using a one-step process, which compares the fair value to the carrying amount of the asset as of the beginning of the fiscal year.

(l) Recognition and measurement of long-lived assets
Converium periodically reviews its long-lived assets to determine potential impairment. If the recoverable amount is less than the carrying amount of the asset, an impairment loss is recognized. The recoverable amount is measured using the sum of the asset’s undiscounted estimated future cash flows expected to arise from the use of the asset and from its disposal at the end of its useful life. The impairment loss is measured as the difference between the carrying amount of the asset and its fair value. Fair value is defined as the market price less cost of disposal. If the market price is not available, fair value is estimated based on the present value of future cash flows.

(m) Income taxes
Taxes on income are accrued in the same periods as the revenues and expenses to which they relate. Deferred income taxes are provided for all temporary differences, which are based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted local income tax rates and laws, and for loss carry forwards. A valuation allowance is recorded to reduce a deferred tax asset to that amount that is expected to be realized.

F-12

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

(n) Employee benefits
Converium provides employee retirement benefits under principally two types of arrangements: defined benefit plans providing specified benefits and defined contribution plans. The assets of these plans are principally held separately from Converium’s general assets in trustee-administered funds.

Defined benefit plan obligations and contributions are determined periodically by qualified actuaries using the projected unit credit method. Converium’s expense related to defined benefit plans is accrued over the employees’ service periods based upon the actuarially determined cost for the period. Actuarial gains and losses are normally spread over the average remaining service lives of employees. Contributions to defined contribution pension plans are charged to income as they become due.

Converium recognizes the expense related to incentive plans over the relevant performance period. With regard to share-based compensation, Converium uses the fair value based method of accounting. Expense recorded for share-based compensation takes into account the exercise price as of the grant date in determining the fair value of the shares or options to be awarded.

(o) New accounting pronouncements
The following new standards have been or will be required to be adopted by Converium in the future:

SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This Statement amends SFAS No. 133 for decisions made as part of the Derivatives Implementation Group process and in connection with implementation issues raised in relation to the application of the definition of a derivative. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. This standard did not have a material impact on the financial condition or results of operations of Converium.

SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. This standard did not have a material impact on Converium.

Statement of Position (“SOP”) 03-1,“Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts”
In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts.” The SOP provides guidance on accounting and reporting by insurance enterprises for certain non-traditional long-duration contracts and for separate accounts. The SOP is effective for financial statements for fiscal years beginning after December 15, 2003, with earlier adoption encouraged. The SOP may not be applied retroactively to prior years’ financial statements, and initial application should be as of the beginning of an entity’s fiscal year. This statement is not expected to have a material impact on the financial condition or results of operations of Converium.

(p) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Therefore, actual results could differ from those estimates.

F-13

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

3. Restructuring costs

In connection with the Transactions, Converium incurred US$ 50.0 million in restructuring costs during 2001. Any restructuring costs relating to the Transactions in excess of this amount were borne by Zurich Financial Services. The restructuring costs, according to the Master Agreement, included the costs and expenses of the Transactions, including advisors’ fees, retention plan costs expensed in 2001 and stamp duty taxes. Converium did not incur any restructuring costs during 2003 or 2002.

4. Foreign currency translation and transactions

Table 4.1 summarizes the principal exchange rates which have been used for translation purposes (US dollar per foreign currency unit). Net realized gains (losses) on foreign currency transactions included in the statements of income were immaterial for each of the three years ended December 31, 2003.

Table 4.1

					Statements of income
	Balance sheets				and cash flows
Exchange rates against US$	2003		2002		2003		2002		2001
UK pound		1.7804		1.6027		1.6349		1.5031		1.4406
Euro		1.2531		1.0476		1.1317		0.9453		0.8955
100 Japanese yen		0.9352		0.8437		0.8637		0.7998		0.8240
Swiss franc		0.8033		0.7206		0.7441		0.6446		0.5929

5. Segment information

The primary measure of segment information, as reflected in the Schedule of Segment Data, is segment income, defined as income before other income (loss), interest expense, amortization of goodwill and restructuring costs and income taxes.

In October 2003, Converium implemented changes to its organizational and financial reporting structures. At the time of its IPO in December 2001, Converium adopted an organizational model based on geography. This was largely driven by the historical development of its then parent, Zurich Financial Services. Over its first two years as an independent reinsurer, Converium has become more globally integrated and has seen its business strategy evolve. As a result, the issues of legal entity and geography have become less relevant criteria when evaluating business strategy and capital and resource allocation.

The new segment structure centers on global lines of business. There are now three new global business segments by which Converium sets strategy and measures results: Standard Property & Casualty Reinsurance, Specialty Lines, and Life & Health Reinsurance. The lines of business by segment are as follows:

Standard Property & Casualty Reinsurance: general third party liability, motor, personal accident (assumed from non-life insurers) and property.

Specialty Lines: agribusiness, aviation & space, credit & surety, engineering, marine & energy, professional liability and other special liability, and workers’ compensation.

Life & Health Reinsurance: life and disability, and accident and health.

In addition to the three segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Converium accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. The changes in the segment structure do not change the previously disclosed consolidated results.

F-14

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 5.1 below shows net premiums written by line of business.

Table 5.1
Net premiums written by line of business
(US$ million)

Year ended December 31	2003		2002		2001
Standard Property & Casualty Reinsurance:
General third party liability		335.0		337.7		271.6
Motor		488.5		453.5		436.9
Personal accident (assumed from non-life insurers)		35.1		35.0		21.1
Property		787.0		626.0		550.4
Total standard property & casualty reinsurance		1,645.6		1,452.2		1,280.0
Specialty Lines:
Agribusiness		90.0		22.0		32.0
Aviation & space		341.8		365.3		182.8
Credit & surety		236.0		200.1		178.5
Engineering		139.9		116.1		81.5
Marine & energy		95.3		94.3		73.6
Professional liability and other special liability		598.0		536.9		241.2
Workers’ compensation		310.9		220.6		178.8
Total specialty lines		1,811.9		1,555.3		968.4
Total non-life reinsurance		3,457.5		3,007.5		2,248.4
Life & Health Reinsurance:
Life and disability		162.1		154.7		136.4
Accident and health		207.4		160.0		97.8
Total life & health reinsurance		369.5		314.7		234.2
Total		3,827.0		3,322.2		2,482.6

Table 5.2 below shows gross premiums written by geographic area of ceding company. Gross premiums written reflect the markets where the business is originally produced.

Table 5.2
Gross premiums written by geographic area of ceding company
(US$ million)

Year ended December 31	2003		2002		2001
United Kingdom(*)		1,083.0		910.4		560.1
Germany		286.9		176.1		179.4
France		160.5		106.9		89.8
Italy		131.2		84.0		62.7
Rest of Europe		338.8		224.0		199.5
Far East		266.4		191.9		113.7
Near and Middle East		134.3		124.3		99.8
North America		1,671.1		1,553.2		1,431.5
Latin America		151.7		165.0		144.7
Total		4,223.9		3,535.8		2,881.2

(*) Premiums from the United Kingdom include business assumed through GAUM and Lloyds’ syndicates for such lines of business as aviation and space as well as marine, where the exposures are worldwide in nature. Therefore, geographic location of the ceding company may not necessarily be indicative of the location of risk.

In 2003, two reinsurance intermediaries produced approximately 11% and 12% of Converium’s gross premiums written. The revenues from these reinsurance intermediaries were produced across all of the segments. The same two reinsurance intermediaries produced approximately 13% each in 2002, and 13% and 12% in 2001, respectively, of Converium’s gross premiums written. No ceding company accounted for more than 10% of Converium’s revenues for any of the three years ended December 31, 2003.

F-15

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

6. Invested assets and investment income

Table 6.1
Net investment income
(US$ million)

Year ended December 31	2003		2002		2001
Fixed maturities		121.0		132.7		130.0
Equity securities		11.4		14.5		9.7
Short-term investments and cash and cash equivalents		7.5		12.9		12.5
Real estate		11.5		11.5		3.6
Other		7.0		11.0		2.0
Funds Withheld Asset/Zurich Financing Agreement		85.6		81.1		75.7
Total investment income		244.0		263.7		233.5
Investment expenses		-8.0		-6.1		-4.7
Real estate expenses		-3.0		-5.8		-0.1
Net investment income		233.0		251.8		228.7

In 2001, the cash flows of Converium AG were managed by Zurich Financial Services pursuant to the Zurich Financing Agreement. In conjunction with the establishment of the Funds Withheld Asset (see Note 15), the Zurich Financing Agreement was cancelled. The Funds Withheld Asset was US$ 1,530.6 million and US$ 1,648.1 million as of December 31, 2003 and 2002, respectively. Net investment income on the Funds Withheld Asset is based on a weighted average interest rate similar to that of a bond portfolio.

Table 6.2
Net realized capital gains (losses)
(US$ million)

Year ended December 31	2003		2002		2001
Fixed maturities:
Realized capital gains		46.1		145.9		50.0
Realized capital losses		-11.3		-57.9		-4.1
Equity securities:
Realized capital gains		9.1		37.5		48.5
Realized capital losses		-1.7		-90.4		-30.6
Write-down of impaired investments		-27.4		-48.3		-82.5
Other		3.6		2.9		0.3
Net realized capital gains (losses)		18.4		-10.3		-18.4

Included in the 2002 realized amounts were gains on the restructuring of the fixed maturities portfolio of US$ 62.9 million, offset by losses on the restructuring of the equity portfolio of US$ 48.2 million, and losses realized on the sale of WorldCom fixed income investments of US$ 15.8 million.

In 2003, Converium created a portfolio of held-to-maturity government bonds totaling US$ 500.4 million (10.2% of the fixed maturities portfolio, excluding the Funds Withheld Asset), of which US$ 308.0 million were transferred from available-for-sale to held-to-maturity and US$ 192.4 million were directly invested from operational cash flow.

F-16

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 6.3
Unrealized investment gains and losses
(included in other comprehensive income)
(US$ million)

	Net change for the year						Total as
	ended December 31						of December 31
	2003		2002		2001		2003		2002
Fixed maturities held-to-maturity		14.1		—		—		14.1		—
Fixed maturities available-for-sale		-8.0		11.2		-9.1		25.8		33.8
Equity securities available-for-sale		148.1		-75.7		24.7		94.5		-53.6
Less amounts of net unrealized investment gains (losses) attributable to:
Net deferred income taxes		-5.9		31.2		-2.9		10.9		16.8
Foreign currency effect		50.3		-50.3		-1.2		—		-50.3
Total		198.6		-83.6		11.5		145.3		-53.3

Table 6.4
Investments in fixed maturities
and equity securities
(US$ million)

	Cost or				Gross				Gross				Estimated
	amortized cost				unrealized gains				unrealized losses				fair value
	2003		2002		2003		2002		2003		2002		2003		2002
Held-to-maturity
Fixed maturities:
Transferred in:
US government		294.0		—		6.2		—		—		—		300.2		—
Other governments		14.0		—		0.1		—		—		—		14.1		—
Newly invested:
US government		169.8		—		1.8		—		—		—		171.6		—
Other governments		22.6		—		—		—		-0.8		—		21.8		—
Total held-to-maturity as of December 31		500.4		—		8.1		—		-0.8		—		507.7		—
Available-for-sale
Fixed maturities:
US government		1,728.0		1,497.1		13.6		23.4		-8.0		-2.5		1,733.6		1,518.0
Other governments		1,163.4		383.8		3.8		1.4		-2.6		-0.3		1,164.6		384.9
Corporate and other debt securities		671.6		706.9		12.7		9.6		-3.4		-3.3		680.9		713.2
Mortgage and asset-backed securities		839.4		821.5		11.5		5.6		-1.8		-0.1		849.1		827.0
Total as of December 31		4,402.4		3,409.3		41.6		40.0		-15.8		-6.2		4,428.2		3,443.1
Equity securities		745.7		584.4		96.2		2.6		-1.7		-56.2		840.2		530.8
Total available-for-sale as of December 31		5,148.1		3,993.7		137.8		42.6		-17.5		-62.4		5,268.4		3,973.9

In order to conform to the current year’s presentation, a reclassification within accumulated other comprehensive income of US$ 18.7 million was made in 2003 between net unrealized gains (losses) on investments and cumulative translation adjustments. This reclassification had no impact on accumulated other comprehensive income or total equity.

F-17

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

The following table summarizes gross unrealized investment losses on fixed maturities and equity securities as of December 31, 2003:

Table 6.5
Unrealized investment losses on
fixed maturities and equity securities
(US$ million)

			Gross unrealized losses				Total gross
	Estimated fair		Less than		Greater than		unrealized
	value		one year		one year		losses
Held-to-maturity
Fixed maturities		14.1		-0.8		—		-0.8
Available-for-sale
Fixed maturities		1,264.1		-15.8		—		-15.8
Equity securities		20.7		-1.7		—		-1.7
Total available-for-sale as of December 31, 2003		1,284.8		-17.5		—		-17.5

The estimated fair values and carrying values of fixed maturities are shown by contractual maturity below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

Table 6.6
Fixed maturity schedule by maturity
(US$ million)

	Estimated fair value		% of total		Carrying value		% of total
	Available-for-sale (AFS)		AFS		Held-to-maturity (HTM)		HTM
Less than one year		48.9		1.1		19.0		3.8
One year through five years		2,241.7		50.6		78.8		15.7
Five years through ten years		939.0		21.2		364.7		72.9
Over ten years		162.1		3.7		37.9		7.6
Subtotal		3,391.7		76.6		500.4		100.0
Mortgage and asset-backed securities		849.1		19.2		—		—
Unit trust bonds		187.4		4.2		—		—
Total as of December 31, 2003		4,428.2		100.0		500.4		100.0

At December 31, 2003 and 2002, real estate held for investment of US$ 130.2 million and US$ 167.9 million, respectively, net of accumulated depreciation of US$ 5.8 million and US$ 7.6 million, respectively, consists primarily of investments in residential and commercial rental properties located in Switzerland, acquired in late 2001 from subsidiaries of Zurich Financial Services. The fire insurance value of Converium’s real estate held for investment and fixed assets totaled US$ 222.7 million and US$ 283.3 million at December 31, 2003 and 2002, respectively.

There are no investments in any entity in excess of 10% of equity at December 31, 2003 and 2002, other than investments issued or guaranteed by the US or sovereign governments or their agencies. Cash and investments with a carrying value of US$ 234.6 million and US$ 147.9 million were deposited in trust or with regulatory authorities as of December 31, 2003 and 2002, respectively.

7. Goodwill

Goodwill was US$ 140.2 million and US$ 117.6 million, and accumulated amortization of goodwill was US$ 33.7 million and US$ 33.7 million at December 31, 2003 and 2002, respectively. Goodwill is included in the balance sheet under the caption “Other assets”.

During August 1997, Zurich Financial Services acquired all the remaining equity interests in Converium Reinsurance (North America) Inc. not then owned by Zurich Financial Services. The acquisition of the minority interest in Converium Reinsurance (North America) Inc. was accounted for as a purchase. Accordingly, the excess of the consideration paid in exchange for the minority interest over the fair value of the net assets attributable to the minority interest was recorded as goodwill. This goodwill has been reflected in the consolidated financial statements under the application of “push down” accounting. An additional US$ 20.7 million of goodwill arose from Converium’s acquisition of a 49.9% interest in MDU Services Ltd during 2000.

F-18

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

In March 2003, upon receipt of all regulatory approvals, Converium finalized an agreement to acquire a 25% stake in Global Aerospace Underwriting Managers Limited (GAUM), a leading international aviation-underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and satellite business. Under the terms of the sale and purchase agreement, Converium has paid an initial consideration of GBP 14.2 million (US$ 22.4 million) and is additionally obligated to pay deferred consideration associated with the underlying performance of GAUM’s in force business. In view of a capped limit on deferred consideration, the maximum amount payable by Converium for the 25% stake in GAUM is GBP 20.8 million (US$ 32.7 million). At December 31, 2003, the current estimate of the final cost of the acquisition is GBP 16.8 million (US$ 28.0 million), of which GBP 11.4 million (US$ 18.4 million) is goodwill on acquisition. The remaining GBP 5.4 million (US$ 9.6 million) is comprised of Converium’s share of equity and the related intangible asset acquired. At December 31, 2003, the carrying value of the equity investment in GAUM is GBP 5.8 million (US$ 10.3 million) and the goodwill on acquisition remains at GBP 11.4 million (US$ 18.4 million).

Upon initial application of SFAS No. 142, Converium ceased amortizing goodwill on January 1, 2002. The following information presents reported and adjusted net loss and basic and diluted loss per share for the year ended December 31, 2001 using the policy adopted from January 1, 2002.

Table 7.1
(US$ million, except share information)

Year ended December 31, 2001	US$		Per share
Reported net loss		-367.4		-9.18
Amortization of goodwill		7.8		0.19
Adjusted net loss		-359.6		-8.99

SFAS No. 142 requires that goodwill be tested annually for impairment. During 2003 and 2002, there were no impairment losses resulting from the impairment tests performed.

8. Losses and loss adjustment expenses

Significant delays occur in the notification of claims and a substantial measure of experience and judgment is involved in assessing outstanding liabilities, the ultimate cost of which cannot be known with certainty as of the balance sheet date. The reserve for losses and loss adjustment expenses is determined on the basis of information currently available; however, it is inherent to the nature of the business written that the ultimate liabilities may vary as a result of subsequent developments.

Table 8.1
Reserves for losses and loss adjustment expenses
(US$ million)

	2003		2002		2001
As of January 1
Gross reserves for losses and loss adjustment expenses		6,821.3		5,710.5		4,546.0
Less reinsurance recoverable		1,459.8		1,545.0		1,212.2
Net reserves for losses and loss adjustment expenses		5,361.5		4,165.5		3,333.8
Loss and loss adjustment expenses incurred
Current year		2,527.9		2,186.8		2,039.5
Prior years		-31.3		148.5		123.6
Total		2,496.6		2,335.3		2,163.1
Losses and loss adjustment expenses paid
Current year		324.7		299.4		359.1
Prior years		1,464.7		1,095.5		885.2
Total		1,789.4		1,394.9		1,244.3
Foreign currency translation effects		388.7		255.6		-87.1
As of December 31
Net reserves for losses and loss adjustment expenses		6,457.4		5,361.5		4,165.5
Reinsurance recoverable		1,385.4		1,459.8		1,545.0
Gross reserves for losses and loss adjustment expenses		7,842.8		6,821.3		5,710.5

F-19

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

In 2003, there was US$ 31.3 million net positive development on prior years’ loss reserves, consisting of positive development of US$ 49.4 million in the Standard Property & Casualty Reinsurance segment, offset by US$ 18.1 million of adverse development in the Specialty Lines segment. In the Standard Property & Casualty Reinsurance segment, net positive development of prior years’ loss reserves on property lines was partially offset by adverse development of the motor and general third party liability lines. In the Specialty Lines segment, net adverse development on workers’ compensation and professional liability and other special liability lines was largely offset by net positive development of prior years’ loss reserves on aviation and space. Risk diversification is a basic risk management tool in the insurance and reinsurance industry; as a multi-line reinsurer there are always likely to be reserve adjustments at the line of business level. Our book of business is broadly diversified by line of business as well as balanced by region and by the expected duration of its claims obligations.

In 2002, Converium strengthened reserves for prior years by US$ 148.5 million. Throughout the year, increased loss experience related to prior years continued to emerge, and Converium performed an in-depth actuarial reserve analysis of certain lines of business. This resulted in an additional US$ 148.5 million provision for losses, primarily related to underwriting years 1997 through 2000. In the Standard Property & Casualty Reinsurance segment, there were additional provisions of US$ 62.2 million for the motor, general third party liability and property lines of business. In the Specialty Lines segment, there were additional provisions of US$ 86.3 million, primarily related to commercial umbrella and medical errors and omissions liability lines of business.

In 2001, Converium strengthened reserves for prior years by US$ 123.6 million. Converium retained an actuarial consulting firm to perform an independent review of non-life net reserves as of December 31, 2000. This review reflected certain information that became available after the issuance of the December 31, 2000 financial statements, including most fourth quarter 2000 and some first quarter 2001 reports from ceding companies, who typically report on a one-quarter lag. Based on the independent review and Converium’s own evaluations of these new developments, additional provisions of US$ 123.6 million, net of reinsurance, were recorded in 2001, principally related to accident years 2000 and prior at Converium Reinsurance (North America) Inc. In the Standard Property & Casualty Reinsurance segment, there were additional net provisions of US$ 46.6 million, primarily for the motor and property lines of business. In the Specialty Lines segment, there were additional net provisions of US$ 77.0 million, primarily related to the excess and surplus, commercial umbrella and marine and energy lines of business, offset by positive development in aviation and space.

The reserves for certain losses and loss adjustment expenses, such as those for settled claims with fixed payment terms, represent the present value estimates of the ultimate cost of all losses incurred but not paid through December 31 of each year. Where applicable, gross reserves of US$ 594.4 million and US$ 488.9 million have been discounted using average interest rates of 3.5% and 4.3% in 2003 and 2002, respectively. This has reduced reserves by US$ 65.3 million and US$ 57.9 million as of December 31, 2003 and 2002, respectively. In addition, deferred charges relating to retrospective reinsurance assumed and structured settlements totaling US$ 64.3 million and US$ 79.9 million as of December 31, 2003 and 2002, respectively, are included in other assets.

Converium believes that its exposure to environmental impairment liability and asbestos-related claims is relatively small due to the diminutive amount of business written prior to 1987 for Converium AG and Converium Reinsurance (North America) Inc. Additionally, Converium Reinsurance (North America) Inc. is protected by a stop loss agreement with Zurich Insurance Company (“ZIC”), a wholly owned subsidiary of Zurich Financial Services, for business effected prior to June 1, 1993. As of December 31, 2003 and 2002, Converium Rückversicherung (Deutschland) AG had reserves for environmental impairment liability and asbestos-related claims of US$ 45.8 million and US$ 44.6 million, respectively, representing a survival ratio (calculated as the ratio of reserves held, including IBNR, over claims paid over the average of the last three years) of 13.6 years and 13.5 years, respectively.

Guaranteed Minimum Death Benefit (GMDB) Business

In addition to the non-life reserve development described above, the Life & Health Reinsurance segment strengthened reserves on a closed block of variable annuity business by US$ 20.5 million (to net US$ 56.0 million), US$ 15.6 million and US$ 13.4 million in 2003, 2002 and 2001, respectively. Although Converium feels that its currently carried reserves for its GMDB exposure are adequate, it has exercised the call option it negotiated in the third quarter of 2003, to access additional reinsurance protection of up to US$ 75.0 million. This decision was made in light of the current volatility and the valuation of the equity markets in the United States. The annual expense associated with this protection is expected to be less than US$ 0.5 million per year. Based on information available today, this additional reinsurance protection adequately addresses potential adverse deviations to the key assumptions i.e., mortality risks, lapse rate risks, surrenders, and investment risks, such as equity market performance and volatility, incorporated in Converium’s models.

F-20

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

September 11th terrorist attacks
As of December 31, 2003, Converium recorded gross and net incurred losses and loss adjustment expenses related to the September 11th terrorist attacks as follows:

Segment
(US$ million)

			Retrocessional
			reinsurance
	Gross losses		recoveries		Net losses
Standard Property & Casualty Reinsurance		283.4		192.0		91.4
Specialty Lines		370.8		185.0		185.8
Life & Health Reinsurance		20.0		8.0		12.0
Total		674.2		385.0		289.2

Included in the reinsurance recoveries above are US$ 134.2 million due from Zurich Financial Services and subsidiaries.

Certain arrangements with Zurich Financial Services described below provide protection against potential adverse loss development on the September 11th terrorist attacks for Converium AG, Converium Rückversicherung (Deutschland) AG and Converium Reinsurance (North America) Inc. above the initial loss amounts recorded of US$ 289.2 million, net of retrocessional reinsurance recoveries. As losses are capped at US$ 289.2 million, there was no additional development in net reserves during 2003 or 2002. Ceded premiums in connection with these arrangements and other coverages from Zurich Financial Services were US$ 28.5 million in 2001.

Converium AG’s exposure under the Quota Share Retrocession Agreement (see Note 15) is limited for “Extraordinary Events”. The agreement limits Converium AG’s losses arising out of any “Extraordinary Event” to US$ 220.0 million and the parties have agreed that the September 11th terrorist attacks are an Extraordinary Event and that the US$ 220.0 million limit applies to losses arising out of the September 11th terrorist attacks. Because ZIC and Zurich International Bermuda Ltd (“ZIB”), wholly owned subsidiaries of Zurich Financial Services, retain losses in excess of the limit, Zurich Financial Services will be responsible for non-payment, if any, by the retrocessionaires with regard to losses arising out of the September 11th terrorist attacks in excess of the US$ 220.0 million limit.

ZIC will indemnify Converium Rückversicherung (Deutschland) AG for losses arising out of the September 11th terrorist attacks in excess of US$ 11.0 million, net of retrocessional reinsurance recoveries.

Converium Reinsurance (North America) Inc. is covered under the ZIC 1997 Aggregate Excess of Loss Agreement for losses in excess of US$ 58.2 million. In addition, ZIC will indemnify Converium Reinsurance (North America) Inc. against loss development in excess of the available limits under the ZIC 1997 Aggregate Excess of Loss Agreement. See Note 15 for further information.

Enron Chapter 11 reorganization
In December 2001, Enron Corp. announced that it and certain of its subsidiaries had filed voluntary petitions for Chapter 11 reorganization in the United States. Converium recorded ultimate losses of US$ 67.0 million pre-tax (US$ 48.0 million after-tax) for the year ended December 31, 2001, representing Converium’s aggregate limits under existing reinsurance contracts in connection with Enron. These exposures result principally from credit and surety and, to a lesser extent, liability lines of business. The losses Converium may ultimately incur, and the timing of any loss payment, will be affected by numerous factors including the actions of third parties, possible judicial rulings and other contingencies. In 2003 and 2002, the ultimate losses related to Enron declined US$ 17.2 million and US$ 5.2 million, respectively.

F-21

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

9. Retrocessional reinsurance and catastrophe protection

Retrocessional reinsurance
Retrocessional reinsurance arrangements generally do not relieve Converium from its direct obligations to its reinsureds. Thus, a credit exposure exists with respect to reinsurance ceded to the extent that any retrocessionaire is unable or unwilling to meet the obligations assumed under the retrocessional agreements. At December 31, 2003, Converium holds US$ 635.3 million in collateral as security under related retrocessional agreements in the form of deposits, securities and/or letters of credit. Converium is able to access outside capacity for both traditional and non-traditional coverage and therefore is not dependent upon any single retrocessional market.

Recoverables from subsidiaries of Zurich Financial Services total 19.5% of equity at December 31, 2003. Recoverables from one other third-party retrocessionaire were 10.2% of equity at December 31, 2003. Recoverables from retrocessionaires relating to contracts in arbitration were 7.9% of equity at December 31, 2003. There were no recoverables from any other retrocessionaire that exceeded 10% of equity at December 31, 2003. Allowances of US$ 35.4 million and US$ 17.4 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2003 and 2002, respectively.

Table 9.1
(US$ million)

	Gross				Reinsurance assets				Net of reinsurance
Year ended December 31	2003		2002		2003		2002		2003		2002
Reserves for losses and loss adjustment expenses		7,842.8		6,821.3		1,385.4		1,459.8		6,457.4		5,361.5
Reserves for unearned premiums		1,467.4		1,170.7		177.0		94.7		1,290.4		1,076.0
Future life benefits		483.5		371.7		156.2		73.2		327.3		298.5
Total underwriting reserves at December 31		9,793.7		8,363.7		1,718.6		1,627.7		8,075.1		6,736.0

Table 9.2
Premiums written and earned
(US$ million)

	Premiums written						Premiums earned
For the years ended December 31	2003		2002		2001		2003		2002		2001
Direct premiums		245.6		88.0		124.9		139.0		77.1		106.6
Assumed premiums		3,978.3		3,447.8		2,756.3		3,855.3		3,289.0		2,581.9
Ceded premiums		-387.5		-204.2		-393.4		-308.4		-191.2		-388.1
Catastrophe Agreement		-9.4		-9.4		-5.2		-9.4		-9.4		-5.2
Total		3,827.0		3,322.2		2,482.6		3,676.5		3,165.5		2,295.2

Table 9.3
Benefits, losses and expenses
(US$ million)

For the years ended December 31	2003		2002		2001
Losses, loss adjustment expenses and life benefits
Direct		112.6		124.5		104.3
Assumed		2,759.1		2,587.7		2,834.4
Ceded		-197.5		-220.2		-638.2
Total		2,674.2		2,492.0		2,300.5
Underwriting acquisition costs
Direct		23.3		24.6		32.8
Assumed		814.8		681.3		529.0
Ceded		-34.9		-39.2		-53.7
Total		803.2		666.7		508.1

F-22

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Catastrophe protection
As of December 31, 2003, Converium has entered into agreements for coverage of losses related to certain catastrophic loss events. These agreements include both traditional reinsurance as well as a catastrophe agreement described more fully below. The traditional reinsurance agreements cover losses from a first event in excess of US$ 75.0 million.

In June 2001, ZIC entered into a transaction with Trinom Ltd, a Bermuda company that ultimately provides ZIC with specific high limit catastrophe protection. Trinom is a special purpose entity (“SPE”) established by ZIC in Bermuda, which issued all of its common shares to a Bermuda trust. Trinom’s business consists solely of issuing three-year catastrophe securities to third-party qualified investors in the form of preference shares and two classes of notes. Simultaneous with the offering of these securities, Trinom entered into a counterparty contract with ZIC whereby Trinom will make payments to ZIC from its funds to cover defined catastrophic losses in the United States and Europe. ZIC is required to make payments to Trinom based on the balance of Trinom’s funds and the magnitude of its losses. The owners of the securities are entitled to receive their original investment, plus interest on the notes or dividends on the preference shares, both paid quarterly, less any loss payments made to ZIC.

Additionally, as part of the Transactions, ZIC and Converium AG have entered into a catastrophe derivative agreement (the “Catastrophe Agreement”) in the form of a purchased option whereby Converium AG receives protection from ZIC under terms similar to ZIC’s protection under the Trinom transaction. Converium AG will pay ZIC amounts at least equal to the payments made by ZIC to Trinom. Similarly, Converium AG is entitled to receive payments from ZIC that are similar to those that ZIC is entitled to receive from Trinom. However, there is no contractual relationship between Converium AG and Trinom as only ZIC is the legal counterparty to the Trinom transaction. This Catastrophe Agreement is effective as of June 18, 2001, and will remain in effect for the same period as ZIC’s agreement with Trinom, including any extension thereto.

The coverage ZIC and ultimately Converium AG have obtained from the Trinom transaction and the related Catastrophe Agreement is expected to reduce Converium AG’s net retained loss for large catastrophe events that produce insured losses greater than what is referred to in the industry as “once in 100 years” magnitude. Perils covered by the Trinom transaction and the Catastrophe Agreement include only US hurricane, California earthquake, and European windstorm losses that occur before June 13, 2004. Discussions are currently underway to obtain reinsurance protection for catastrophic losses upon the expiration of the Trinom transaction and the related Catastrophe Agreement in June 2004.

Payments from Trinom to ZIC, and similarly from ZIC to Converium AG, are based on modeled reinsurance losses for ZIC and ultimately Converium AG’s exposures at the time of the Trinom transaction. In a modeled loss contract, the covered party’s aggregate exposure to each geographical region and type of catastrophe, by line of business, is compared to industry-wide data in order to produce the covered party’s market share of particular loss events by line of business using commercially available natural catastrophe loss simulation modeling software. The software simulates a catastrophe, at various levels of severity, by generating certain probabilistic loss distributions, in order to calculate industry-wide losses and the corresponding losses for the covered party on a “ground-up basis”, by line of business. These losses are then compared to the modeled loss contracts to determine the amount of the covered party’s recovery in respect of such an event.

Because the Trinom transaction is in two tranches, Converium AG’s coverage under the Catastrophe Agreement is also effectively in two tranches. The first tranche provides first event coverages of approximately US$ 65.0 million on 68% of losses that exceed a modeled range of losses from US$ 209.0 million to US$ 227.0 million; and the second tranche provides US$ 97.0 million of coverage on 100% of second and subsequent event losses that exceed a modeled range of losses from US$ 100.0 million to US$ 133.0 million. The amount of losses that must be incurred before coverage applies relates to the type of loss event, e.g. earthquake, hurricane or windstorm. The expected annual cost of the Catastrophe Agreement to Converium AG is approximately US$ 9.4 million. However, if Converium collects amounts as a result of a loss event that is protected by the Catastrophe Agreement, Converium will be required to pay higher amounts for the remainder of the Catastrophe Agreement’s term, and to reduce the recovery by these higher amounts.

10. Debt

Converium assumed US$ 200.0 million principal amount of non-convertible, unsecured, unsubordinated Senior Notes (the “Senior Notes”) originally issued during October 1993. The Senior Notes mature in full on October 15, 2023 and bear interest at the rate of 7.125%, payable semiannually in arrears on April 15 and October 15.

In December 2002, Converium Finance S.A. issued US$ 200.0 million principal amount of non-convertible, unsecured, guaranteed subordinated notes (the “Guaranteed Subordinated Notes”). The Guaranteed Subordinated Notes are irrevocably and unconditionally guaranteed on a subordinated basis by each of Converium Holding AG and Converium AG. The Guaranteed Subordinated Notes mature in full on December 23, 2032 and bear interest at the rate of 8.25% paid quarterly in arrears on March 15, June 15, September 15 and December 15.

Debt issuance costs and discounts were US$ 9.4 million and US$ 9.6 million at December 31, 2003 and 2002, respectively. Such costs are being amortized over the term of the related debt.

F-23

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

11. Income taxes

Table 11.1 below illustrates an overview of the current and deferred tax expense (benefit) for each tax jurisdiction of Converium.

Table 11.1
Income tax expense (benefit)
(US$ million)

Year ended December 31	2003		2002		2001
Current
Switzerland		10.0		23.9		—
United States		-48.4		—		31.1
Germany		-2.3		0.2		3.4
Total current		-40.7		24.1		34.5
Deferred
Switzerland		26.5		-22.2		-3.5
United States		63.9		-34.4		-178.7
Germany		-10.4		-16.9		-22.2
Total deferred		80.0		-73.5		-204.4
Total income tax expense (benefit)		39.3		-49.4		-169.9

An “expected” income tax expense (benefit) is calculated based on the statutory tax rates for Converium. These rates were derived by calculating the weighted average of the expected statutory income tax in relation to the income (loss) generated in the various territories in which Converium operates. Based on the expected income tax expense (benefit), a reconciliation is made to the actual income tax expense (benefit).

Table 11.2 below illustrates the factors that cause the actual income tax expense (benefit) to differ from the expected amount computed by applying the expected rate.

Table 11.2
Expected and actual income tax expense (benefit)
(US$ million)

Year ended December 31	2003			2002			2001
Income (loss) before taxes		224.4			57.4			-537.3
Statutory average tax rate		7.0	%		-24.9	%		33.6	%
Expected income tax expense (benefit)		15.7			-14.3			-180.3
Increase (reduction) in taxes resulting from:
Investment income		-3.8			-2.9			-4.8
Non-taxable reinsurance contract		—			-4.9			-20.4
Branch tax		2.1			0.7			2.6
Non-deductible expenses		3.3			9.1			15.7
Tax losses not realizable		37.9			—			—
Tax loss carryforward		-13.6			-21.3			—
Changes in applicable tax rates		-2.8			-5.5			—
Deferred acquisition costs		—			-4.7			—
Currency translation adjustments		—			-6.7			—
Valuation allowance		—			—			3.2
Non-deductible ceded premiums		—			—			8.5
Other		0.5			1.1			5.6
Actual income tax expense (benefit)		39.3			-49.4			-169.9
Effective tax rate		17.5	%		-86.1	%		31.6	%

The 2003 consolidated tax expense reflects an increase in the tax loss carryforward due to the retrocession of certain contracts from Germany to Switzerland. This was offset by non-deductible expenses caused by the novation of certain contracts from North America to Switzerland. The 2002 consolidated tax benefit reflects a one-time benefit of US$ 21.3 million as the result of a ruling Converium AG received from the Swiss tax authorities regarding a tax loss carried forward.

F-24

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Deferred income taxes are provided for all temporary differences, which are based on the difference between financial statement carrying amounts and the income tax bases of assets and liabilities. The income tax basis of an asset or liability is calculated in accordance with the rules for determining taxable income established by the local taxation authorities. For a particular asset or liability, this may result in a deferred tax asset in one country but a deferred tax liability in another. In addition, a deferred tax asset is established for net operating loss carryforwards. The deferred tax asset is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.

Converium’s deferred income tax assets and liabilities are reflected in Table 11.3 below.

Table 11.3
Deferred income taxes
(US$ million)

	2003		2002
Deferred income tax assets
Loss reserve discount		110.0		141.4
Unearned premium reserve deduction		36.3		16.6
Accruals not currently deductible		18.4		11.3
Partnership loss		5.5		6.3
Net operating loss carryforwards		175.4		197.1
Goodwill		11.0		17.3
Other		36.4		23.2
Total deferred income tax assets		393.0		413.2
Valuation allowance		-47.9		-21.4
Net deferred income tax assets		345.1		391.8
Deferred income tax liabilities
Loss and benefit reserves		-31.9		-39.3
Deferred policy acquisition costs		-71.0		-63.3
Unrealized appreciation of investments		-9.3		-20.6
Investments		-12.0		-2.0
Reinsurance contracts		-17.6		—
Other		-16.5		-8.7
Total deferred income tax liabilities		-158.3		-133.9
Net deferred income tax assets		345.1		391.8
Net deferred income taxes as of December 31		186.8		257.9

The current net income tax receivable as of December 31, 2003 and 2002 was US$ 44.1 million and US$ 0.9 million, respectively. During 2003, Converium was able to reclassify a deferred tax asset of US$ 48.4 million to a current tax asset as a result of our ability to accelerate the recognition of this tax benefit by filing a refund claim with the United States Internal Revenue Service.

As of December 31, 2003, Converium had total net operating loss carryforwards of US$ 561.1 million available to offset future taxable income of certain branches and subsidiaries.

Converium’s net operating loss carryforwards by expiration date are as follows:

Table 11.4
Net operating loss carryforwards
(US$ million)

			Deferred				Net deferred
	Net operating loss		income		Valuation		income
	carryforward		tax asset		allowance		tax asset
One year through five years		85.7		12.9		—		12.9
Over five years		475.4		162.5		47.9		114.6
Total as of December 31, 2003		561.1		175.4		47.9		127.5

F-25

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

12. Employee benefits

Converium has established a number of benefit plans for its employees. Some employees belong to defined benefit plans and other employees participate in defined contribution plans, providing benefits equal solely to contributions paid plus investment returns. Prior to the Separation Date, Converium’s employees participated in various pension plans of Zurich Financial Services or its affiliates.

Personnel costs incurred for 2003, 2002 and 2001 were US$ 123.9 million, US$ 110.7 million and US$ 104.8 million, respectively.

Employees of certain of Converium’s entities are covered under various defined benefit pension plans. Eligibility for participation in these plans is either based on completion of a specified period of continuous service or date of hire. Benefits are generally based on the employees’ years of credited service and average compensation in the years preceding retirement. Annual funding requirements are determined based on actuarial cost methods. The transition obligation (asset) is being amortized over the greater of either fifteen years or the service period of the employees on a straight-line basis.

The Pension Fund of Converium AG (“the Fund”) is a foundation whose objective is to insure the personnel of Converium AG against the economic consequences of retirement, disability and death as provided by the statutory provisions of the plan rules. The Fund is a pension fund providing mandatory insurance as required by Swiss Federal Law and is supervised by the Canton of Zurich. The Fund’s pension plan is a “defined contribution plan” in accordance with Swiss Federal Law, but it does not meet the definition of a defined contribution plan pursuant to SFAS No. 87, “Employers’ Accounting for Pensions”, because of certain defined benefit elements required by Swiss Federal Law.

The participants’ contributions to the Fund typically amount to between 7% and 11.5% of the coordinated annual salary (defined as base salary minus coordination amount of 30%) depending on the insured participant’s age and 7% of the annual incentive-based salary. By law, the employer’s contribution must at least equal the contribution of the participant. Converium AG’s contribution typically amounts to between 9% and 16% of the coordinated annual salary and 9% of the incentive-based salary. Converium AG’s contributions to the Fund amounted to CHF 5.2 million in 2003 and CHF 8.6 million in 2002, the year the Fund started its activity, including a contribution of CHF 4.3 million in 2002 for the cost of transition benefit provisions granted on January 1, 2002.

Participants may purchase pension benefits at their own cost at any time within certain limits defined by the plan rules or prefinance their pension benefits reductions in case of early retirement.

F-26

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 12.1
Weighted average

	2003			2002			2001
Discount rate		3.99	%		3.85	%		4.30	%
Expected long-term rate of return on assets		6.00	%		6.00	%		5.25	%
Future salary increases		2.00	%		2.16	%		2.57	%
Future pension increases		0.90	%		0.91	%		1.36	%

Table 12.2
(US$ million)

	2003		2002		2001
Projected benefit obligation
Projected benefit obligation as of January 1		64.9		43.6		42.4
Service cost		7.6		5.0		2.9
Interest cost		2.6		2.1		1.8
Plan amendments		—		—		-1.6
Actuarial (gains) losses		-3.8		4.5		-0.2
Foreign currency translation effects		8.8		9.8		-1.4
Benefits paid		0.2		-0.1		-0.3
Projected benefit obligation as of December 31		80.3		64.9		43.6
Fair value of plan assets
Fair value of plan assets as of January 1		35.6		23.6		32.5
Actual return on plan assets		2.9		-0.9		-1.7
Employee contributions		2.6		1.8		1.1
Employer contributions		4.4		5.9		2.6
Net transfer adjustment from the Transactions		—		—		-9.5
Foreign currency translation effects		4.9		5.3		-1.1
Benefits paid		0.2		-0.1		-0.3
Fair value of plan assets as of December 31		50.6		35.6		23.6
Funded status
Funded status		-29.7		-29.3		-20.0
Unrecognized transition obligation		—		2.8		1.0
Unrecognized net actuarial losses (gains)		6.6		8.2		2.0
Unrecognized prior service cost		-1.7		-1.7		-1.6
Additional plan liabilities		—		-1.1		—
Accrued benefit liability		-24.8		-21.1		-18.6
Amounts recognized in the balance sheet
Accrued benefit liability		-24.8		-21.1		-18.6

F-27

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 12.3
Net periodic benefit expense
(US$ million)
For the years ended December 31	2003		2002		2001
Service cost		7.6		5.0		2.9
Interest cost		2.6		2.1		1.8
Expected return on plan assets		-2.4		-1.7		-1.7
Employee contributions		-2.6		-1.8		-1.1
Amortization of transition obligation		0.6		0.5		0.5
Amortization of actuarial (gains) losses		0.4		—		—
Amortization of past service cost		-0.2		-0.2		—
Net periodic benefit expense		6.0		3.9		2.4

Table 12.4
Accrued benefit liability
(US$ million)
Year ended December 31	2003		2002		2001
Balance at January 1		-21.1		-18.6		-9.7
Current year expense		-6.0		-3.9		-2.4
Contributions paid		4.4		5.9		2.6
Net transfer adjustment from the Transactions		—		—		-9.5
Foreign currency translation effects		-2.1		-3.4		0.4
Additional plan liabilities		—		-1.1		—
Balance at December 31		-24.8		-21.1		-18.6

As part of the finalization of the Transactions in respect of employee benefits, there was a transfer of pension fund assets and benefit obligations from the Zurich Financial Services pension funds to the pension fund of Converium AG. Under US GAAP, the net impact of this transfer resulted in an increase in the liabilities of Converium AG to its pension fund and a corresponding reduction of equity of US$ 9.5 million in 2001.

Converium Reinsurance (North America) Inc. sponsors various qualified defined contribution plans. Substantially all employees of Converium Reinsurance (North America) Inc. are eligible for participation in these plans. The plans provide for voluntary contributions by employees, which typically range from 1% to 25% of annual salaries, up to a calendar year maximum. Contributions by the employer are typically another 10% (matching or otherwise). In addition, various supplemental, non-qualified deferred compensation plans allow members of management to defer certain amounts of compensation and receive specified contributions. Converium Reinsurance (North America) Inc.’s contributions under these plans amounted to US$ 2.5 million, US$ 2.8 million and US$ 2.4 million in 2003, 2002 and 2001, respectively.

13. Share compensation and incentive plans

Converium has various incentive and share-based compensation plans to attract, retain and motivate management and employees, to reward them for their contributions to Converium’s performance and to encourage employee share ownership.

(a) Cash-based incentive plans
Various Converium entities operate short-term incentive programs for executives, management and in some cases employees. Awards are made in cash based on the accomplishment of both organizational and individual performance objectives. The compensation expense incurred in 2003, 2002 and 2001 in connection with these plans was US$ 11.7 million, US$ 7.4 million and US$ 16.4 million, respectively.

(b) Share-based incentive plans
Share-based compensation plans include all plans under which shares or options to purchase shares are awarded. The grant of shares and options to purchase shares in Converium Holding AG is at the discretion of the Remuneration Committee of the Board of Directors. The most significant of these plans are described below.

F-28

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Employee Stock Purchase Plan
Converium adopted an Employee Stock Purchase Plan (the “ESPP”) on January 1, 2002. The ESPP has two offering periods beginning January 1 and July 1 of each year. Substantially all employees meeting specified service requirements are eligible to participate in the ESPP. Participants may contribute between 1% and 15% of base salary towards the purchase of Converium Holding AG shares, up to certain limits. Employees who enroll in the ESPP purchase Converium Holding AG shares at 85% of the lower of the stock’s fair market value on the first or last day of the offering period.

Share plan
Converium adopted a share plan for selected employees. Generally, the size of a participant’s award is based on their level of responsibility and position, and market conditions. For 2001 and 2002, most restricted shares granted vest in their entirety after six years, subject to acceleration after year three based on the achievement of certain performance objectives. Beginning in 2003, most restricted shares granted vest ratably over three years. Shares also vest upon retirement.

Retention awards, IPO share grant, and Zurich Financial Services share-based plans
In 2001, in conjunction with the Transactions, Converium granted retention awards to certain employees in the form of shares in Converium Holding AG. Employees other than those who were granted retention awards received, in conjunction with the Transactions, shares in Converium Holding AG. In addition, prior to the Transactions, certain Converium employees participated in various share compensation and incentive plans of Zurich Financial Services. After the Transactions, the outstanding share awards to Converium employees under the Zurich Financial Services long-term performance share plans were converted into shares of Converium Holding AG.

Table 13.1 summarizes the status of Converium’s share plans for 2003, 2002 and 2001.

Table 13.1

	2003		2002		2001
Unvested shares at beginning of year		363,278		706,451		—
Shares granted		133,930		29,732		706,878
Shares vested		-311,587		-299,214		—
Shares forfeited		-24,762		-73,691		-427
Unvested shares at end of year		160,859		363,278		706,451

Stock option plan
Under the Stock Option Plan (the “Stock Option Plan”), in 2003 and 2002, certain employees were awarded options to purchase shares in Converium Holding AG. The exercise prices were equal to the market value of the shares or ADSs on the grant date. Of the options awarded under the Stock Option Plan, 25% vest immediately on the grant date and 25% will vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

During 2001, 312,329 options to purchase shares in Converium Holding AG were awarded. The exercise prices were equal to the market value of the shares or ADSs on the grant date. Of these options awarded, 25% vested immediately on the grant date of December 11, 2001, and 25% will vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

Executive IPO option plan
In connection with the Transactions, Converium granted certain executives options to purchase shares in Converium Holding AG (the “Executive IPO Option Plan”). Under the Executive IPO Option Plan, 420,000 options to purchase shares in Converium Holding AG were awarded. The exercise prices were equal to the market value of the shares or ADSs on the grant date. Of the options awarded under the Executive IPO Option Plan, 25% vested immediately on the grant date of December 11, 2001, and 25% will vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

F-29

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 13.2 summarizes the status of Converium’s outstanding stock options for 2003, 2002 and 2001.

Table 13.2

	2003				2002				2001
			Weighted				Weighted				Weighted
			average				average				average
			exercise				exercise				exercise
	Options		price		Options		price		Options		price
Outstanding at beginning of year		1,115,424	CHF 79.28			732,329	CHF 82.00			—		—
Granted		699,555		58.14		442,514		74.66		732,329	CHF 82.00
Exercised		-23,450		60.10		-3,574		78.85		—		—
Forfeited		-62,785		74.31		-55,845		80.40		—		—
Outstanding at end of year		1,728,744		71.17		1,115,424		79.28		732,329		82.00
Options exercisable at end of year		901,933		75.74		423,509		80.47		183,082		82.00

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Table 13.3

Weighted average	2003		2002		2001
Risk-free rate		1.51%		1.87%		3.21%
Expected life	3 years		3 years		3 years
Expected volatility		27.24%		31.27%		32.67%
Dividend yield		1.78%		0.80%		0.80%
Fair value of options granted	US$	7.43	US$	11.11	US$	12.08

Table 13.4 summarizes information about stock options outstanding at December 31, 2003:

Table 13.4

	Options outstanding						Options exercisable
			Weighted
Range of	Number		average remaining		Weighted average		Number		Weighted average
exercise prices	outstanding		contractual life		exercise price		Exercisable		exercise price
CHF 56.05-62.50		839,046		9.8		CHF 58.63		270,686		CHF 59.34
CHF 82.00-89.10		889,698		8.5		82.99		631,247		82.78
CHF 56.05-89.10		1,728,744		9.1		71.17		901,933		75.74

(c) Compensation expense
The compensation expense charged to income under the share-based incentive plans was US$ 10.0 million, US$ 24.4 million and US$ 11.0 million in 2003, 2002 and 2001, respectively.

F-30

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

14. Shareholders’ equity

(a) Issued share capital
Upon incorporation on June 19, 2001, Converium Holding AG had share capital of CHF 100,000 divided into 10,000 fully paid registered shares with a nominal value of CHF 10 each, all of which were entitled to receive dividends. On September 24, 2001, the extraordinary general meeting of the shareholders passed two resolutions to increase the ordinary share capital to CHF 400 million, divided into 40 million fully paid registered shares with a nominal value of CHF 10 each, all of which are entitled to receive dividends.

(b) Contingent share capital
Pursuant to Converium Holding AG’s Articles of Incorporation, share capital can be increased by the issuance of a maximum of four million fully paid registered shares of CHF 10 nominal value each, amounting to a maximum of CHF 40 million, in conjunction with Converium’s obligations to employees and members of the Board of Directors under various compensation plans. At December 31, 2003, CHF 62,170 of the contingent share capital, or 6,217 ordinary shares have been exercised.

(c) Dividend restrictions and capital and solvency requirements
Converium Holding AG is subject to legal restrictions on the amount of dividends it may pay to its shareholders under the Swiss Code of Obligations. The Swiss Code of Obligations provides that 5% of the annual profit must be allocated to the general reserve until such reserve in the aggregate has reached 20% of the paid-in share capital. Similarly, the company laws of countries in which Converium entities operate may restrict the amount of dividends payable by such entities to their parent companies.

Other than by operation of the restrictions mentioned above, the ability of Converium entities to pay dividends may be restricted or, while dividend payments per se may be legally permitted, may be indirectly influenced by minimum capital and solvency requirements that are imposed by insurance, bank and other regulators in the countries in which the entities operate as well as by other limitations existing in certain of these countries (e.g., foreign exchange control restrictions).

In Switzerland, insurance supervisory regulations require entities to fund their statutory reserves at a minimum level of 20% of net profits until the statutory reserve fund reaches an amount equal to 50% of the statutory share capital, including freely disposable reserves, if any. In the United States, restrictions on payment of dividends are imposed by the Insurance Commissioner of the state of domicile. For Converium Reinsurance (North America) Inc., dividends are payable only from earned surplus and are limited annually to the greater of 10% of the previous year’s policyholders surplus or 100% of the previous year’s statutory net income. Dividends paid in excess of these limitations require prior approval of the Insurance Commissioner of the state of domicile. In Germany, the minimum amount of statutory capital reserves required is 10% of the nominal value of the common stock. If the 10% criterion is met, dividends of up to 100% of current year’s surplus can be paid. If the 10% criterion is not met, dividends are limited to a maximum of 95% of current year’s surplus less the prior year loss carryover. Under German law, an entity’s executive board in consent with the supervisory board have the authority to reclassify up to 100% of the current year surplus to retained earnings, thereby not allowing dividends to be paid.

Converium AG may pay a maximum dividend, net of withholding tax, to Converium Holding AG without regulatory approval of approximately US$ 141.7 million as of December 31, 2003. The maximum dividend that Converium Holding AG is able to pay in 2004, before withholding tax, is approximately US$ 142.9 million as of December 31, 2003.

Statutory capital and surplus for Converium AG was CHF 2,530.6 million at December 31, 2002, the date of its most recent statutory report. This amount includes its holdings in Converium Reinsurance (North America) Inc. and Converium Rückversicherung (Deutschland) AG, which had aggregate statutory capital and surplus of approximately US$ 874.2 million at December 31, 2003, computed under local statutory accounting principles.

As of December 31,2003, Converium’s entities were in compliance with all applicable regulatory capital adequacy requirements.

F-31

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

15. Transactions with Zurich Financial Services

Quota Share Retrocession Agreement
In connection with the Transactions, the transfer of certain historical reinsurance business to Converium AG by ZIC and ZIB was affected by means of the Quota Share Retrocession Agreement effective July 1, 2001. The covered business consists of the business historically managed by Converium, which has an inception or renewal date on or after January 1, 1987, and consists of substantially all of the third party assumed reinsurance business written by ZIC and ZIB, under the “Zurich Re” brand name. The liabilities Converium AG assumed include all net unearned premiums, net losses and loss adjustment expenses and experience account balances relating to this business.

The Quota Share Retrocession Agreement provides for the payment of premiums to Converium AG by ZIC as consideration for assuming the covered liabilities. The Quota Share Retrocession Agreement provides that these premiums are on a “funds withheld” basis, whereby the premium is not immediately paid, but is rather retained by ZIC and credited to a funds withheld account, which is referred to as the Funds Withheld Asset.

Because the business subject to the Quota Share Retrocession Agreement consists of business that was historically managed by Converium, this business is already reflected in the financial statements. Any reinsurance business written by ZIC or ZIB that is not part of the historically managed and operated third-party reinsurance business of Converium is not covered by the Quota Share Retrocession Agreement, and all related legal rights and obligations of this business have been retained by ZIC and ZIB. Accordingly, this business is excluded from the financial statements. Therefore, execution of the Quota Share Retrocession Agreement has no impact on results of operations as reported.

Converium AG will receive the surplus remaining with respect to the Funds Withheld Asset, if any, after all liabilities have been discharged. Any surplus or any additional cash flows will be recorded in the financial statements in the period when they occur. Additionally, Zurich Financial Services has the right to prepay to Converium AG the full amount or a portion thereof of the Funds Withheld Asset prior to termination of the agreement.

Converium AG will continue to administer the transferred business on behalf of ZIC and ZIB, which remain liable to the original cedents of the business. Additionally, Converium AG will manage third-party retrocessions related to the business transferred. Converium will bear the credit risk for uncollectible reinsurance balances excluding those related to the September 11th terrorist attacks. Converium AG will have a broad right of offset under the Quota Share Retrocession Agreement so that reinsurance balances owed to ZIC and ZIB may be offset against the Funds Withheld Asset account directly.

The Quota Share Retrocession Agreement provides for commutation and termination for special reasons, such as insolvency of a party or loss of its authorization to do business or a change of control of Converium AG. Each of the parties agrees to indemnify the other against liability or expense incurred by reason of its conduct or failure to act in appropriate circumstances. The Quota Share Retrocession Agreement contains other provisions that are customary for an agreement of this nature.

Converium has entered into various other transactions with Zurich Financial Services and its subsidiaries, the most significant of which are described below.

Converium Reinsurance (North America) Inc. had an intra-Converium aggregate excess of loss reinsurance agreement in place since July 1,1997 (“1997 Aggregate Excess of Loss Agreement”). This agreement provided protection to Converium Reinsurance (North America) Inc. for losses that exceeded a net retention after amounts recoverable from its outside retrocessionaires. Because the 1997 Aggregate Excess of Loss Agreement pre-dated the Transactions, ZIC was the formal counterparty to Converium Reinsurance (North America) Inc. In October 2001, the 1997 Aggregate Excess of Loss Agreement was amended as follows:

• Converium Reinsurance (North America) Inc.’s coverage for net losses of US$ 320.4 million with respect to all Amerisafe business retroceded to the Unicover Pool remains in effect, with ZIC as counterparty,

• Converium Reinsurance (North America) Inc.’s coverage for net losses of US$ 307.5 million from the September 11th terrorist attacks that exceed US$58.2 million remains in effect, with ZIC as counterparty; and

• the remainder of the coverage under the agreement is commuted.

See Notes 3, 6, 8, 9, 12, 13, 16 and 19 for other transactions with Zurich Financial Services.

F-32

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

16. Related party transactions

There were no unpaid loans, including guarantee commitments, granted to the Converium directors and members of the Converium Global Executive Committee as of December 31, 2003.

In March 2003, upon receipt of all regulatory approvals, Converium finalized an agreement to acquire a 25% stake in Global Aerospace Underwriting Managers Limited (GAUM), a leading international aviation-underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and satellite business (see Note 7). In March 2003, Converium as a shareholder provided a loan to GAUM in the amount of GBP 12.6 million (US$ 19.8 million). In addition, Converium entered into a pool members agreement for the 2003 underwriting year under which it became a member of the aviation and aerospace pools run by GAUM and its subsidiary, Associated Aviation Underwriters Inc. For the 2003 underwriting year, Converium has committed 25% of the overall pools capacity. Previously, Converium had indirectly reinsured 9% of the pools managed by GAUM. Gross premiums assumed through the pools managed by GAUM were US$ 266.4 million, US$ 64.4 million and US$ 41.9 million for 2003, 2002 and 2001, respectively.

Converium has entered into a strategic alliance with the Medical Defence Union (MDU) that resulted in a 49.9% participation in MDU Services Ltd. MDU Services Ltd distributes medical malpractice insurance policies to the members of the Medical Defence Union. As a result of the initial FSA approval in respect of general liability business, insurance policies underwritten by Converium Insurance (UK) Ltd were issued to members of the Medical Defence Union beginning July 1, 2003. These insurance polices replaced policies formerly issued in the United Kingdom by Zurich Financial Services’ entities, the majority of which were reinsured by Converium. Gross premiums from MDU were US$ 137.3 million, US$ 140.0 million and US$ 57.0 million for 2003, 2002 and 2001, respectively.

Converium has a 48% participation in SATEC, a leading global space underwriting agency based in Venice, Italy. Gross premiums assumed through the pool managed by SATEC were US$ 5.9 million, US$ 5.0 million and US$ 3.2 million for 2003, 2002 and 2001, respectively.

17. Supplemental cash flow disclosures

Beginning in 2002, the change in the Funds Withheld Asset is reported as a component of cash provided by operating activities, as movements in its balance consist solely of operating activities subsequent to the Transactions.

Table 17.1
Supplemental cash flow disclosures
(US$ million)	2003		2002		2001
Income taxes paid		-2.7		-2.3		-46.4
Interest expense paid		-31.6		-16.4		-22.1

F-33

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

18. Fair value of financial instruments

The methods and assumptions used by Converium in estimating the fair value of
financial instruments are:

• fixed maturities securities: fair values are generally based upon quoted market prices. Where market prices are not readily available, fair values are estimated using either values obtained from independent pricing services or quoted market prices of comparable investments.

• equity securities: fair values are based on quoted market prices.

• Funds Withheld Asset: carrying value of the Funds Withheld Asset approximates fair value.

• other investments for which quoted market prices are not readily available are not fair valued and are not significant to Converium.

• cash and short-term investments: carrying amounts approximate fair value.

• debt: fair values are generally based upon quoted market prices.

Table 18.1 lists the estimated fair values and carrying values of Converium’s financial instruments as of December 31, 2003 and 2002.

Table 18.1	Total		Total		Total		Total
Fair value of financial instruments	fair		carrying		fair		carrying
(US$ million)	value		value		value		value
	2003		2003		2002		2002
Fixed maturities		4,935.9		4,928.6		3,443.1		3,443.1
Equity securities		840.2		840.2		530.8		530.8
Other investments (excluding real estate)		43.3		43.3		9.4		9.4
Short-term investments		55.8		55.8		318.0		318.0
Funds Withheld Asset		1,530.6		1,530.6		1,648.1		1,648.1
Cash and cash equivalents		280.8		280.8		361.5		361.5
Debt		-428.6		-390.6		-375.1		-390.4

19. Commitments and contingencies

In July 2003, Converium obtained a US$ 900 million unsecured syndicated letter of credit facility. This three-year syndicated letter of credit facility is available for Converium AG and its nominated subsidiaries as of July 1, 2003. The syndicate is comprised of 19 banks, which have committed their respective capacities.

The facility is guaranteed by Converium AG and will be used primarily to collateralize third-party claims related to the underwriting business of the Converium. As of December 31, 2003, Converium had outstanding letters of credit of US$ 633.1 million under the facility. This includes the replacement of certain existing letters of credit which were previously provided by certain syndicate banks on an individual basis, as well as the issuance of new letters of credit under the syndicated facility.

In addition to the syndicated letter of credit facility, other irrevocable letters of credit of US$ 390.3 million were outstanding at December 31, 2003, for which investments of US$ 431.1 million are pledged as collateral related to certain of these letters of credit. A parental guarantee of US$ 120.0 million has been issued related to certain of these letters of credit.

Converium has entered into various operating leases as lessee for office space and certain computer and other equipment. Rental expenses for these items totaled US$ 15.9 million, US$ 14.8 million and US$ 10.8 million for the years ending December 31, 2003, 2002 and 2001, respectively.

F-34

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Table 19.1 lists minimum future payments under operating leases with terms in excess of one year.

Table 19.1
Minimum future payments under operating leases
(US$ million)

	Rental
	payments
2004		12.6
2005		12.4
2006		12.4
2007		12.3
2008		12.3
2009 and thereafter		31.2
Total		93.2

Converium AG leases office space from Zurich Financial Services. The lease term is fixed until 2011, with two renewal options for three-year terms each. The lease payments are fixed with annual rent escalations based on a cost of living index. Converium Ruckversicherung (Deutschland) AG leases office space from Zurich Financial Services. The lease term is for a period of ten years, with an option to renew for up to two additional ten-year terms. Lease payments have bi-annual rent escalations based on changes in local real estate price indices.

Converium Reinsurance (North America) Inc. entered into a sublease with ZC Resource LLC (“ZC Resource”), a subsidiary of Zurich Financial Services in July 2001. The sublease has a term of approximately eleven years, ending in 2012. As part of the Transactions, Converium Reinsurance (North America) Inc. entered into an agreement to indemnify Global Asset Holdings Limited (“GAHL”) (an indirect parent of ZC Resource and a co-guarantor of the prime lease) for losses under the prime lease or the guaranty caused by Converium Reinsurance (North America) Inc.’s default under the sublease that results in a default under the prime lease; GAHL, in turn, will indemnify Converium Reinsurance (North America) Inc. for any losses under the guaranty caused by a default by ZC Resource under the prime lease. Centre Insurance Company, a subsidiary of Zurich Financial Services, will guaranty the punctual payment of all amounts due by GAHL under the guaranty and all expenses incurred by Converium Reinsurance (North America) Inc. enforcing the guaranty. See Note 22 for additional information on guarantees.

Converium Holding AG and its subsidiaries are continuously involved in legal proceedings, claims and litigation arising, for the most part, in the ordinary course of its business operations as a reinsurer. The outcome of such current legal proceedings, claims and litigation could have a material effect on operating results or cash flows when resolved in a future period. However, in the opinion of management, these matters are not material to Converium’s financial position, with the exception of the matters described below:

Amerisafe Matters
In September 2003, the parties settled the March 2001 litigation initiated by American Interstate Insurance Company (“Amerisafe”) against Converium Reinsurance (North America) Inc., (“CRNA”), Guy Carpenter & Company Inc. (“Guy Carpenter”) and Zurich Financial Services Group (“ZFS”) in the United States District Court for the Western District of Louisiana. ZFS and Guy Carpenter had previously been dismissed from the suit. Based on the terms of the settlement agreement and on the basis of the aggregate excess of loss protection from ZIC (see Note 15), CRNA believes that it is fully protected through reinsurance agreements for all potential liability in respect of this action.

Since late fall of 2000, CRNA had received a series of inquires from the Louisiana Department of Insurance (“LDI”) investigating CRNA’s disputes with Amerisafe in response to a complaint filed by Amerisafe. As part of the September 2003 settlement with Amerisafe, Amerisafe has withdrawn the complaint and the LDI has officially closed the file with respect to the complaint.

F-35

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Superior National Matters
On January 16, 2002, the California Insurance Commissioner (the “Commissioner”), filed a complaint against a subsidiary of ZFS, Centre Insurance Company (“CIC”) and affiliates, as well as CRNA and Converium Insurance (North America) Inc. (“CINA”), on behalf of the Superior National Insurance Companies in Liquidation (“SNICIL”), in a proceeding in the Superior Court of the State of California, County of Los Angeles. The complaint alleges several counts, including voidable preferences and fraudulent transfers, seeking the recovery of transfers totaling US$ 202.9 million, damages for breach of contract in the amount of US$ 59.8 million, additional damages in an amount to be proved at trial, and punitive damages. The overwhelming bulk of the damages sought appear to arise out of CIC transactions, not CRNA or CINA transactions. As part of the Transactions, ZFS has agreed to indemnify Converium for liabilities arising out of or related to the assets not assumed by or transferred to Converium in the separation from ZFS. The principal claim brought against CRNA appears to arise from CRNA’s commutation of certain reinsurance obligations. In that connection, however, while the Complaint does in fact reference the commutation, the payment involved was a commutation payment made by CRNA, not to CRNA. The liquidator, however, is apparently claiming that the amount paid by CRNA was inadequate consideration for the reinsurance obligations commuted and thus, this commutation constituted a fraudulent transfer. The Commissioner’s pending complaint in the SNICIL action does not assign a value to the reinsurance obligations that were commuted, repeatedly stating that their value is “undetermined”, however, he has indicated that he may seek to recover some portion of the difference between the amount paid by CRNA (US$17.8 million) and the amount purportedly owed under the commuted reinsurance contracts (informally asserted by certain counsel for the liquidator to be approximately US$ 41.0 million with no further clarification as to the basis for this amount). CRNA and CINA intend to defend this litigation vigorously and to assert various setoffs. Based on the limited information available to date, we are unable to predict CRNA’s and CINA’s chances of prevailing in this action. While Converium believes that it has a strong case, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the litigation.

No discovery relating to any transaction in which CRNA or CINA was involved is ongoing and any such discovery is not likely to commence until at least late 2004.

US Life Insurance Co. Arbitration
On November 29, 1999, US Life Insurance Company (“US Life”) initiated an arbitration proceeding against SNICIL, CINA and CIC. US Life seeks to rescind a multi-year quota share reinsurance contract effective May 1, 1998 on the basis that material misrepresentations and omissions were allegedly made in procuring that contract. Inception-to-date amounts ceded by Converium to the contract through December 31, 2003 are US$ 54.0 million premiums earned, US$ 18.1 million commissions earned and US$ 110.7 million losses incurred. All discovery in this matter closed in November 2002, and arbitration hearings commenced in late 2002 and continued in 2003. The arbitration has not concluded at this time and the arbitrators have currently advised that additional dates necessary to conclude the arbitration will not be available until the second half of 2004. Based on the limited information available to date, we are unable to predict CINA’s chances of prevailing in this action. While Converium believes that it has a strong case against US Life for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

All American Life Insurance Company Arbitration
On December 23, 2002, CRNA and CINA initiated an arbitration against All American Life Insurance Company (“All American”). The dispute arises from a quota share reinsurance contract provided by All American. Because All American has failed and refused to make payments under the quota share contract, CRNA and CINA demanded arbitration to collect all outstanding balances due under the contract. In the arbitration, All American is now seeking to rescind the contract on the basis of certain alleged misrepresentations and omissions made by SNICIL, who is also now a party to the arbitration as a reinsured under the contract. As of this date, the arbitration panel has been constituted and hearings are scheduled for June 2004. Inception-to-date amounts ceded by Converium to the contract through December 31, 2003 are US$ 41.1 million premiums earned, US$ 14.2 million commissions earned and US$ 62.3 million losses incurred. Based on the limited information available to date, we are unable to predict CRNA’s and CINA’s chances of prevailing in this action. While Converium believes that it has a strong case against All American for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

Continental Casualty Company Arbitration
On December 16, 2002, Continental Casualty Company (“Continental”) and CRNA served cross demands for arbitration on each other. The dispute arises from a retrocessional contract pursuant to which Continental reinsured CRNA for 50% of the accident and health exposures CRNA assumed from a third-party insurer pursuant to a reinsurance agreement. In October 2002, Continental advised CRNA that it had identified issues concerning the third-party insurer business that Continental believes might give rise to defenses under the reinsurance agreement. CRNA offered to permit Continental to assert those defenses directly against the third-party insurer and, in addition, advised Continental that, if Continental did not agree to do so, CRNA would conduct its own investigation with respect to the putative defenses identified by Continental. However, Continental instead asserted that CRNA has somehow breached a duty of utmost good faith to Continental, which justifies rescission of the retrocessional contract. At arbitration, CRNA would be seeking enforcement of the retrocessional contract and Continental would be seeking rescission of the same contract. Inception-to-date amounts ceded to the contract through

F-36

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

December 31, 2003 are US$ 20.8 million premiums earned, no commissions earned and US$ 56.4 million losses incurred. The parties have each selected their party-appointed arbitrators, but at this stage an umpire has not yet been selected. Based on the limited information available to date, we are unable to predict CRNA’s chances of prevailing in this action. While Converium believes that it has a strong case against Continental for full reinsurance coverage in accordance with the contract, at this stage of the proceedings it is not possible to make any determination regarding the potential outcome of the arbitration.

Canada Life
On December 21, 2001, The Canada Life Assurance Company, Toronto (“Canada Life”), brought action against Converium Ruckversicherung (Deutschland) AG in the U.S. District Court of the Southern District of New York. Canada Life alleged that Converium breached certain quota share retrocession agreements with Canada Life by failing to indemnify its full percentage of Canada Life’s September 11th losses and by failing to post an US$ 82.4 million letter of credit for its liability pursuant to the ISA facilities’ underlying agreements. Converium is disputing this claim on the grounds that its liability under the pertinent contracts is limited and is also raising other contracts defenses. In its decision of April 11, 2002, the U.S. District Court of the Southern District of New York dismissed Canada Life’s action, ruling that The Air Transportation Safety and System Stabilization Act, which Canada Life claimed to give the court jurisdiction over the subject matter, is not applicable. The court ruled that the Act applies broadly to the actions filed by individual victims of the September 11th attacks but does not apply to disputes among reinsurers. The Second Circuit Court of Appeal affirmed the dismissal. As a result of the decision of the U.S. District Court of the Southern District of New York, Converium sent Canada Life a request to arbitrate. The organizational meeting of the arbitrators took place on October 8, 2003. The hearing will be scheduled for October 2004.

Converium has fully reserved this matter. However, arrangements entered into with Zurich Financial Services provide for this matter to be covered by the agreed-to cap for September 11th related losses provided to Converium by Zurich Financial Services in conjunction with Converium’s global offering.

20. Consolidated entities

A list of operating entities and other important holdings, together with the country of incorporation, Converium’s ownership interest and the share capital of each entity, is set out below.

	Country of	% of equity			Share
Entity	incorporation	shares held			capital
Converium Rückversicherung (Deutschland) AG	Germany		100	EUR		4,601,627
Converium Finance S.A.	Luxembourg		100	EUR		31,000
Converium Holding AG	Switzerland		100	CHF		400,062,170
Converium AG	Switzerland		100	CHF		400,000,000
Converium Holdings (North America) Inc.	US		100	US$		1
Converium Reinsurance (North America) Inc.	US		100	US$		3,500,000
Converium Insurance (North America) Inc.	US		100	US$		5,000,000
Converium Holding (UK) Ltd	UK		100	GBP		101
Converium Insurance (UK) Ltd	UK		100	GBP		60,000,000
Converium London Management Ltd	UK		100	GBP		1,000
Converium Underwriting Ltd	UK		100	GBP		2

Converium’s interest in Converium Rückversicherung (Deutschland) AG increased to 100% in January 2003.

On May 27, 2003, the United Kingdom Financial Services Authority (“FSA”) granted Converium Insurance (UK) Ltd permission to conduct the business of insurance in the class of general liability business in the United Kingdom. On August 27, 2003, the FSA further granted the company permission to conduct the business of insurance in the classes of aircraft and aircraft liability in the United Kingdom. Following its permission to write general liability business in May 2003, Converium Insurance (UK) Ltd had an initial capitalization level of GBP 50 million (US$ 82.4 million). As a precondition of the permission of the FSA to write aircraft and aircraft liability business, in August 2003, the company increased its capital by GBP 10 million (US$ 16.6 million). Accordingly at December 31, 2003 the capitalization level of Converium Insurance (UK) Ltd is GBP 60 million (US$ 99.0 million).

F-37

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

21. Earnings per share

Converium Holding AG purchased 377,650 shares and 349,126 shares during 2003 and 2002, respectively, related to sharebased compensation plans.

The following table shows the average shares outstanding:

For the years ended December 31	2003		2002		2001
Average shares outstanding (000’s)		39,808		39,911		40,000
Average diluted shares outstanding (000’s)		40,309		40,483		40,000

Earnings per share data for 2001 is calculated based on 40 million registered shares of Converium Holding AG issued and outstanding as of December 31, 2001 as if these shares were outstanding for the entire year. Diluted earnings per share data is computed similar to basic earnings per share data except that the weighted average shares outstanding is increased to include potential common shares, such as shares from non-vested stock grants and the assumed exercise of stock options, if dilutive.

22. Subsidiary issuer information

Presented below are the consolidating balance sheets of Converium Holding AG (the “parent guarantor”), Converium AG (the “subsidiary guarantor”) (together the “guarantor companies”), and Converium Finance S.A. (the “subsidiary issuer”), for whom the Guaranteed Subordinated Notes are guaranteed, as of December 31, 2003 and 2002 and the related condensed consolidating statements of income and condensed consolidating statements of cash flows for each of the three years in the period ended December 31, 2003. The guarantor companies have jointly and severally guaranteed payments by the subsidiary issuer on these notes. The subsidiary issuer and subsidiary guarantor are wholly-owned subsidiaries of the parent guarantor.

Investments in subsidiaries are accounted for by the guarantor companies under the equity method for purposes of supplemental consolidating presentation as of the effective date of the acquisition. Earnings of subsidiaries are reflected in the investment accounts of the guarantor companies as of the effective date of the acquisition.

Information for the parent guarantor and the subsidiary issuer is only included from the date of formation.

Condensed consolidating statements of income

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2003	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Revenues
Net premiums written		—		2,492.4		—		1,334.6		—		3,827.0
Net premiums earned		—		2,392.8		—		1,283.7		—		3,676.5
Net investment income		11.0		129.5		12.5		103.5		-23.5		233.0
Net realized capital (losses) gains		—		-10.7		—		29.1		—		18.4
Other income (loss)		35.0		-30.8		39.5		-5.7		-35.3		2.7
Total revenues		46.0		2,480.8		52.0		1,410.6		-58.8		3,930.6
Benefits, losses and expenses
Losses and loss adjustment expenses and life benefits		—		-1,588.9		—		-1,085.3		—		-2,674.2
Underwriting acquisition costs		—		-552.1		—		-251.1		—		-803.2
Other operating and administration expenses		-8.6		-119.1		4.1		-107.4		33.2		-197.8
Interest expense		-10.5		—		-16.5		-29.6		25.6		-31.0
Total benefits, losses and expenses		-19.1		-2,260.1		-12.4		-1,473.4		58.8		-3,706.2
Income (loss) before taxes		26.9		220.7		39.6		-62.8		—		224.4
Income tax (expense) benefit		-3.5		-32.6		—		-3.2		—		-39.3
Income (loss) before equity in income (loss) of subsidiaries		23.4		188.1		39.6		-66.0		—		185.1
Equity in income (loss) of subsidiaries		161.7		-26.4		—		—		-135.3		—
Net income (loss)		185.1		161.7		39.6		-66.0		-135.3		185.1

F-38

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Consolidating balance sheets

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
December 31, 2003	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Assets
Invested assets
Fixed maturities		—		1,929.5		14.8		2,984.3		—		4,928.6
Equity securities		—		441.8		—		398.4		—		840.2
Investment in subsidiaries		2,006.8		1,117.4		—		—		-3,124.2		—
Notes receivable		150.0		—		175.0		—		-325.0		—
Short-term and other investments		44.7		187.5		—		41.8		-44.7		229.3
Total investments		2,201.5		3,676.2		189.8		3,424.5		-3,493.9		5,998.1
Funds Withheld Asset		—		1,530.6		—		—		—		1,530.6
Total invested assets		2,201.5		5,206.8		189.8		3,424.5		-3,493.9		7,528.7
Other assets
Cash and cash equivalents		1.2		121.9		2.1		155.6		—		280.8
Premiums receivable		—		1,477.4		—		812.8		-281.9		2,008.3
Reinsurance assets		—		790.7		—		2,221.4		-1,069.5		1,942.6
Funds held by reinsureds		—		1,043.4		—		587.3		-256.7		1,374.0
Deferred policy acquisition costs		—		293.6		—		86.5		—		380.1
Deferred income taxes		—		32.7		—		312.4		—		345.1
Other assets		42.7		170.2		46.1		233.9		2.1		495.0
Total assets		2,245.4		9,136.7		238.0		7,834.4		-5,099.9		14,354.6
Liabilities and equity
Liabilities
Losses and loss adjustment expenses, gross		—		4,764.0		—		3,759.1		-680.3		7,842.8
Unearned premiums, gross		—		827.2		—		867.8		-227.6		1,467.4
Future life benefits, gross		—		62.4		—		496.8		-75.7		483.5
Other reinsurance liabilities		—		1,040.4		—		398.9		-352.0		1,087.3
Funds held under reinsurance contracts		—		247.7		—		538.9		-256.8		529.8
Deferred income taxes		—		71.4		—		86.9		—		158.3
Accrued expenses and other liabilities		12.1		116.8		0.8		240.2		-58.3		311.6
Notes payable		150.0		—		—		175.0		-325.0		—
Debt		—		—		193.4		197.2		—		390.6
Total liabilities		162.1		7,129.9		194.2		6,760.8		-1,975.7		12,271.3
Equity
Common stock and additional paid-in capital		1,569.7		1,546.1		—		1,169.3		-2,715.4		1,569.7
Unearned stock compensation		-6.1		—		—		—		—		-6.1
Total accumulated other comprehensive income		261.4		242.7		4.2		51.8		-298.7		261.4
Retained earnings (loss)		258.3		218.0		39.6		-147.5		-110.1		258.3
Total equity		2,083.3		2,006.8		43.8		1,073.6		-3,124.2		2,083.3
Total liabilities and equity		2,245.4		9,136.7		238.0		7,834.4		-5,099.9		14,354.6

F-39

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Condensed consolidating
statements of cash flows

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2003	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Cash provided by (used in) operating activities		3.3		1,217.9		-1.1		45.2		—		1,265.3
Cash flows from investing activities
Purchases of fixed maturities held-to-maturity		—		-192.4		—		—		—		-192.4
Proceeds from sales and maturities of fixed maturities available-for-sale		—		904.9		—		2,908.5		—		3,813.4
Purchases of fixed maturities available-for-sale		—		-1,828.1		-14.8	-	3,211.1		—		-5,054.0
Proceeds from sales of equity securities		—		47.8		—		46.5		—		94.3
Purchases of equity securities		—		-178.2		—		-66.0		—		-244.2
Net decrease (increase) in short-term investments		3.6		256.6		42.7		-25.8		—		277.1
Purchase of note receivable		—		—		-25.0		—		25.0		—
Investment in subsidiaries		29.9		-106.8		—		—		76.9		—
All other investing activity		—		-17.1		—		-4.9		—		-22.0
Net cash provided by (used in) investing activities		33.5		-1,113.3		2.9		-352.8		101.9		-1,327.8
Cash flows from financing activities
Capital contribution		—		—		—		106.8		-106.8		—
Issuance of note payable		—		—		—		25.0		-25.0		—
Net purchases of common shares		-17.3		—		—		—		—		-17.3
Dividends to shareholders		-29.9		-29.9		—		—		29.9		-29.9
Net cash (used in) provided by financing activities		-47.2		-29.9		—		131.8		-101.9		-47.2
Effect of exchange rate changes on cash and cash equivalents		10.8		18.7		—		-0.5		—		29.0
Change in cash and cash equivalents		0.4		93.4		1.8		-176.3		—		-80.7
Cash and cash equivalents as of January 1		0.8		28.5		0.3		331.9		—		361.5
Cash and cash equivalents as of December 31		1.2		121.9		2.1		155.6		—		280.8

F-40

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Condensed consolidating
statements of income

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2002	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Revenues
Net premiums written		—		1,829.6		—		1,492.6		—		3,322.2
Net premiums earned		—		1,622.4		—		1,543.1		—		3,165.5
Net investment income		12.6		117.0		0.1		135.8		-13.7		251.8
Net realized capital (losses) gains		—		-13.9		—		3.6		—		-10.3
Other (loss) income		-0.5		11.9		—		-2.5		-10.1		-1.2
Total revenues		12.1		1,737.4		0.1		1,680.0		-23.8		3,405.8
Benefits, losses and expenses
Losses and loss adjustment expenses and life benefits		—		-1,178.7		—		-1,313.3		—		-2,492.0
Underwriting acquisition costs		—		-291.0		—		-375.7		—		-666.7
Other operating and administration expenses		20.7		-98.6		0.2		-95.6		—		-173.3
Interest expense		-10.7		-1.2		-0.3		-28.0		23.8		-16.4
Total benefits, losses and expenses		10.0		-1,569.5		-0.1		-1,812.6		23.8		-3,348.4
Income (loss) before taxes		22.1		167.9		—		-132.6		—		57.4
Income tax (expense) benefit		-2.2		0.5		—		51.1		—		49.4
Income (loss) before equity in income (loss) of subsidiaries		19.9		168.4		—		-81.5		—		106.8
Equity in income (loss) of subsidiaries		86.9		-81.5		—		—		-5.4		—
Net income (loss)		106.8		86.9		—		-81.5		-5.4		106.8

F-41

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Consolidating balance sheets

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
December 31, 2002	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Assets
Invested assets
Fixed maturities		—		640.1		—		2,803.0		—		3,443.1
Equity securities		—		228.2		—		302.6		—		530.8
Investment in subsidiaries		1,684.3		838.4		—		—		-2,522.7		—
Notes receivable		150.0		—		150.0		—		-300.0		—
Short-term and other investments		26.8		435.6		42.7		13.4		-23.2		495.3
Total investments		1,861.1		2,142.3		192.7		3,119.0		-2,845.9		4,469.2
Funds Withheld Asset		—		1,648.1		—		—		—		1,648.1
Total invested assets		1,861.1		3,790.4		192.7		3,119.0		-2,845.9		6,117.3
Other assets
Cash and cash equivalents		0.8		28.5		0.3		331.9		—		361.5
Premiums receivable		—		1,276.3		—		517.8		-72.8		1,721.3
Reinsurance assets		—		942.8		—		1,507.2		-582.4		1,867.6
Funds held by reinsureds		—		801.0		—		380.7		-245.8		935.9
Deferred policy acquisition costs		—		174.1		—		90.8		—		264.9
Deferred income taxes		—		37.3		—		354.5		—		391.8
Other assets		29.7		154.9		1.1		217.5		-12.5		390.7
Total assets		1,891.6		7,205.3		194.1		6,519.4		-3,759.4		12,051.0
Liabilities and equity
Liabilities
Losses and loss adjustment expenses, gross		—		3,724.9		—		3,553.5		-457.1		6,821.3
Unearned premiums, gross		—		762.4		—		516.7		-108.4		1,170.7
Future life benefits, gross		—		—		—		371.7		—		371.7
Other reinsurance liabilities		—		588.9		—		173.7		-101.0		661.6
Funds held under reinsurance contracts		—		345.8		—		329.6		-245.9		429.5
Deferred income taxes		—		37.8		—		96.1		—		133.9
Accrued expenses and other liabilities		3.6		61.2		0.4		293.0		-24.3		333.9
Notes payable		150.0		—		—		150.0		-300.0		—
Debt		—		—		193.4		197.0		—		390.4
Total liabilities		153.6		5,521.0		193.8		5,681.3		-1,236.7		10,313.0
Equity
Common stock and additional paid-in capital		1,580.6		1,546.1		—		960.9		-2,507.0		1,580.6
Unearned stock compensation		-10.0		—		—		—		—		-10.0
Total accumulated other comprehensive income (loss)		60.6		51.3		0.3		-41.3		-10.3		60.6
Retained earnings (loss)		106.8		86.9		—		-81.5		-5.4		106.8
Total equity		1,738.0		1,684.3		0.3		838.1		-2,522.7		1,738.0
Total liabilities and equity		1,891.6		7,205.3		194.1		6,519.4		-3,759.4		12,051.0

F-42

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Condensed consolidating
statements of cash flows

							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2002	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Cash provided by operating activities		2.0		635.2		1.1		232.1		—		870.4
Cash flows from investing activities
Proceeds from sales and maturities of fixed maturities		—		476.6		—		4,096.7		—		4,573.3
Purchases of fixed maturities		—		-1,054.1		—		-4,321.2		—		-5,375.3
Proceeds from sales of equity securities		—		144.1		—		455.1		—		599.2
Purchases of equity securities		—		-284.1		—		-367.0		—		-651.1
Net (increase) decrease in short-term investments		-3.6		-264.6		-42.7		82.4		—		-228.5
Purchase of note receivable		—		—		-150.0		—		150.0		—
Investment in subsidiaries		—		-104.8		—		—		104.8		—
All other investing activity		—		-9.9		-1.8		0.8		—		-10.9
Net cash (used in) provided by investing activities		-3.6		-1,096.8		-194.5		-53.2		254.8		-1,093.3
Cash flows from financing activities
Issuance of guaranteed subordinated notes		—		—		193.7		—		—		193.7
Issuance of note payable		—		150.0		—		—		-150.0		—
Capital contribution		—		—		—		104.8		-104.8		—
Net purchases of common shares		-14.7		—		—		—		—		-14.7
Net cash (used in) provided by financing activities		-14.7		150.0		193.7		104.8		-254.8		179.0
Effect of exchange rate changes on cash and cash equivalents		—		-0.6		—		-14.5		—		-15.1
Change in cash and cash equivalents		-16.3		-312.2		0.3		269.2		—		-59.0
Cash and cash equivalents as of January 1		17.1		340.7		—		62.7		—		420.5
Cash and cash equivalents as of December 31		0.8		28.5		0.3		331.9		—		361.5

F-43

Converium Holding AG and Subsidiaries
Notes to the consolidated and historical combined financial statements (continued)

Condensed consolidating statements of income

					Non-
(US$ million)	Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2001	Holding AG		AG		Entities		Adjustments		Consolidated
Revenues
Net premiums written		—		1,269.9		1,212.7		—		2,482.6
Net premiums earned		—		1,118.2		1,177.0		—		2,295.2
Net investment income		1.5		88.5		139.0		-0.3		228.7
Net realized capital gains (losses)		—		2.5		-20.9		—		-18.4
Other income (loss)		—		3.9		-9.0		-0.7		-5.8
Total revenues		1.5		1,213.1		1,286.1		-1.0		2,499.7
Benefits, losses and expenses
Losses, loss adjustment expenses and life benefits		—		-997.9		-1,303.1		0.5		-2,300.5
Underwriting acquisition costs		—		-221.3		-286.8		—		-508.1
Other operating and administration expenses		-1.2		-54.8		-90.9		0.5		-146.4
Interest expense, amortization of goodwill and restructuring costs		-1.2		-40.6		-40.2		—		-82.0
Total benefits, losses and expenses		-2.4		-1,314.6		-1,721.0		1.0		-3,037.0
Loss before taxes		-0.9		-101.5		-434.9		—		-537.3
Income tax benefit		—		3.5		166.4		—		169.9
Net loss		-0.9		-98.0		-268.5		—		-367.4

Condensed consolidating statements of cash flows

					Non-
(US$ million)	Converium		Converium		Guarantor		Consolidating
Year ended December 31, 2001	Holding AG		AG		Entities		Adjustments		Consolidated
Cash provided by (used in) operating activities		5.9		421.3		-120.5		4.8		311.5
Cash flows from investing activities
Proceeds from sales and maturities of fixed maturities		—		100.0		1,792.2		—		1,892.2
Purchases of fixed maturities		—		-123.6		-1,846.1		—		-1,969.7
Proceeds from sales of equity securities		—		38.1		250.5		—		288.6
Purchases of equity securities		—		-152.9		-272.8		—		-425.7
Net decrease in short-term investments		—		13.5		12.1		—		25.6
Net change in Funds Withheld Asset		—		-290.6		—		—		-290.6
Purchase of real estate held for investment		—		-139.4		—		—		-139.4
Purchase of note receivable		-150.0		-150.0		—		300.0		—
Investment in subsidiaries		-822.9		—		—		822.9		—
All other investing activity		—		-13.7		5.4		—		-8.3
Net cash (used in) provided by investing activities		-972.9		-718.6		-58.7		1,122.9		-627.3
Cash flows from financing activities
Issuance of note payable		150.0		—		150.0		-300.0		—
Capital contribution		—		822.9		—		-822.9		—
Net transfers from Zurich Financial Services		834.1		9.5		17.6		—		861.2
Payable to Zurich Financial Services		—		-233.4		—		—		-233.4
Net cash provided by (used in) financing activities		984.1		599.0		167.6		-1,122.9		627.8
Effect of exchange rate changes on cash and cash equivalents		—		-42.0		33.4		-4.8		-13.4
Change in cash and cash equivalents		17.1		259.7		21.8		—		298.6
Cash and cash equivalents as of January 1		—		81.0		40.9		—		121.9
Cash and cash equivalents as of December 31		17.1		340.7		62.7		—		420.5

F-44

CONVERIUM HOLDING AG
REPORT OF THE GROUP AUDITORS ON
THE FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Shareholders of
Converium Holding AG, Zug

     Our audits of the consolidated and historical combined financial statements referred to in our report dated February 13, 2004, also included an audit of the financial statement schedules listed in Part III Item [18(b)] of this Form 20-F. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated and historical combined financial statements of Converium Group.

PricewaterhouseCoopers Ltd.

Andrew Hill            Martin Frei

Zurich, February 13, 2004

S-1

Schedule I

					Amount at which
Summary of investments other than investments	Cost or				shown in the
in related parties as of December 31, 2003	amortized cost		Fair value		balance sheet
			($ millions)
Fixed maturities:
Bonds held-to-maturity:
U.S. government		463.8		471.8		463.8
Other government		36.6		35.9		36.6
Total fixed maturities held-to-maturity		500.4		507.7		500.4
Bonds available-for-sale:
U.S. government		1,728.0		1,733.6		1,733.6
Other government		1,163.4		1,164.6		1,164.6
Public utilities		21.9		22.7		22.7
Other corporate debt securities		465.3		470.8		470.8
Unit trust		184.4		187.4		187.4
Mortgage and asset-backed securities		839.4		849.1		849.1
Total fixed maturities available for sale		4,402.4		4,428.2		4,428.2
Total fixed maturities		4,902.8		4,935.9		4,928.6
Equity securities:
Common stocks:
Public utilities		12.7		14.3		14.3
Banks, trusts, and insurance companies		67.8		80.9		80.9
Industrial, miscellaneous and all other		318.6		363.6		363.6
Unit trust		340.0		374.7		374.7
Non-redeemable preferred stocks		6.6		6.7		6.7
Total equity securities		745.7		840.2		840.2
Real estate		130.2		130.2		130.2
Policyholder, collateral and other loans		22.7		22.7		22.7
Other investments		20.6		20.6		20.6
Short-term investments		55.8		55.8		55.8
Total investments		5,883.6		6,005.4		5,998.1
Funds Withheld Asset		1,530.6		1,530.6		1,530.6
Total invested assets		7,414.2		7,536.0		7,528.7

S-2

Schedule II

Converium Holding AG
Statements of income

					June 19, 2001 (date
					of incorporation) to
($ millions)	2003		2002		December 31, 2001
Revenues
Net investment income		11.0		12.6		1.5
Other income (loss)		35.0		-0.5		—
Total revenues		46.0		12.1		1.5
Expenses
Other operating and administration expenses		-8.6		20.7		-1.2
Interest expense		-10.5		-10.7		-1.2
Total expenses		-19.1		10.0		-2.4
Income (loss) before taxes		26.9		22.1		-0.9
Income tax (expense) benefit		-3.5		-2.2		—
Income (loss) before equity in income (loss) of subsidiaries		23.4		19.9		-0.9
Equity in income (loss) of subsidiaries		161.7		86.9		—
Net income (loss)		185.1		106.8		-0.9

See notes to consolidated financial statements.

S-3

Converium Holding AG
Balance sheets

	December 31,
($ millions)	2003		2002
Assets
Invested assets
Investment in subsidiaries		2,006.8		1,684.3
Notes receivable		150.0		150.0
Short-term and other investments		44.7		26.8
Total invested assets		2,201.5		1,861.1
Other assets
Cash and cash equivalents		1.2		0.8
Other assets		42.7		29.7
Total assets		2,245.4		1,891.6
Liabilities and equity
Liabilities
Accrued expenses and other liabilities		12.1		3.6
Notes payable		150.0		150.0
Total liabilities		162.1		153.6
Equity
Common stock		253.0		253.0
Additional paid-in capital		1,326.7		1,330.9
Treasury stock		-10.0		-3.3
Unearned stock compensation		-6.1		-10.0
Total accumulated other comprehensive income		261.4		60.6
Retained earnings		258.3		106.8
Total equity		2,083.3		1,738.0
Total liabilities and equity		2,245.4		1,891.6

See notes to consolidated financial statements.

S-4

Schedule II

Converium Holding AG
Statements of cash flows

					June 19, 2001 (date
					of incorporation) to
($ millions)	2003		2002		December 31, 2001
Cash flows from operating activities
Net income (loss) before equity in income (loss) of subsidiaries		23.4		19.9		-0.9
Changes in other assets and liabilities		-20.1		-17.9		6.8
Cash provided by operating activities		3.3		2.0		5.9
Cash flows from investing activities
Issuance of note receivable		—		—		-150.0
Investment in Converium AG		29.9		—		-822.9
Net decrease (increase) in short-term investments		3.6		-3.6		—
Net cash provided by (used in) investing activities		33.5		-3.6		-972.9
Cash flows from financing activities
Net transfer from Zurich Financial Services		—		—		834.1
Issuance of note payable		—		—		150.0
Net purchases of common shares		-17.3		-14.7		—
Dividends to shareholders		-29.9		—		—
Net cash (used in) provided by financing activities		-47.2		-14.7		984.1
Effect of exchange rate changes on cash and cash equivalents		10.8		—		—
Change in cash and cash equivalents		0.4		-16.3		17.1
Cash and cash equivalents, beginning of period		0.8		17.1		—
Cash and cash equivalents, end of period		1.2		0.8		17.1

See notes to consolidated financial statements.

S-5

Schedule IV

	Gross		Ceded to other			Assumed from other				% of amount
Reinsurance	Amount		Companies			Companies		Net Amount		assumed to net
Insurance premiums and other considerations:
2003	$	245.6		($396.9	)	$	3,978.3	$	3,827.0		104.0	%
2002		88.0		(213.6	)		3,447.8		3,322.2		103.8	%
2001		124.9		(398.6	)		2,756.3		2,482.6		111.0	%

S-6

GLOSSARY OF SELECTED

INSURANCE AND REINSURANCE TERMS

Annuity	A contract that pays a periodic income benefit for the life of a person (the annuitant) or for a specified number of years, or a combination of the two, in return for a single premium payment. Immediate annuities provide income from the date the policy is taken out and deferred annuities provide income at a future specified date.
Cede; ceding insurer; cession	When an insurer reinsures its risk with another insurer (a “cession”), it “cedes” business and is referred to as the “ceding insurer.”
Co-insurance	Also referred to as original terms reinsurance, and refers to reinsurance contracts in which the reinsurer receives a portion of the premiums paid to the ceding company on the policies. Reinsurance premiums under a co-insurance contract will normally have the same premium arrangement as the original insurance policies, which may extend over several years.
Combined ratio	The sum of the loss ratio and the expense ratio for a non-life insurance company or a reinsurance company. A combined ratio below 100 generally indicates profitable underwriting. A combined ratio over 100 generally indicates unprofitable underwriting. An insurance company with a combined ratio over 100 may be profitable to the extent net investment results exceed underwriting losses. Expense ratio. The ratio of non-life insurance or reinsurance operating expenses (i.e., acquisition costs and profit participation net of reinsurance commissions) to net premiums earned plus administration expenses to net premiums written.
Facultative reinsurance	The reinsurance of part or all of the insurance provided by a single policy negotiated on a contract-by-contract basis.
Finite risk	Insurance and reinsurance policies under which the aggregate risk to the insurer or reinsurer is capped at a finite limit. Typically, such policies have maturities of several years and provide for sharing profits arising from the policy with the client at the policy maturity. The policy limit-to-premium ratio is frequently significantly lower than under traditional insurance and reinsurance policies.
Gross premiums written	Total premiums (whether or not earned) for insurance contracts written or assumed (including deposits for contracts with an insignificant amount of mortality or morbidity risk) during a specific period, without deduction for premiums ceded.
Incurred but not yet reported (“IBNR”) reserves	Reserves for estimated losses and LAE which have been incurred but not yet reported to the insurer or reinsurer, including future development of claims which have Incurred but not yet reported been reported to the insurer or reinsurer but where the established reserves may ultimately prove to be inadequate.
Lapse	Termination of a policy because of surrender, failure to pay a premium or lack of sufficient cash value to maintain in-force status.
Loss	An insured event that is the basis for submission or payment of a benefit under an insurance policy. Losses may be covered, limited or excluded from coverage, depending on the terms of the policy.

G-1

Loss adjustment expenses (“LAE”)	The expenses of investigating and settling claims, including certain legal and other fees, and the expenses of administering the claims adjustment process.
Loss ratio	The ratio of a non-life insurance or reinsurance company’s net incurred losses and LAE to net premiums earned.
Loss reserves	Reserves established by an insurer or reinsurer and reflected on its balance sheet to reflect the estimated cost of payments for claims for which the insurer or reinsurer ultimately will be required to indemnify insureds or reinsureds in the future in respect of losses occurring on or prior to the balance sheet date on insurance or reinsurance it has written and that has been earned. Loss reserves are composed of individual case reserves for reported claims and IBNR reserves.
Modified co-insurance	A form of reinsurance which differs from co-insurance only in that reserves are retained by the ceding company while the risk remains with the reinsurer. The ceding company normally pays interest to replace the interest the reinsurer would have earned if it had held the assets corresponding to the reserves in its own investment portfolio. We principally use the term to refer to a proportional reinsurance product offered by our Converium Life operations to clients to finance their initial acquisition costs such as agent and broker commissions.
National Association of Insurance Commissioners	An association of reinsurance regulatory officials of all 50 states and the District of Columbia organized to promote consistency of regulatory practice and statutory accounting standards throughout the United States.
Net premiums written	Gross premiums less premiums ceded for reinsurance.
Non-proportional reinsurance	Reinsurance under which the reinsurer’s participation in a claim depends on the size of the claim. Also known as “excess reinsurance.”
Participating contracts	Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance enterprise. The participation occurs through the distribution of dividends to policyholders.
Premiums earned	That portion of gross premiums written in current and past periods applying to the expired portion of the policy period.
Proportional reinsurance	Arrangement whereby the insurer cedes to the reinsurer an agreed fixed percentage of premiums and claims and other liabilities for each policy covered on a pro rata basis.
Reinsurance	The practice whereby one insurer, called the reinsurer, in consideration for premiums received, agrees to indemnify the ceding insurer for all or a portion of the risk under a policy or policies of insurance issued by the ceding insurer. The legal rights of the insured generally are not affected by the reinsurance transaction, and the insurance enterprise issuing the insurance contract remains liable to the insured for payment of policy benefits.
Reserves	Liabilities established by insurers and reinsurers to reflect the estimated cost of claims payments, benefits payments and the related expenses that the insurer or reinsurer will ultimately be required to pay in accordance with the insurance or reinsurance it has written.

G-2

Retention	The amount or portion of risk which a ceding insurer retains for its own account. Losses and loss expenses paid by the ceding insurer in excess of the retention level are then reimbursed to the insurer by the reinsurer. In proportional insurance, the retention may be a percentage of the original policy’s limit. In non-proportional insurance, the retention is an amount of loss, a loss ratio or a percentage.
Retrocessional Reinsurance	An arrangement under which a reinsurer cedes to another reinsurer (the “retrocessionaire”) all or a portion of the insurance risks reinsured by the first reinsurer. Retrocessional reinsurance generally does not legally discharge the ceding reinsurer from its liability to the original ceding company.
Separate account	Investment account established and maintained by an insurer to which funds have been allocated for certain insurance policies or contracts of the insurer. The income, gains and losses realized from assets allocated to the account are, in accordance with the insurance policies or contracts, credited to or charged against the account without regard to other income, gains or losses of the company or the company’s other separate accounts. Separate accounts cannot generally be charged with the liabilities of the general account. Products meeting this definition are often referred to as “investment linked” or “unit linked” products. The policyholders bear all of the investment risk for these products.
Survival Ratio	An industry measure of the number of years it would take a company to exhaust its A&E reserves for losses and loss expenses based on that company’s current level of A&E claims payments. The ratio is derived by dividing the current ending losses and loss expense reserves by the average annual payments for the prior three years. The ratio is computed based on the ending reserves for losses and loss expenses over the respective claims settlements during the fiscal year.
Surrender	Many life insurance products permit the insured to withdraw a portion of the cash surrender value of the contract. Future benefits are reduced accordingly.
Tail	The period of time that elapses between the incurrence and settlement of losses under a policy. A “short-tail” insurance product is one where ultimate losses are known and settled comparatively quickly; ultimate losses under a “long-tail” insurance product are sometimes not known and settled for many years.
Term life insurance	Life insurance protection for a limited period which expires without maturity value if the insured survives the period specified in the policy.
Treaty reinsurance	A type of reinsurance whereby the ceding company automatically cedes and the reinsurer automatically assumes a predetermined portion or category of specified risks underwritten by the ceding company.
Underwriting	The process whereby an insurer or reinsurer reviews applications submitted for insurance or reinsurance coverage and determines whether it will provide all or part of the coverage being requested for an agreed premium.
Underwriting results	The pre-tax profit or loss experienced by a non-life insurance company or reinsurance company after deducting incurred losses and loss expenses and operating expenses from premiums earned. This profit and loss calculation includes reinsurance assumed and ceded but excludes

G-3

	investment income.
Unit linked	See “Separate account.”
Unit trust	Unit trusts can be invested in stocks, shares, government securities and other investment instruments. The fund is divided into units, which fluctuate in value, depending on the value of the overall fund. The unit trust is an open ended fund which means it has a variable number of units in issue at any one time. Units are bought from and sold to the fund manager.
Universal life insurance	A life insurance product under which premiums are generally flexible, the level of death benefits may be adjusted and expenses and other charges are specifically disclosed to the policyholder and deducted from their account balance.
Whole life insurance	A permanent life insurance product offering guaranteed death benefits and guaranteed cash values.

G-4

SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

CONVERIUM HOLDING AG
By /s/ Dirk Lohmann
Name:	Dirk Lohmann
Title:	Chief Executive Officer, Converium Holding AG

By /s/ Martin A. Kauer
Name:	Martin A. Kauer
Title:	Chief Financial Officer, Converium Holding AG

Date: April 5, 2004

Sig - 1

INDEX TO EXHIBITS

Exhibit
Number	Description
1.1	Articles of Incorporation of Converium Holding AG, adopted November 8, 2001.*
1.2	Bylaws of Converium Holding AG, adopted November 16, 2001.*
1.3	Articles of Incorporation of Converium Holding AG, revised February 5, 2003. ^
2.1	Form of Deposit Agreement among Converium Holding AG, The Bank of New York, as Depositary, and all owners and beneficial owners from time to time of ADSs issued thereunder (including the form of ADS), incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially 2filed with the Commission on November 19, 2001.*
2.2	Indenture, dated as of October 20, 1993 between Zurich Reinsurance Centre Holdings, Inc. and The Bank of New York, as Trustee, relating to $200,000,000 principal amount of 7 1/8% Senior Notes due 2023 (and assumed by Converium Holdings (North America) Inc. pursuant to the Supplement Indenture included as Exhibit 2.3 hereto).* (Previously filed as Exhibit 3.1)
2.3	First Supplemental Indenture among Zurich Reinsurance Centre Holdings, Inc., as Issuer, Converium Holdings (North America) Inc., as Guarantor, and The Bank of New York, as Trustee, dated as of November 20, 2001.* (Previously filed as Exhibit 3.2)
2.4	Form of Indenture between Converium Finance, S.A., as Issuer, Converium AG and Converium Holding AG as Guarantors and JPMorgan Chase Bank as Trustee, Calculation Agent and Paying Agent.+
2.5	Form of the $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032 (included in Exhibit 2.4 hereto).+
2.6	Subordinated Guarantee by Converium Holding AG and Converium AG relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^
2.7	Indenture, dated December 23, 2002 between Converium Finance S.A., Converium Holding AG, Converium AG and JP Morgan Chase Bank, as trustee, relating to $200,000,000 principal amount of 8.25% Guaranteed Subordinated Notes Due 2032. ^
4.1	Master Agreement by and among Zurich Financial Services and Converium Holding AG, dated December 1, 2001.*
4.2	Stock Purchase Agreement between Zurich Reinsurance Centre Stock Purchase Agreement between Zurich Reinsurance Centre Holdings, Inc. and Converium Holdings (North America) Inc., dated as of October 1, 2001.*
4.3	Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln) Aktiengesellschaft, dated September 28, 2001.*
4.4	Quota Share Retrocession Agreement between Zurich Insurance Company (including its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1, 2001.*
4.5	Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd. and Converium AG, dated October 1, (and effective as of July 1, 2001).*
4.6	Asset purchase and Assumption of Liability Agreement between Zurich Insurance Company and Converium AG, dated September 28, 2001.*
4.7	Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*

Exhibit
Number	Description
4.8	Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*
4.9	Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung (Köln) Aktiengesellschaft and Zurich Insurance Company, dated as of October 1, 2001.*
4.10	Partial Commutation Agreement between Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*
4.11	Master Novation and Indemnity Reinsurance Agreement among Zurich Reinsurance (North America), Inc., Centre Insurance Company, Centre Solutions (U.S.) Limited and Zurich Insurance Company, Bermuda Branch, dated as of October 1, 2001.*
4.12	Group Reinsurance Business Master Novation and Indemnity Reinsurance Agreement by and among Zurich Reinsurance (North America), Inc., Zurich Insurance Company and Zurich International (Bermuda) Ltd., dated as of October 1, 2001.*
4.13	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1991 through December 31, 1993) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.14	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1994 through December 31, 1994) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.*
4.15	Commutation Agreement (covering the Aggregate Excess of Loss Reinsurance Agreement effective January 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.16	Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective October 1, 1995) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance Limited, dated as of October 1, 2001.*
4.17	Commutation Agreement (covering the Obligatory Surplus Share Reinsurance Agreement effective November 6, 1992) between Zurich Reinsurance (North America), Inc. and Centre Reinsurance International Company, dated as of October 1, 2001.*
4.18	Agreement Amending and Terminating Centre Reinsurance Dublin Affiliated Group Tax Allocation Agreement among Orange Stone Delaware Holdings Limited, Orange Stone Reinsurance, Centre Reinsurance Holdings (Delaware) Limited, Centre Reinsurance (U.S.) Limited, Zurich Reinsurance Centre Holdings, Inc., Zurich Reinsurance (North America), Inc., ZC Insurance Company, ZC Specialty Insurance Company, Centre Risk Advisors, Inc., Constellation Reinsurance Company, Centre Re Services, Inc., Zurich Global Assets LLC, formerly known as BDA/US Services Limited, ZC Management Corporation, ZC Resource LLC, ZC Property Management, Inc. and Claims Solutions Group, dated October 1, 2001.*
4.19	Catastrophe Cover Retrocession Agreement by and between Converium AG and Zurich Insurance Company, dated December 1, 2001.*
4.20	Stock Purchase Agreement between Zurich Reinsurance (North America), Inc. and Centre Strategic Investments Holdings Limited, dated August 23, 2001.*
4.21	Run-off Services and Management Agreement between Zurich Insurance Company and Converium AG, dated December 3, 2001.*
4.22	Tax Sharing and Indemnification Agreement among Zurich Reinsurance Centre Holdings, Inc., Orange Stone Delaware Holdings Limited, Converium Holdings (North America) Inc., Zurich Reinsurance (North America), Inc. and Zurich Insurance Company, dated as of October 1, 2001. *
4.23	Tax Sharing and Indemnification Agreement between Zurich Financial Services, Zurich Insurance Company, Converium Holding AG and Converium AG dated December 3, 2001. *

Exhibit
Number		Description
	4.24	Form of Converium Standard Stock Option Plan for Non-U.S. Employees. *
	4.25	Form of Converium Standard Stock Purchase Plan for Non-U.S. Employees. *
	4.26	Omnibus Share Plan for U.S. Employees. *
	4.27	Converium Employee Stock Purchase Plan for U.S. Subsidiaries.*
	4.28	Form of Converium Annual Incentive Deferral Plan.*
	4.29	Lease, between Zurich Insurance Company and Converium AG, dated August 29, 2001.*
	4.30	Sublease Support Agreement among Zurich Reinsurance (North America), Inc., Global Asset Holdings Limited and Centre Insurance Company, dated as of October 1, 2001.*
	4.31	Sublease between ZC Resource LLC and Zurich Reinsurance (North America), Inc., dated as of June 20, 2001.*
	4.32	Form of Letter Agreement between Converium Holding AG and The Bank of New York, relating to the pre-release of the ADRs, incorporated by reference from the Registration Statement on Form F-6 of Converium Holding AG (File No. 333-14108), initially filed with the Commission on November 19, 2001.*
	4.33	Agreement dated September 2, 2002, between Converium AG and MDU Investments Ltd, regarding subscription of up to 20 million shares at £1 each. ^
	4.34	Share Purchase Agreement dated November 27, 2002, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
	4.35	Shareholder’s Agreement dated March 12, 2003, between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal and Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
	4.36	Sale and Purchase Agreement and Assignment between Converium AG and Converium Finance S.A. regarding the transfer of a $150 million loan granted to Converium Holding AG. ^
	4.37	Amendment to Share Purchase Agreement dated November 27, 2002 between Converium AG and Northern States Agency Inc., Munich Re, Aviva and Royal Sun Alliance regarding Global Aerospace Underwriting Managers Limited (GAUM). ^
	4.38	Agreement dated December 30, 2003, for the sale and purchase of 5.1% of Royal and Sun Alliance Insurance PLC’s shareholding in Global Aerospace Underwriting Managers Limited (GAUM).
	4.39	Agreement dated July 24, 2003 $900,000,000 Credit Facility for Converium AG, Zurich arranged by ABN Amro Bank N.V., Barclay’s Capital and Commerzbank Aktiengesellschaft.
	7.1	Computation of ratio of earnings to fixed charges.
	8.1	Subsidiaries of the Registrant.
	12.1	Consent of PricewaterhouseCoopers Ltd, independent accountants.
	31.1	302 Certification of Chief Executive Officer.
	31.2	302 Certification of Chief Financial Officer.
	32.1	906 Certification of Chief Executive Officer.
	32.2	906 Certification of Chief Financial Officer.

*	Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 10, 2001.
+	Incorporated by reference to the Company’s Registration Statement filed on Form F-1, on December 18, 2002.
^	Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2002, filed on April 18, 2003.

EX-4.38

Exhibit 4.38

December 2003

ROYAL & SUN ALLIANCE INSURANCE PLC

AND

CONVERIUM AG

AGREEMENT FOR THE SALE AND
PURCHASE OF PART OF ROYAL & SUN
ALLIANCE INSURANCE PLC’S
SHAREHOLDING IN GLOBAL AEROSPACE
UNDERWRITING MANAGERS LIMITED

CONTENTS

CLAUSE		PAGE
1.	INTERPRETATION		1
2.	SALE AND PURCHASE		7
3.	THE RSA LOAN		8
4.	CONDITIONS		8
5.	FRONTING ARRANGEMENTS		9
6.	COMPLETION		10
7.	THE SELLER’S WARRANTIES AND OTHER MATTERS		10
8.	THE BUYER’S REMEDIES		11
9.	THE BUYER’S WARRANTIES		12
10.	FITZWILLIAM LEASE		13
11.	DEFERRED CONSIDERATION		13
12.	CONDUCT OF BUSINESS BETWEEN COMPLETION AND THE FOURTH PAYMENT DATE		13
13.	CONFIDENTIAL INFORMATION		14
14.	ANNOUNCEMENTS		15
15.	ASSIGNMENT		16
16.	COSTS		16
17.	WITHHOLDING TAX AND GROSSING UP		16
18.	ENTIRE AGREEMENT		17
19.	THIRD PARTY RIGHTS		17
20.	GENERAL		18
21.	NOTICES		19
22.	GOVERNING LAW AND JURISDICTION		20
SCHEDULE 1 COMPLETION REQUIREMENTS			22
	1.        Seller’s obligations		22
	2.        Buyer’s obligations		22
SCHEDULE 2 SELLER’S WARRANTIES			24
	1.        Capacity and authority		24
	2.        RSA shares		25
SCHEDULE 3 LIMITATIONS ON THE SELLER’S LIABILITY			26
	1.        Limitation on quantum		26
	2.        Mitigation		26
	3.        General		26

Page I

CLAUSE	PAGE
SCHEDULE 4 DETERMINATION OF 2003 RELEVANT PROFIT		27
SCHEDULE 5 DETERMINATION OF AMOUNT IN RESPECT OF PROFIT COMMISSION DUE TO SELLER		29

Page II

THIS AGREEMENT is made on 30 December 2003

BETWEEN:

(1)	ROYAL & SUN ALLIANCE INSURANCE PLC, a company incorporated in England and Wales (registered no. 93792), whose registered office is at St Mark’s Court, Chart Way, Horsham, West Sussex RH12 1XL (RSA or the Seller); and
(2)	CONVERIUM AG, a company incorporated in Switzerland whose registered office is at General Guisan-Quai 26, 8022 Zürich, Switzerland (Converium or the Buyer).

WHEREAS:

(A)  The Company (as defined below) is a private company limited by shares incorporated in England. The Seller is the sole legal and beneficial owner of 10.1 per cent of the share capital of the Company.

(B)  RSA has agreed to sell the RSA Shares (as defined below) to the Buyer and the Buyer has agreed to purchase the RSA Shares for the consideration and upon the terms set out in this Agreement.

(C)  The parties have agreed that Converium will take the economic benefits of the RSA Shares with effect from 1 January 2004.

THE PARTIES AGREE as follows:

1.	Interpretation
1.1	In this Agreement:

AAU means Associated Aviation Underwriters, Inc. a Delaware corporation and an indirect wholly-owned subsidiary of the Company;

Act means the Companies Act 1985;

Accounts means the Group Accounts for the financial year ended 31 December 2002;

Agents means, together, the Company and AAU and Agent means either one of them;

Agreed Rate means:

(a)	where the sum owed is denominated in United States dollars, the rate per annum at which HSBC Bank plc is offering US dollar deposits of US$1 million to prime banks in the London Interbank Market for a period of one year at or about 11.00 a.m. (London time) on the first day of the period for which interest is to accrue (or if that day is not a Business Day on the next Business Day); and
(b)	where the sum owed is denominated in pounds sterling, the rate per annum at which HSBC Bank plc is offering pound sterling deposits of £1 million to

prime banks in the London Interbank Market for a period of one year at or about 11.00 a.m. (London time) on the first day of the period for which interest is to accrue (or if that day is not a Business Day on the next Business Day);

Business Day means a day (other than a Saturday or Sunday) on which banks generally are open in London for the transaction of normal banking business;

Buyer’s Completion Documents means the documents which the Buyer will execute at Completion as specified in Schedule 1 of this Agreement;

Buyer’s Group means the Buyer its ultimate parent undertaking and its ultimate parent undertaking’s subsidiary undertakings for the time being and from time to time;

Buyer’s Group Undertaking means the Buyer, a subsidiary undertaking or parent undertaking for the time being of the Buyer or a subsidiary undertaking for the time being and from time to time of a parent undertaking of the Buyer;

Company means Global Aerospace Underwriting Managers Limited, a company incorporated in England and Wales (registered no. 02512067), whose registered office is at Fitzwilliam House, 10 St Mary Axe, London, EC3A 8EQ;

Completion means the completion of the sale and purchase of the RSA Shares under this Agreement;

Completion Date means the date which is five Business Days after the date on which the last of the Conditions is satisfied (not being later than the Longstop Date);

Condition means a condition set out in clause 4.1 and Conditions means all those conditions;

Deed of Waiver of Pre-emption Rights and Certain Other Rights means the deed of waiver in the agreed form to be entered into, amongst others, between the Buyer and the Seller prior to Completion;

Deferred Consideration means the amounts payable to the Seller as additional consideration for the RSA Shares in accordance with clause 11;

Draft Certificate has the meaning set out in paragraph 1.2 of Schedule 4;

Encumbrance means any security interest of any nature whatsoever including without limitation, any mortgage, lien, equity, claim, restriction, charge or other encumbrance or right exercisable by a third party having similar effect;

First Payment Date means the tenth Business Day following the earlier of the acceptance by the parties of the Draft Certificate or the final determination in accordance with paragraphs 1.4 and 1.5 of Schedule 4 of the 2003 Relevant Profit;

First Period means the underwriting year in respect of the GAUM Pool commencing on 1 January 2001 and expiring on 31 December 2001, inclusive of both these dates;

Page 2

First Pool Members Agreement means the members agreement dated 27 September 2000 relating to the GAUM Pool (as subsequently amended) in respect of the underwriting years commencing 1 January 2001 and 1 January 2002;

Fitzwilliam Lease means the lease in respect of the second and third floors of Fitzwilliam House, 10 St. Mary Axe, London EC3 dated 16 March 1992 between (1) the Universities Superannuation Scheme (2) British Aviation Insurance Group Limited (3) Aviation & General Insurance Company Limited and Others;

Fourth Payment Date means the twenty-first Business Day following the determination of the Total Trading Return in respect of the Third Period as provided in paragraph 3.3 of schedule 3 to the Second Pool Members Agreement;

GAUM Pool means the pool arrangement known as the Global Aerospace Underwriting Pool which was managed by the Company and AAU on the terms set out in the First Pool Members Agreement;

Group means the Company and each Subsidiary Undertaking;

Group Accounts means, in respect of any financial year, the audited group accounts (as that term is used in section 227 Companies Act 1985) for the Group;

Group Company means the Company or a Subsidiary Undertaking;

Indemnities means the indemnities and undertakings contained in clauses 20, 21 and 23.5 of the Original SPA and Indemnity means any one of them;

Initial Consideration means that part of the consideration payable by the Buyer at Completion, as specified in clause 2.2(a);

Longstop Date has the meaning given in clause 4.1;

New Warranties means the warranties to be given by the Seller and set out in Schedule 2;

Original SPA means the agreement for the sale and purchase of CGU International PLC’s and part of Royal & Sun Alliance Insurance PLC’s shareholding in Global Aerospace Underwriting Managers Limited dated 27 November 2002 to which amongst others the Buyer and the Seller are parties;

Profit Commission has the meaning set out in paragraph 1.5 of schedule 3 to the First Pool Members Agreement as regards the First and Second Periods and has the meaning set out in paragraph 3.2 of schedule 3 to the Second Pool Members Agreement as regards the Third Period;

Proceedings means any civil, criminal, arbitration, administrative or other proceeding;

Related Persons means in relation to any party, its ultimate parent undertaking and its ultimate parent undertaking’s subsidiary undertakings at the date of this Agreement;

Relevant Claim means a claim by the Buyer under the New Warranties;

Page 3

Relief means any loss, relief, allowance, exemption, set-off, deduction, right to repayment or credit or other relief of a similar nature granted by or available in relation to Tax pursuant to any legislation or otherwise;

RSA Loan means 50.49 per cent. (or such lesser amount pursuant to clause 3.5) of the amount outstanding at Completion, together with accrued interest attributable to such amount from and including 1 January 2004, under the loan agreement dated 12 March 2003 between (1) RSA and (2) the Company (the RSA Loan Agreement);

RSA Shares means 1,275,000, of the fully-paid ordinary shares of £1.00 each in the capital of the Company;

Second Global Aerospace Pool means the aerospace pool arrangement in respect of Specified Risks (as such term is defined in the Second Pool Members Agreement) written after 27 November 2002 and attaching on or after 1 January 2003 and before 1 January 2004 managed by the Company and AAU on the terms set out in the Second Pool Members Agreement;

Second Payment Date means the twenty-first Business Day following the agreement of the Total Trading Return in respect of the First Period with the external actuaries (as referred to in paragraph 1.6 of schedule 3 to the First Pool Members Agreement) or such later date as may be agreed pursuant to the Original SPA;

Second Period means the underwriting year in respect of the GAUM Pool commencing on 1 January 2002 and expiring on 31 December 2002, inclusive of both these dates;

Second Pool Members Agreement means the members agreement dated 27 November 2002 between, amongst others, the Seller, the Buyer and the Company constituting the Second Global Aerospace Pool;

Seller’s Group means for the time being and from time to time the Seller, its ultimate parent undertaking and its ultimate parent undertaking’s subsidiary undertakings;

Seller’s Group Undertaking means for the time being and from time to time the Seller, a subsidiary undertaking or parent undertaking of the Seller or a subsidiary undertaking for the time being of a parent undertaking of the Seller;

Subsidiary Undertaking means a subsidiary undertaking of the Company or an undertaking in which the Company owns shares and Subsidiary Undertakings means all those undertakings;

Tax means (a) all forms of taxation including and without limitation any charge, tax, duty, levy, impost, withholding or liability wherever chargeable, imposed by any Tax Authority or any national, state, federal, municipal or local government or governmental authority or any other person and whether of UK or any other jurisdiction; and (b) any penalty, fine, surcharge, interest and costs payable in connection with any taxation within (a) above;

Tax Authority and Taxation Authority mean any fiscal, revenue, customs or excise authority anywhere in the world including, without limitation, the Inland Revenue and H.M. Customs & Excise;

Page 4

Tax Deed means the tax deed dated 12 March 2003 to which, amongst others, the Buyer and Seller are parties;

Third Period means the underwriting year in respect of the Second Global Aerospace Pool commencing on 1 January 2003 and expiring on 31 December 2003, inclusive of both these dates;

Third Payment Date means the twenty-first Business Day following the agreement of the Total Trading Return in respect of the Second Period with the external actuaries (as referred to in paragraph 1.6 of schedule 3 to the First Pool Members Agreement) or such later date as may be agreed pursuant to the Original SPA;

Total Trading Return shall mean, in respect of either of the First or Second Period, the total trading return as such term is defined in paragraph 1.5 of schedule 3 to the First Pool Members Agreement and in respect of the Third Period, the total trading return as such term is defined in paragraph 3.2 of schedule 3 to the Second Pool Members Agreement;

2003 Accounts means the Group Accounts prepared for the financial year to 31 December, 2003;

2003 Financial Year means the financial year to 31 December 2003;

2003 Relevant Profit means in respect of the 2003 Financial Year, an amount calculated using the following formula:

A = P – (C+T+D) + G
where

A	is the Relevant Profit;
P	is the pre tax profit of the Group in respect of the 2003 Financial Year as shown in the 2003 Accounts;
C	is any amount taken into account in the calculation of P as shown in the 2003 Accounts by way of accrual for any Profit Commission which will or may become payable to the Agents under the provisions of the First and Second Pool Members Agreement;
T	is the amount of tax payable by the Company relating to the 2003 Financial Year excluding taxes in respect of accruals for any Profit Commission;
D	is the amount which as at Completion has already been paid to the Seller in respect of profits for the 2003 Financial Year; and
G	is an amount equal to goodwill amortisation for the 2003 Financial Year as shown in the 2003 Accounts;

Warranty means a statement contained in Schedule 3 of the Original SPA and Warranties means all those statements; and

Working Hours means 9.30 a.m. to 5.30 p.m. on a Business Day.

Page 5

1.2	In this Agreement, a reference to:
(a)	a subsidiary undertaking or parent undertaking is to be construed in accordance with section 258 of the Act, to an undertaking or group undertaking is to be construed in accordance with section 259 of the Act and to a subsidiary or holding company is to be construed in accordance with section 736 of the Act;
(b)	a document in the agreed form is a reference to a document in a form approved on or before the date of this Agreement and for the purposes of identification initialled by or on behalf of each party hereto or in such other form as may be agreed in writing by each party hereto;
(c)	a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time before the date of this Agreement and any subordinate legislation made under the statutory provision (as so modified or re-enacted) before the date of this Agreement;
(d)	a person includes a reference to any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any joint venture, association or partnership, works council or employee representative body (whether or not having separate legal personality);
(e)	a person includes a reference to that person’s legal personal representatives, successors and permitted assigns;
(f)	a party includes a reference to that party’s successors and permitted assigns;
(g)	a clause, paragraph or Schedule, unless the context otherwise requires, is a reference to a clause or paragraph of, or Schedule to, this Agreement;
(h)	any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term and to any English statute shall be construed so as to include equivalent or analogous laws of any other jurisdiction;
(i)	times of the day is to London time and reference to a day is to a period of 24 hours running from midnight on the previous day;
(j)	the words other, include and including do not connote limitation in any way; and
(k)	to £ are to pounds sterling and reference to any amount in such currency shall be deemed to include reference to an equivalent amount in any other currency.
1.3	The headings in this Agreement do not affect its interpretation.

1.4     Where it is necessary to determine whether a pounds sterling monetary threshold referred to in this Agreement has been reached or exceeded and the value of the relevant claim is expressed in a currency other than pounds sterling, the value of

Page 6

that claim shall be translated into pounds sterling at the closing mid-point pound spot rate applicable to that amount of that non-pound currency at close of business in London on the date of receipt by the Seller of written notification from the Buyer of the existence of such claim (or, if such day is not a Business Day, on the Business Day immediately preceding such day) as shown in the Financial Times (London First Edition) published on the next following day or if the Financial Times (London First Edition) is not published on that day the closing middle point spot rate quoted by HSBC Bank plc for pounds sterling applicable to amounts of £1 million or more.

1.5 Where it is necessary to determine whether a US dollar monetary limit referred to in this Agreement has been reached or exceeded and the value of the claim is expressed in a currency other than United States dollars, the value of that claim shall be translated into United States dollars at the closing mid-point dollar spot rate applicable to that amount of that non-dollar currency at close of business in London on the date of receipt by the Seller of written notification from the Buyer of the existence of such claim (or, if such day is not a Business Day, on the Business Day immediately preceding such day) as shown in the Financial Times (London First Edition) published on the next following day or if the Financial Times (London First Edition) is not published on that day the closing middle point spot rate quoted by HSBC Bank plc for United States dollars applicable to amounts of $1 million or more.

2. Sale and purchase

2.1 On and subject to the terms of this Agreement RSA, as legal and beneficial owner, agrees to sell or procure the sale with full title guarantee and the Buyer agrees to buy the RSA Shares together with all rights and benefits attaching to the RSA Shares on or after 1 January 2004, free of any Encumbrance including, without limitation, claims or other third party rights (including rights of pre-emption) of any nature whatsoever.

2.2 The total Consideration for the sale of the RSA Shares shall be the payment by the Buyer of:

(a)	the Initial Consideration, being the sum of US$2,945,980.841 payable in accordance with clause 6; and
(b)	the Deferred Consideration, to be determined and paid in accordance with clause 11.

2.3 The Seller shall, if requested by the Buyer from time to time, provide to the Buyer a copy of a properly completed US Internal Revenue Service Form W-8BEN or other applicable form, certificate or document specified by the Buyer and prescribed by the US Internal Revenue Service in respect of any payments to be made to the Seller under this Agreement in respect of which the Buyer would be liable to withhold tax.

¹ 2,571,439.39 x 1.7710 = $4,554,019.16
$7,500,000 – $4,554,019.16 = $2,945,980.84

Page 7

3. The RSA Loan

3.1 At Completion RSA will assign to Converium (or subject to not less than three Business Days notice by Converium, a member of the Buyer’s Group incorporated in England or Wales) its rights under the RSA Loan for a consideration of $4,554,019.16 pursuant to an assignment in the agreed form.

3.2 RSA confirms that the amount of principal outstanding under the RSA Loan as at the date of this Agreement is £2,571,439.39.

3.3 The Buyer agrees and undertakes that it shall promptly pay to the Seller any interest in respect of the RSA Loan the Buyer receives in respect of periods up to 31 December 2003. Any such receipt shall, pending such payment, be held by the Buyer as agent for the Seller.

3.4 The Seller agrees and undertakes that it shall promptly pay to the Buyer any interest in respect of the RSA Loan the Seller receives in respect of periods after 31 December 2003. Any such receipt shall, pending such payment, be held by the Seller as agent for the Buyer.

3.5 RSA agrees that if the principal amount of the RSA Loan is reduced prior to Completion, the consideration under clause 3.1 will be correspondingly reduced (using the exchange rate of $1.7710 to £1).

4. Conditions

4.1 Completion is conditional on the following Conditions being satisfied, on or before 31 March 2004 (or if any clearance or approval is required in order to satisfy the Condition in clause 4.1(b), on or before 30 June 2004) (the Longstop Date):

(a)	each of the parties to the Deed of Waiver of Pre-emption Rights and Certain Other Rights having validly executed it or the consents, waivers and authorisations required thereunder having been obtained by other means acceptable to the Buyer and the Seller, acting reasonably;
(b)	Converium being satisfied, acting reasonably, that no clearances or approvals are required in relation to the transfer of the RSA Shares or any other provision of this Agreement or the Buyer’s Completion Documents which:

(i)	have not been obtained on terms reasonably satisfactory to the Buyer; or
(ii)	if not obtained would:

(A)	render such transfer or the effecting of such provision illegal, void or invalid in any applicable jurisdiction; or
(B)	render the Buyer liable to any penalty; or

(iii) would not be likely to be granted on terms reasonably satisfactory to the Buyer; and

Page 8

(c) RSA validly withdrawing from the Second Global Aerospace Pool for periods commencing on or after 1 January 2004.

4.2 Each of the Buyer and the Seller shall use their respective reasonable efforts to achieve satisfaction of the Conditions in clauses 4.1(a) and 4.1(c) as soon as reasonably practicable and in any event before the Longstop Date.

4.3 The following provisions apply in relation to the Condition set out in clause 4.1(b):

(a)	the Buyer shall use its reasonable efforts to achieve satisfaction of such Condition as soon as practicable and the Seller shall provide such information and assistance as may be reasonably required by the Buyer in this connection;
(b)	the Buyer shall as soon as practicable after the date hereof identify jurisdictions in respect of which clauses 4.1(b)(ii) and (iii) are not satisfied and provide the Seller with a list of jurisdictions so identified. The Buyer agrees to provide the Seller by 30 January 2004 with a preliminary list based on information solely within its own control;
(c)	the Buyer agrees to use reasonable efforts to make applications for clearance in such jurisdictions by 27 February 2004 or as soon as practicable thereafter.

4.4 If, at any time, any party becomes aware of a fact or circumstance that is likely to prevent a Condition being satisfied, it shall as soon as reasonably practicable and in any event within two Business Days, inform the other party of the matter.

4.5 If one or more of the Conditions set out in clause 4.1 has not been satisfied on or before the Longstop Date, this Agreement (other than clauses 1, 7.9, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22) shall automatically terminate with immediate effect and each party’s further rights and obligations cease immediately on termination, but termination does not affect a party’s accrued rights and obligations at the date of termination.

5. Fronting arrangements

5.1 For a period of one year from the date of this Agreement, the Seller agrees to act, and to procure that members of the Seller’s Group shall act, as fronting insurers for the Buyer and members of the Buyer’s Group in such jurisdictions as the Buyer may direct from time to time where the Buyer or such member of the Buyer’s Group is not duly authorised in respect of the type of insurance business to which the direction relates provided that the Seller or a member of the Seller’s Group has any necessary authorisation in the relevant jurisdiction (Fronting Arrangements), and the Buyer agrees to pay to the Seller at Completion US$1,500,000 in consideration of the Seller affording the Buyer such right.

5.2 The Seller and the Buyer shall review the Fronting Arrangements as at 1 December 2004.

5.3 Any Fronting Arrangement shall be on the terms of the Fronting and Administration Agreement between Global Aerospace Underwriters Managers Limited, Global Aerospace, Inc., Converium and RSA dated 1 January 2003 with the

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jurisdictions in Schedule 1 and the “Specified Risks” changed to reflect the business to which the direction relates (subject to the proviso in clause 5.1) and any other consequential or clerical amendments which may be necessary.

6. Completion

6.1 Completion shall take place at the offices of Freshfields Bruckhaus Deringer in London or such other place as shall be agreed in writing between the parties on the Completion Date.

6.2 At Completion the Seller and the Buyer shall do all those things respectively required of them in Schedule 1.

6.3 No party is obliged to complete this Agreement unless the other party complies with all its obligations under this clause 6 and Schedule 1.

6.4 The Buyer shall not be obliged to complete the purchase of any of the RSA Shares unless the sale and purchase of all the RSA Shares is completed simultaneously.

6.5 If Completion does not take place on the Completion Date because the Buyer or the Seller fails to comply with any of its obligations under this clause 6 and/or under Schedule 1 (whether any such failure amounts to a repudiatory breach or not), the Seller (in the case of a failure by the Buyer) may by notice to the Buyer, or the Buyer (in the case of a failure by the Seller), may by notice to the Seller:

(a)	proceed to Completion to the extent reasonably practicable (without limiting its rights under this Agreement);
(b)	postpone Completion to a date not more than ten Business Days after the Completion Date and not later than the Longstop Date; or
(c)	terminate this Agreement.

6.6 If the Buyer or the Seller postpones Completion to another date in accordance with clause 6.5(b), the provisions of this Agreement apply as if that other date is the Completion Date.

6.7 If the Buyer or the Seller terminates this Agreement pursuant to clause 6.5(c), each party’s further rights and obligations (other than clauses 1, 7.9, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22) cease immediately on termination, but termination shall not affect a party’s accrued rights and obligations at the date of termination (including, if applicable, the rights to remedies).

7. The seller’s warranties and other matters

7.1 The Seller warrants to the Buyer in the terms of the New Warranties. The New Warranties shall be deemed to have been repeated at Completion by the Seller to the Buyer by reference to the facts and circumstances then subsisting.

7.2 The Seller’s liability shall be limited or excluded, as the case may be, if, but only to the extent that, the limitations or exclusions set out in Schedule 3 apply.

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7.3 Each warranty in Schedule 2 is to be construed independently and separately and is not limited by a provision of this Agreement or another Warranty.

7.4 If the Buyer has a valid claim under the Warranties, the Tax Deed or the Indemnities, the parties agree that the aggregate liability of RSA set out in paragraph 1.2 of Schedule 4 of the Original SPA (the Original Cap) shall be increased as set out in clause 7.5, but subject to the limitations under the Original SPA.

7.5 If the Buyer has a right to claim amounts from the Seller in respect of valid claims under the Warranties, the Tax Deed or the Indemnities and the amount of the Buyer’s loss or claim (calculated subject to the same principles and limitations mutatis mutandis as under the Original SPA or Tax Deed, as appropriate) in respect of all claims exceeds 25% of the Original Cap, the Buyer will be entitled to recover the amount of its loss or claim from the Seller, (subject to the same principles and limitations as aforesaid), up to a maximum aggregate amount of US$7,500,000 in respect of all such claims.

7.6 The limitation in clause 20.1, 20.8 and 21.1 of the Original SPA whereby the “Sellers” covenant or indemnify the “Buyers” up to 89.9% of the relevant amounts shall be increased as between the Buyer and the Seller only, but not against any other person, so that the Buyer shall be entitled to claim from the Seller such additional amounts under clauses 20 and 21 of the Original SPA as could have been claimed by the Buyers from the “Sellers” had the figure “89.9%” been replaced by “95%”.

7.7 The limitation in clause 2 of the Tax Deed whereby the “Sellers” agree to pay the “Buyers” 89.9% of the relevant amounts, liabilities or losses shall be increased as between the Buyer and the Seller only, but not against any other person, so that the Buyer shall be entitled to claim from the Seller such additional amounts under the Tax Deed as could have been claimed by the “Buyers” from the “Sellers” had the figure of 89.9% in clause 2 of the Tax Deed been replaced in each case where it appears in that clause by “95%”.

7.8 This clause 7 is not a variation of the Original SPA or the Tax Deed.

7.9 The Seller undertakes to each Group Company that it:

(a)	does not have any rights against; and
(b)	may not make any claim against,

any employee, director, agent or officer of any Group Company on whom it may have relied before agreeing to any term of, or entering into, this Agreement or any other agreement or document referred to herein (save in relation to any right or claim arising from wilful default or a fraudulent act or omission).

8. The buyer’s remedies

8.1 Notwithstanding that the Buyer becomes aware at any time after execution of this Agreement, whether before or after Completion:

(a) of a fact or circumstance which gives rise to or which would or might give rise to a claim under the New Warranties;

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(b)	that there has been a breach of any New Warranty or any other provision of this Agreement; or
(c)	that there may be a claim against the Seller under any representation, statement, assurance, covenant, undertaking, indemnity, guarantee or commitment given by or on behalf of the Seller in connection with this Agreement,

the Buyer shall not, save as provided in clause 6, be entitled to rescind this Agreement or treat this Agreement as terminated and, accordingly, the Buyer waives all and any rights of rescission and/or termination they may have in respect of any such matter (howsoever arising or deemed to arise), other than those provided in clause 6 and any such rights in respect of fraud or wilful non-disclosure.

9.	The buyer’s warranties
9.1	The Buyer warrants to the Seller that:
(a)	it has the requisite capacity, power and authority, and has taken all action necessary, to execute, deliver and perform its obligations under this Agreement;
(b)	its obligations under this Agreement and the Buyer’s Completion Documents are, or when the relevant Buyer’s Completion Document is executed will be, enforceable in accordance with their respective terms;
(c)	the execution and delivery of, and the performance by it of its obligations under, this Agreement and the Buyer’s Completion Documents will not:

(i)	result in a breach of any provision of its by-laws;
(ii)	result in a breach by it of, or constitute a default by it under, any instrument to which it is a party or by which it is bound and which is material in the context of the transactions contemplated by this Agreement;
(iii)	result in a breach by it of any order, judgment or decree of any court or governmental agency to which it is a party or by which the Buyer is bound or submits and which is material in the context of the transactions contemplated by this Agreement; or
(iv)	save for any consent, approval, notice or registration which would be required in order to satisfy the Condition in clause 4.1(b), require it to obtain any consent or approval of, or give any notice to or make any registration with, any governmental or other regulatory authority which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked (save pursuant to any legal or regulatory entitlement to revoke the same other than by reason of any misrepresentation or misstatement) to the extent such consent, approval, notice or regulation is material in the context of the transaction contemplated by this Agreement.

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9.2	The Buyer’s warranties in clause 9.1 shall be deemed to have been repeated at Completion by the Buyer to the Seller by reference to the facts and circumstances then subsisting.
10.	Fitzwilliam lease

The limitation in clause 23.3 of the Original SPA whereby Converium’s “Relevant Percentage” is stated to be “25%” shall be increased as between the Buyer and the Seller only, but not against any other person, so that the Seller shall be entitled to claim from the Buyer such additional amounts under clause 23 of the Original SPA as could have been claimed by it from the Converium had the figure “25%” been replaced by “30.1%”.

11. Deferred consideration

The Buyer shall pay to the Seller:

(a)	an amount equal to 5.1 per cent of the 2003 Relevant Profit determined as set out in Schedule 4, such amount to be paid in cash on the First Payment Date;
(b)	an amount in respect of the Profit Commission received by the Agents under the First Pool Members Agreement in respect of the First Period, such amount to be determined as set out in Schedule 5 and paid in cash on the Second Payment Date or, if the circumstances in paragraph 1.4 of Schedule 5 apply, in whole or in part at a time or times thereafter, as provided for in such paragraph;
(c)	an amount in respect of the Profit Commission received by the Agents under the First Pool Members Agreement in respect of the Second Period, such amount to be determined as set out in Schedule 5 and paid in cash on the Third Payment Date or, if the circumstances in paragraph 1.4 of Schedule 5 apply, in whole or in part at a time or times thereafter, as provided for in such paragraph; and
(d)	an amount in respect of the Profit Commission received by the Agents under the Second Pool Members Agreement in respect of the Third Period, such amount to be determined as set out in Schedule 5 and paid in cash on the Fourth Payment Date or, if the circumstances in paragraph 1.4 of Schedule 5 apply, in whole or in part at a time or times thereafter, as provided for in such paragraph.
12.	Conduct of business between completion and the fourth payment date

12.1   The Buyer undertakes to the Seller that, during the period between Completion and the Fourth Payment Date:

(a) it shall not, and shall use its reasonable endeavours to procure that no member of the Buyer’s Group shall and that no member of the Group shall, take steps, or cause steps to be taken, where the main intention of taking such steps or causing such steps to be taken is to materially adversely affect the amount of Deferred Consideration; and

Page 13

(b) it shall not, and shall use its reasonable endeavours to procure that no member of the Group or of the Buyer’s Group shall, take steps, or cause steps to be taken, where the Buyer is aware that the effect of taking such steps or causing such steps to be taken is to materially adversely affect the amount of Deferred Consideration provided always that at any time during such period, the Buyer shall not be required to use reasonable endeavours to procure that any member of the Group shall allocate costs, expenses or liabilities other than in accordance with its normal practice at such time or otherwise act in a way which is inconsistent with its normal business practice or its obligations under any applicable laws and existing contractual agreements at such time.

12.2 Prior to the Fourth Payment Date, save with the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed), the Buyer will not take steps, nor will it procure that steps are taken, to wind up the Agents (or either of them) or cause the Agents (or either of them) to cease carrying on any material part of its business, save where an Agent is unable to pay its debts (for the purposes of section 123 of the Insolvency Act 1986) or the directors of an Agent, acting in good faith, reasonably consider it their duty to cause such winding-up or cessation.

13. Confidential information

13.1 Subject to clause 13.2 and clause 14, the Seller undertakes to the Buyer (for the Buyer’s own benefit and as agent and trustee for each Buyer’s Group Undertaking) and the Buyer undertakes to the Seller (for the Seller’s own benefit and as agent and trustee for each Seller’s Group Undertaking), that it shall (and, in the case of the Seller, that it shall procure that each Seller’s Group Undertaking shall, and, in the case of the Buyer, that it shall procure that each Buyer’s Group Undertaking shall) treat as confidential and shall not use or disclose to any other person all information received or obtained as a result of entering into or performing this Agreement which relates to:

(a)	the other party including, where that other party is the Seller, the Seller’s Group and where that other party is the Buyer, the Buyer’s Group;
(b)	the provisions or the subject matter of this Agreement or any document referred to herein and any claim or potential claim thereunder; or
(c)	the negotiations relating to this Agreement or any documents referred to herein.

13.2 Clause 13.1 does not apply to disclosure of any such information as is referred to in this clause 13.2:

(a) which is required to be disclosed by law or for the purpose of any judicial proceedings, by a rule of a listing authority or stock exchange to which any party is subject or submits or by a governmental authority or other authority with relevant powers to which any party is subject or submits, whether or not the requirement has the force of law provided that the disclosure shall, so far as is practicable, be made after consultation with the other party and after taking into account the other party’s reasonable requirements as to its timing, content and manner of making or despatch;

Page 14

(b)	to the extent required by, or necessary in the opinion of that party for, any securities exchange or regulatory or governmental body or Tax Authority to which any Seller’s Group Undertaking or Buyer’s Group Undertaking is subject, wherever situated;
(c)	to an adviser for the purposes of advising in connection with the transactions contemplated by this Agreement provided that such disclosure is necessary or desirable for these purposes and is on the basis that clause 13.1 applies to the disclosure by the adviser;
(d)	to any director, officer or employee of the Buyer or the Buyer’s Group or of a Seller’s Group Undertaking whose function requires him to have the relevant confidential information;
(e)	to the extent that the information has been made public other than through breach of this Agreement;
(f)	to any connected company (as defined in clause 15.1) of any party in connection with any assignment permitted under clause 15.1;
(g)	to the extent confidential information (as such term is defined in clause 8.7 of the First Pool Members Agreement) is required or permitted to be disclosed under the provisions of clause 8 (Confidentiality) of the First Pool Members Agreement;
(h)	to the extent confidential information (as such term is defined in clause 16.8 of the Second Pool Members Agreement) is required or permitted to be disclosed under the provisions of clause 16 (Confidentiality) of the Second Pool Members Agreement.

13.3 The restrictions contained in this clause shall continue to apply without limit in time and whether or not this Agreement is terminated.

14. Announcements

14.1 Subject to clause 14.2, no party may, before or after Completion, make or send a public announcement, communication or circular concerning the transactions referred to in this Agreement unless it has first obtained the other party’s written consent, which may not be unreasonably withheld or delayed.

14.2 Clause 14.1 does not apply to a public announcement, communication or circular:

(a) required by law, by a rule of a listing authority or stock exchange to which either party is subject or submits or by a governmental authority or other authority with relevant powers to which any party is subject or submits, whether or not the requirement has the force of law provided that the public announcement, communication or circular shall, so far as is practicable, be made after consultation with the other parties and after taking into account the other party’s reasonable requirements as to its timing, content and manner of making or despatch; or

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(b) which the other party has given its prior written approval to, such approval not to be unreasonably withheld or delayed.

14.3 The provisions of this clause shall remain in full force and effect notwithstanding the termination of this Agreement and each party to this Agreement shall remain bound by the provisions of this clause for a period of five years from Completion.

15. Assignment

15.1 A party may, without the consent of the other party, assign to a connected company the benefit of all or any or any part of any other party’s obligations to it under this Agreement and/or any benefit arising under or out of this Agreement provided however that such assignment shall not be absolute but shall be expressed to have effect only for so long as the assignee remains a connected company. For the purposes of this clause 15.1, connected company means, for the Seller, any Seller’s Group Undertaking and, for the Buyer, any Buyer’s Group Undertaking.

15.2 No party shall assign, transfer, declare a trust of the benefit of or in any other way alienate any of its rights under this Agreement whether in whole or in part to a company which is not a connected company without the consent in writing of the other party.

15.3 A party shall, following an assignment under clauses 15.1 and 15.2, notify the other party within 14 days of such an assignment.

16. Costs

Each party shall pay its own legal, accountancy and other costs and expenses relating to the negotiation, preparation, execution and performance by it of this Agreement and of each document referred to in it.

17. Withholding tax and grossing up

17.1 Each party shall pay all sums payable by it under this Agreement free and clear of all deductions or withholdings unless the law requires a deduction or withholding. If a deduction or withholding is so required and except in the case of interest payments the relevant party shall pay such additional amount as will ensure that the net amount the payee receives equals the full amount which it would have received had the deduction or withholding not been required.

17.2 If any Tax authority brings any sum paid by the Seller pursuant to this Agreement into charge to Tax (other than interest but including any circumstances where any Relief is available in respect of such charge to Tax) then the Seller shall pay such additional amount as will ensure that the total amount paid, less the Tax chargeable on such amount (or that would be so chargeable but for such Relief) is equal to the amount that would otherwise be payable under this Agreement.

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18. Entire agreement

18.1 Each party on behalf of itself and as agent for each of its Related Persons acknowledges and agrees with the other party (acting on behalf of itself and as agent for each of its Related Persons) that:

(a)

this Agreement and each document referred to in the Agreement constitutes the entire agreement between the parties relating to the sale of the RSA Shares;

(b)

neither it nor any of its Related Persons has relied on or been induced to enter into this Agreement or any document referred to in it in reliance upon nor has any such party been given any warranty, representation, statement, assurance, covenant, undertaking, indemnity, guarantee or commitment (whether contractual or otherwise) other than as expressly set out in this Agreement or any document referred to herein.

18.2 In relation to the sale of the RSA Shares, no party is liable to any other party (in equity, contract or tort (including negligence), under the Misrepresentation Act 1967 or in any other way) for a representation, statement, assurance, covenant, undertaking, indemnity, guarantee or commitment (whether contractual or otherwise) that is not set out in this Agreement or any document referred to in it including the Original SPA.

18.3 Nothing in this clause 18 shall have the effect of limiting or restricting any liability arising as a result of any fraud including, without limitation, fraudulent concealment.

19. Third party rights

19.1 Subject to this clause and to clause 7.9, a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 (the Third Parties Act) to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from the Third Parties Act.

19.2 Any employee, director, agent or officer of any Group Company referred to in clause 7.9 (each a Third Party) may enforce the terms of clause 7.9, subject to and in accordance with this clause and clause 23 and the provisions of the Third Parties Act.

19.3 The parties to this Agreement do not require the consent of any Third Party to vary or, to the extent they may do so, rescind or terminate this Agreement.

19.4 If a Third Party brings proceedings to enforce the terms of clause 7.9, then, in addition to the defences, set-offs and counterclaims available to it by virtue of sections 3(2) and 3(4) of the Third Parties Act, the Seller shall have available to them by way of defence or set-off any matter that would have been available by way of defence or set-off if the proceedings had been brought by the Buyer.

19.5 If the Seller is in breach of clause 7.9 the Buyer may not recover from the Seller any sum in respect of a Third Party’s loss arising from that breach or the expense to the Buyer of making good to a Third Party the default of the Seller.

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19.6 No Third Party may assign or transfer or purport to assign or transfer a right to enforce clause 7.9 under the Third Parties Act without having first obtained the parties’ written consent.

19.7 No Third Party may take proceedings to enforce clause 7.9 of this Agreement unless and until it gives notice in writing to the Seller agreeing irrevocably to the provisions of clause 22.

20. General

20.1 A variation of this Agreement is valid only if it is in writing and signed by or on behalf of each party to it. The expression variation shall include any variation, supplement, deletion or replacement however effected.

20.2 The failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not impair or constitute a waiver of the right or remedy or an impairment of or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement or by law prevents further exercise of the right or remedy or, the exercise of another right or remedy.

20.3 Each of the Seller’s rights and remedies contained in this Agreement are cumulative, may be exercised as often as the Seller considers appropriate and are not exclusive of rights or remedies provided by law.

20.4 Each of the Buyer’s rights and remedies contained in this Agreement are cumulative, may be exercised as often as the Buyer considers appropriate and are not exclusive of rights or remedies provided by law.

20.5 Except to the extent that they have been performed and except where this Agreement provides otherwise, the obligations contained in this Agreement remain in force after Completion.

20.6 If a party fails to pay a sum due from it under this Agreement on the due date of payment in accordance with the provisions of this Agreement, that party shall pay interest on the overdue sum from the due date of payment until the date on which its obligation to pay the sum is discharged at a rate of 2% above the Agreed Rate for the currency in which the debt is denominated (accrued daily and compounded monthly).

20.7 Any payment made by the Seller to the Buyer in respect of a claim pursuant to the New Warranties or clauses 7.4 to 7.7 shall be treated by the Buyer and the Seller as a reduction in the consideration paid for the RSA Shares pursuant to this Agreement .

20.8 Save as otherwise provided herein, any payment to be made by any party under this Agreement shall be made in full without any set-off, restriction, condition or deduction for or on account of any counterclaim (including any set-off under any contract with a member of the Seller’s Group).

20.9 If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable under the laws of any jurisdiction, that shall not affect:

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(a)	the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or
(b)	the legality, validity or enforceability under the law of any other jurisdiction of that or another provision of this Agreement.

20.10 This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original and all of which together evidence the same agreement.

20.11 Following Completion the Seller shall from time to time forthwith upon request from the Buyer at the Seller’s expense do or procure the doing of all acts and/or execute or procure the execution of all such documents in a form reasonably satisfactory to that Buyer for the purpose of vesting in the Buyer the full legal and beneficial title to the RSA Shares and otherwise giving the Buyer the full benefit of this Agreement.

21. Notices

21.1 A notice or other communication under or in connection with this Agreement (a Notice) shall be:

(a)	in writing;
(b)	in the English language; and
(c)	delivered personally or sent by first class post pre-paid recorded delivery (and air mail if overseas) to the party due to receive the Notice to the address set out in clause 21.3 or to another address, person or fax number specified by that party by not less than seven days’ written notice to the other parties received before the Notice was despatched.

21.2 Unless there is evidence that it was received earlier, a Notice is deemed given if:

(a)	delivered personally, when left at the address referred to in clause 21.1(c);
(b)	sent by mail, except air mail, two Business Days after posting it;
(c)	sent by air mail, six Business Days after posting it; and
(d)	sent by fax, when confirmation of its transmission has been recorded by the sender’s fax machine.

21.3 The address referred to in clause 21.1(c) is:

			Marked for the
Name of party	Address	Fax No.	attention of
RSA	St. Mark’s Court	00 44 207 569 6607	Company Secretary
	Chart Way
	Horsham
	West Sussex

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			Marked for the
Name of party	Address	Fax No.	attention of
	RH12 1XL
Converium	General Guisan-Quai	00 41 1 639 9066	Chris Bell/
	26		Christian Felderer
	8022 Zürich
	Switzerland

21.4 Any notice given under this Agreement outside Working Hours in the place to which it is addressed shall be deemed not to have been given until the start of the next period of Working Hours in such place.

22. Governing law and jurisdiction

22.1 This Agreement is governed by English law.

22.2 The courts of England have exclusive jurisdiction to settle any dispute arising from or connected with this Agreement (a Dispute) save that this clause 22.2 shall not apply in relation to proceedings commenced to enforce a judgment.

22.3 The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

22.4 The parties agree that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on any party in accordance with clause 21. These documents may, however, be served in any other manner allowed by law. This clause applies to all Proceedings wherever started.

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IN WITNESS of which this agreement has been executed and delivered as a deed on the date which first appears on page 1 of this agreement:

Executed as a deed by	)
ROYAL & SUN ALLIANCE	)
INSURANCE PLC	)
acting by its duly appointed attorney	)
in the presence of:	)	(Signature of attorney)
Witness’s signature:
Name (print):
Occupation:
Address:
Executed as a deed by	)
CONVERIUM AG	)
acting by Chris Bell and Benjamin Gentsch	)
who in accordance	)
with the laws of Switzerland are	)
acting under the authority of	)
Converium AG	)	(Authorised signatories)

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SCHEDULE 1

COMPLETION REQUIREMENTS

1.	Seller’s obligations
1.1	At Completion the Seller shall deliver to the Buyer:
(a)	a duly executed transfer in respect of the RSA Shares in favour of the Buyer or its nominee(s) (subject to written notification to the Seller not less than two days before Completion) along with the share certificate(s) for the RSA Shares (or an indemnity in lieu thereof in a form reasonably acceptable to the Buyer);
(b)	as evidence of the authority of each person executing a document referred to in this Schedule on the Seller’s behalf:

(i)	a copy of the minutes of a duly held meeting of the directors of the Seller (or a duly constituted committee thereof) authorising the execution by the Seller of the document and, where such execution is authorised by a committee of the board of directors of the Seller, a copy of the minutes of a duly held meeting of the directors constituting such committee or a relevant extract thereof; or
(ii)	a copy of a power of attorney conferring the authority,

	in each case certified to be true and complete and that it has not been revoked or superseded by a director or the secretary of the Seller;
(c)	an irrevocable power of attorney in the agreed form duly executed by RSA in favour of the Buyer or its nominee(s) in respect of the RSA Shares;
(d)	the Seller shall deliver to the Buyer a resignation from the board of each Group Company of which such person is a director in the agreed form from David Reeves; and
(e)	an assignment in the agreed form of the RSA Loan duly executed by the Seller (if the Company does not execute the assignment in the agreed form at or prior to Completion, the agreed form shall be amended to remove the Company as a party).
2.	Buyer’s obligations
2.1	At Completion the Buyer shall:
(a)	deliver to the Seller as evidence of the authority of each person executing a document referred to in this Schedule on the Buyer’s behalf:

(i)	a copy of the minutes of Converium Holding Limited in the agreed form); or
(ii)	a copy of a power of attorney conferring the authority,

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	in each case certified to be true and complete (or a true and complete extract) and that it has not been revoked or superseded by a director or secretary of the Buyer;
(b)	pay to the Seller by way of CHAPS or SWIFT the Initial Consideration and the amount due under clause 5.1(a); and
(c)	countersign the assignment referred to in paragraph 1.1(e) of this schedule (if the Company does not execute the assignment in the agreed form at or prior to Completion, the agreed form shall be amended to remove the Company as a party) and pay to the Seller by way of CHAPS or SWIFT the consideration for such assignment.

2.2 Unless otherwise specified by the Seller not less than 2 Business days prior to Completion, payments due to RSA at Completion shall be made to RSA’s “RSAIPLC - Global Risks Reinsurance USD” account at HSBC Bank plc, of 27-32 Poultry, London, PO Box 181, EC2P 2BX, Sort Code: 40-05-15, Account No: 35729639.

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SCHEDULE 2

SELLER’S WARRANTIES

1.	Capacity and authority
1.1	Capacity, power, authority and action
(a)	The Seller has the requisite capacity, power and authority and has taken all action necessary, to execute, deliver and exercise its rights, and perform its obligations under this Agreement and each document to be executed by the Seller at or before Completion.
(b)	Save for any consent, approval, notice or registration which would be required in order to satisfy the Condition in clause 4.1(b), the Seller has obtained all applicable governmental, statutory, regulatory or other consents, licences, waivers or exemptions to empower it to enter into and perform its obligations under this Agreement.
1.2	Binding agreements

The Seller’s obligations under this Agreement and each document to be executed by the Seller at or before Completion are, or when the relevant document is executed will be, enforceable in accordance with their respective terms.

1.3 No Breach

The execution and delivery of, and the performance by the Seller of its obligations under this Agreement and any other documents to be executed by the Seller pursuant to or in connection with this Agreement will not:

(a)	result in a breach of any provision of the memorandum or articles of the Seller; or
(b)	result in a breach by it of any order, judgement or decree of any court or governmental agency to which the Seller is a party or by which the Seller is bound which is material in the context of the transactions contemplated by this Agreement; or
(c)	save for any consent, approval, notice or registration which would be required in order to satisfy the Condition in clause 4.1(b), require the Seller to obtain any consent or approval of, or give any notice or make any registration with, any governmental or other regulatory authority or person which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked (save pursuant to any legal or regulatory entitlement to revoke the same other than by reason of any misrepresentation or misstatement) to the extent such consent, approval, notice or regulation is material in the context of the transaction contemplated by this Agreement.

Page 24

2. RSA shares

2.1 The Seller is the sole legal and beneficial owner of the RSA Shares.

2.2 There is no Encumbrance, and, subject to the satisfaction of the Condition set out in clause 4.1(a), there is no agreement, arrangement or obligation to create or give an Encumbrance, in relation to any of the RSA Shares including, without limitation, an option or right of pre-emption or conversion and the RSA Shares are free from other third party rights of any nature whatsoever.

Page 25

SCHEDULE 3

LIMITATIONS ON THE SELLER’S LIABILITY

1. Limitation on quantum

RSA’s total aggregate liability in respect of all claims pursuant to the New Warranties is limited to US$7,500,000.

2. Mitigation

Nothing in this Schedule 3 restricts or limits any Buyer’s general obligation at law to mitigate any loss or damage which it may incur in consequence of a matter giving rise to a Relevant Claim.

3. General

Nothing in this Schedule 3 shall have the effect of limiting or restricting any liability of the Seller in respect of a claim based upon or arising as a result of any fraud including, without limitation, fraudulent concealment.

Page 26

SCHEDULE 4

DETERMINATION OF 2003 RELEVANT PROFIT

1.1 The Buyer shall use reasonable endeavours to procure that the 2003 Accounts are prepared by the Company and audited by 31 March 2004 (or in any event as soon as reasonably practicable thereafter) in accordance with generally accepted accounting principles and practices in the United Kingdom and on bases and policies consistent in all material respects with those adopted in the Accounts subject to any modification necessary to comply with legal, regulatory or taxation requirements or new accounting standards.

1.2 The Buyer shall use reasonable endeavours to procure that as soon as reasonably practicable after Completion and in any event by the date 15 Business Days after the 2003 Accounts are prepared and audited in accordance with paragraph 1.1 of this Schedule (the Calculation Date) the Company shall calculate the amount of the 2003 Relevant Profit based on the 2003 Accounts and shall set out the amount payable in accordance with clause 11.2(a) on the First Payment Date due to the Seller (along with full details of the calculation thereof) in a certificate (the Draft Certificate) and send a copy of the Draft Certificate to the Seller and the Buyer by no later than 5 Business Days after the Calculation Date.

1.3 After Completion the Buyer shall use reasonable endeavours to procure that the Company shall, in a timely manner, subject to the giving of confidentiality undertakings reasonably acceptable to the Buyer:

(a)	provide the Seller with copies of any relevant papers and/or relevant materials which the Seller may reasonably request at the Seller’s cost; and
(b)	give to the Seller and its accountants, as soon as reasonably practicable following any request, such access during normal working hours to the relevant records, directors, and employees of any Group Company as may reasonably be required,

in order to verify the calculation of the amounts set out in the Draft Certificate and any figures contained in the 2003 Accounts upon which the 2003 Relevant Profit figure is based PROVIDED THAT the obligations in this paragraph 1.3 shall not extend to any information or materials or any other matter that is in the reasonable opinion of the Company confidential or subject to legal privilege which would be likely to be jeopardised by disclosure.

1.4 If the Seller accepts the matters contained in the Draft Certificate and the figures in the 2003 Accounts on which the calculation of the 2003 Relevant Profit is based or the Seller does not elect by notice in writing to the Buyer, within 20 Business Days of receipt of the Draft Certificate to refer the matters for determination pursuant to paragraph 1.5, then the Draft Certificate and the amount payable to the Seller under clause 11.2(a) as set out in such certificate shall be final and binding upon the Buyer and the Seller.

Page 27

1.5 If the Seller does not agree the Draft Certificate or any of the figures in the 2003 Accounts upon which the calculations in the Draft Certificate are based, then the following provisions shall apply:

(a)	the Seller shall within the period of 20 Business Days referred to in paragraph 1.4 of this Schedule serve written notice on the Buyer to that effect along with an explanation in reasonable detail of the reasons behind such disagreement (Disagreement Notice);
(b)	the Buyer and the Seller shall, acting in good faith, try to settle the matters set out in the Disagreement Notice and agree the relevant matters within the period of 20 Business Days after the date of service of the Disagreement Notice (the Resolution Period);
(c)	if the Buyer and the Seller do not reach agreement within the Resolution Period then the Buyer or the Seller may elect, by notice in writing to the other party, at any time after the end of the Resolution Period, to refer the disagreement for determination by an independent firm of chartered accounts (Independent Accountants), acting as experts and not arbitrators and appointed by agreement between the Buyer and the Seller or, in default of agreement within 7 days of receipt of notification of such election, appointed by the President for the time being of the Institute of Chartered Accountants in England and Wales (or in his absence, any appropriate deputy) and, in that regard:

(i)	the Seller and the Buyer shall be bound by the terms of reference and timetable agreed with or, in default of such agreement, imposed by the Independent Accountants; and
(ii)	the determination of the Independent Accountants shall be final and binding upon the Buyer and the Seller in the absence of manifest error (and if there is manifest error the relevant matter shall be referred back to the Independent Accountants to be re-determined);

(d)

in making their determination, the Independent Accountants shall state which of, and to what extent (if at all), those adjustments requested by the Seller are necessary to the Draft Certificate and/or any figures from the 2003 Accounts upon which any calculation therein is based in order that it complies with this agreement and the Independent Accountants shall not consider or propose any adjustments which have not been requested by the Seller or which do not affect the Draft Certificate or any such figures; and

(e)

the costs of the Independent Accountants shall be borne by the Buyer and the Seller in such proportions as the Independent Accountants shall determine, failing which they shall be borne in equal shares by the parties.

Page 28

Draft: [1] 5 March 2004

SCHEDULE 5

DETERMINATION OF AMOUNT IN RESPECT OF

PROFIT COMMISSION DUE TO SELLER

1.1 The Buyer shall use its reasonable endeavours to procure that the Company shall comply with the relevant provisions of the First Pool Members Agreement relating to the calculation of the Profit Commission in respect of the First Period or the Second Period (as the case may be) and with the relevant provisions of the Second Pool Members Agreement relating to the calculation of the Profit Commission in respect of the Third Period and, in respect of each such period, the Buyer shall use reasonable endeavours to procure that the Company shall:

(a)	consult with the Seller in a reasonable timely manner in respect of the proposed calculation of the Total Trading Return and Profit Commission in respect of the relevant Period and, subject to the giving of confidentiality undertakings reasonably acceptable to the Buyer, provide copies of any relevant papers and/or relevant materials which the Seller may reasonably request at the Seller’s cost in respect of such calculations;
(b)	give the Seller reasonable notice in advance of any material discussions with the external actuaries referred to in paragraph 1.5 of schedule 3 to the First Pool Members Agreement relating to the calculation of the Total Trading Return in respect of the First or Second Period or of any discussions regarding the Audited Return to Members relating to the calculation of the Total Trading Return in respect of the Third Period which are material in the context of calculating the Deferred Consideration and allow such representatives of the Seller as the Seller may reasonably request to take part in such discussions;
(c)	to the extent permitted by the First Pool Members Agreement or, as applicable, the Second Pool Members Agreement, take due and reasonable account of the Seller’s views (including, without limitation, complying with any reasonable requests which the Seller may make) in respect of the calculation of the Total Trading Return and/or Profit Commission for the relevant Period (and/or the process for agreeing the same with such external actuaries or agreeing the same for the purposes of the Audited Return to Members to the extent permitted by the First or Second (as applicable) Pool Members Agreement); and
(d)	not agree the calculation of the Total Trading Return for the First or Second Period with such external actuaries or determine the calculation thereof for the Third Period without the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed).

1.2 On agreement being reached in accordance with paragraph 1.1 of this Schedule between the Company and such external actuaries in respect of the Total Trading Return for the First or Second Period, the Buyer shall procure that the Company complies with the provisions of paragraph 1.6 of schedule 3 to the First Pool Members Agreement. On determination of the Total Trading Return for the

Third Period, the Buyer shall use its reasonable endeavours to procure that the Company complies with the provisions of paragraph 3.3 of schedule 3 to the Second Pool Members Agreement.

1.3	The Buyer shall pay to the Seller:
(a)	on the Second Payment Date, an amount equal to 5.1 per cent of net Profit Commission which has been received by the Agents by such date from or on behalf of members of the GAUM Pool in respect of the First Period under the First Pool Members Agreement;
(b)	on the Third Payment Date, an amount equal to 5.1 per cent of net Profit Commission which has been received by the Agents by such date from or on behalf of members of the GAUM Pool in respect of the Second Period under the First Pool Members Agreement; and
(c)	on the Fourth Payment Date, an amount equal to 5.1 per cent of the net Profit Commission which has been received by the Agents by such date from or on behalf of members of the Second Global Aerospace Pool in respect of the Third Period under the Second Pool Members Agreement,

where, in any case, net Profit Commission shall mean the Profit Commission so received by the Company after deduction of any amounts in respect of taxes payable by any member of the Group in respect of such receipt.

1.4 If, on or after the Second Payment Date, the Third Payment Date or the Fourth Payment Date (as the case may be), there remain outstanding any amounts in respect of Profit Commission in respect of the First Period, the Second Period or the Third Period (as the case may be) which are payable to the Agents under the First Pool Members Agreement by any member(s) of the GAUM Pool or under the Second Pool Members Agreement by any member(s) of the Second Global Aerospace Pool, and the Agents (or either of them) receives any payment in respect of such outstanding amounts, the Buyer shall, within 10 Business Days of such receipt, pay in cash to the Seller, an amount equal to 5.1 per cent of such receipt after deduction of any amounts in respect of Taxes payable by any member of the Group in respect of such receipt.

1.5 For the purposes of this Schedule 5:

(a)	a reference to any Agent shall be taken to include any Subsidiary (as such term is used in clause 2.25 of the First Pool Members Agreement or (as the case may be clause 10 of the Second Pool Members Agreement) of such Agent;
(b)	a reference to a member of the GAUM Pool shall be taken to include any nominated company (as such term is used in clause 2.22 of the First Pool Members Agreement) of such member and a reference to a member of the Second Global Aerospace Pool shall be taken to include any nominated company (as such term is used in clause 9 of the Second Pool Members Agreement) of such member; and
(c)	any receipt of any amount in respect of Profit Commission from or on behalf of any member of the GAUM Pool in respect of the First Period or the Second

Page 30

Period or any member of the Second Global Aerospace Pool in respect of the Third Period by the Buyer or any subsidiary undertaking of the Buyer or any Group Company other than an Agent shall be taken to be a receipt by the Agents.

Page 31 EX-4.39 4 u47204exv4w39.htm EXHIBIT 4.39

Exhibit 4.39

AGREEMENT

DATED 24th July, 2003

US$900,000,000

CREDIT FACILITY

FOR

CONVERIUM AG, ZURICH

ARRANGED BY

ABN AMRO BANK N.V.

BARCLAYS CAPITAL

COMMERZBANK AKTIENGESELLSCHAFT

London

CONTENTS

Clause			Page
	1.	Interpretation		1
	2.	Facility		13
	3.	Purpose		14
	4.	Conditions Precedent		15
	5.	Utilisation - - Letters of Credit		15
	6.	Utilisation - - Loans		19
	7.	Letters of Credit		20
	8.	Optional Currencies		23
	9.	Repayment		26
	10.	Prepayment and Cancellation		26
	11.	Interest		29
	12.	Terms		30
	13.	Market Disruption		31
	14.	Taxes		31
	15.	Increased Costs		34
	16.	Mitigation		35
	17.	Payments		35
	18.	Guarantee and Indemnity		37
	19.	Representations		40
	20.	Information Covenants		44
	21.	Financial Covenant		47
	22.	General Covenants		48
	23.	Default		54
	24.	Security		58
	25.	The Administrative Parties		59
	26.	Evidence and Calculations		64
	27.	Fees		64
	28.	Indemnities and Break Costs		65
	29.	Expenses		66
	30.	Amendments and Waivers		67
	31.	Changes to the Parties		68
	32.	Disclosure of Information		72
	33.	Set-off		72
	34.	Pro Rata Sharing		73
	35.	Severability		74
	36.	Counterparts		75
	37.	Notices		75
	38.	Language		76
	39.	Governing law		77
	40.	Enforcement		77

Schedules

1.	Original Parties	79
2.	Conditions Precedent Documents	81
3.	Form of Request	84
4.	Calculation of the Mandatory Cost	85
5.	Form of Transfer Certificate	87
6.	Form of Compliance Certificate	88
7.	Form of Accession Agreement	89
8.	Form of Resignation Request	90
9.	Forms of Letter of Credit	91
10.	Minimum Criteria for Confirming Bank Agreement	96
11.	Existing Letters of Credit	97
Signatories		100

THIS AGREEMENT is dated 24th July, 2003

BETWEEN:

(1)	CONVERIUM AG, ZURICH (registered number CH-170.3.024.826-2) (the Company);
(2)	THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties) as original borrowers (in this capacity the Original Borrowers);
(3)	ABN AMRO BANK N.V., BARCLAYS CAPITAL AND COMMERZBANK AKTIENGESELLSCHAFT as arrangers (in this capacity the Mandated Lead Arrangers);
(4)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as original lenders (the Original Lenders); and
(5)	ABN AMRO BANK N.V., as facility agent (in this capacity the Facility Agent).

IT IS AGREED as follows:

1.	INTERPRETATION
1.1	Definitions
	In this Agreement:
	Accession Agreement means a letter, substantially in the form of Schedule 7 (Form of Accession Agreement), with such amendments as the Facility Agent and the Company may agree.
	Additional Borrower means a wholly owned Subsidiary of the Company which becomes a Borrower after the date of this Agreement.
	Administrative Party means a Mandated Lead Arranger or the Facility Agent.
	Affiliate means a Subsidiary or a Holding Company of a person or any other Subsidiary of that Holding Company.
	Agent’s Spot Rate of Exchange means the Facility Agent’s spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with US Dollars (or, where used in the definition of Required Security or Clause 10.3(c) (Mandatory cancellation - Rating Event), euro or sterling, as the context so requires) at or about 11.00 a.m. on a particular day.
	Approved Jurisdiction means:

(a)	any jurisdiction within Canada, Australia or the U.S.A.;
(b)	any jurisdiction which at the date of this Agreement is within the European Economic Area;
(c)	Labuan;
(d)	Bermuda;

1

(e)	Singapore;
(f)	Poland; and
(g)	Switzerland,

or any other jurisdiction approved by all the Lenders.

Availability Period means the period from and including the date of this Agreement to and including the date falling one month prior to the Final Maturity Date.

Bank means any legal entity which is recognised as such by the banking laws in force in its country of incorporation and which exercises as its main purpose a true banking activity, having personnel, premises and communication devices of its own.

Borrower means the Company, an Original Borrower or an Additional Borrower.

Break Costs means the amount (if any) which a Lender is entitled to receive under Subclause 28.3 (Break Costs) as compensation if any part of a Loan or overdue amount is repaid or prepaid.

Bridge Loan means a Loan made pursuant to Clause 7.3 (Claims under a Letter of Credit).

Business Day means a day (other than a Saturday or a Sunday) on which banks are open for general business in London and:

(a)	if on that day a payment in or a purchase of a currency (other than euro) is to be made, the principal financial centre of the country of that currency; or
(b)	if on that day a payment in or a purchase of euro is to be made, which is also a TARGET Day; and
(c)	in relation to the date for the issue of a Letter of Credit the place of the office of the Facility Agent through which the Letter of Credit is to be issued.

Commitment means:

(a)	for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading Commitments and the amount of any other Commitment it acquires; and
(b)	for any other Lender, the amount of any Commitment it acquires,

to the extent not cancelled, transferred or reduced under this Agreement.

Compliance Certificate means a certificate substantially in the form of Schedule 6 (Form of Compliance Certificate) setting out, among other things, calculations of the financial covenant.

Confirming Bank means an NAIC Approved Bank which confirms Letters of Credit on behalf of a Lender under a Confirming Bank Agreement entered into by it with that Lender.

Confirming Bank Agreement means an agreement, the terms of which comply with the criteria specified in Schedule 10 (Minimum criteria for Confirming Bank Agreement) and are

2

approved by the Company (acting reasonably), and which is entered into by the Facility Agent, the relevant Lender and a Confirming Bank.

Converium Group means Holding and its Subsidiaries.

Credit means a Loan or a Letter of Credit.

Default means:

(a)	an Event of Default; or
(b)	an event which would be (with the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default.

Eligible Investments means any investment in marketable obligations denominated in either US Dollars, euro or sterling and issued or guaranteed by a sovereign government and which have a credit rating of AAA by S&P or Aaa by Moody’s (or, where there is a credit rating in respect of those obligations from each such rating agency, a credit rating of AAA and Aaa respectively).

EURIBOR means for a Term of any Loan or overdue amount in euro:

(a)	the applicable Screen Rate; or
(b)	if no Screen Rate is available for that Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,

as of 11.00 a.m. (Central European time) on the Rate Fixing Day for the offering of deposits in euro for a period comparable to that Term.

euro means the single currency of the Participating Member States.

Event of Default means an event specified as such in Clause 23 (Default).

Existing Letters of Credit means the letters of credit referred to in Schedule 11 (Existing Letters of Credit).

Facility means the credit facility made available under this Agreement.

Facility Office means the office(s) notified by a Lender to the Facility Agent:

(a)	on or before the date it becomes a Lender; or
(b)	by not less than five Business Days’ notice,

as the office(s) through which it will perform its obligations under this Agreement (or, as the case may be, that Lender’s relevant Affiliate acting in accordance with Clause 2.4 (Affiliate Facility Offices)).

3

Fee Letter means any letter entered into by reference to this Agreement between one or more Administrative Parties and the Company setting out the amount of certain fees referred to in this Agreement.

Final Maturity Date means 3rd July, 2006.

Finance Document means:

(a)	this Agreement;
(b)	a Security Document;
(c)	a Fee Letter;
(d)	a Transfer Certificate;
(e)	an Accession Agreement; or
(f)	any other document designated as such by the Facility Agent and the Company.

Finance Party means a Lender or an Administrative Party.

Financial Indebtedness means any indebtedness for or in respect of:

(a)	moneys borrowed;
(b)	any acceptance credit;
(c)	any bond, note, debenture, loan stock or other similar instrument;
(d)	any redeemable preference share;
(e)	any agreement treated as a finance or capital lease in accordance with GAAP;
(f)	receivables sold or discounted (unless on a non-recourse basis);
(g)	the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset;
(h)	any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then mark to market value of the derivative transaction will be used to calculate its amount);
(i)	any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;
(j)	any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or
(k)	any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in the above paragraphs.

GAAP means generally accepted accounting principles in the U.S.A.

4

Group means the Company and its Subsidiaries.

Holding means Converium Holding AG.

Holding Company of any other person, means a company in respect of which that other person is a Subsidiary.

IBOR means LIBOR or EURIBOR.

Increased Cost means:

(a)	an additional or increased cost;
(b)	a reduction in the rate of return from a Facility or on its overall capital; or
(c)	a reduction of an amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates but only to the extent attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.

Insurance Arrangement means any contract or agreement of insurance or reinsurance, including any surety bond, contingent capital arrangement, insurance or reinsurance securitization transaction and any other arrangement having a similar economic effect that is entered into in the course of the underwriting business of a member of the Converium Group whether as cedant, reinsurer or otherwise and which constitutes, for the purpose of the laws or regulations to which the Converium Group is subject in any Approved Jurisdiction, insurance or reinsurance business.

LC Commission means the rate determined in accordance with Clause 7.2 (Commission in respect of Letters of Credit).

LC Series has the meaning given to it in Clause 5.4(c) (Issue of Letter of Credit).

Lender means:

(a)	an Original Lender; or
(b)	any person which becomes a Lender after the date of this Agreement.

Letter of Credit means a Multiple Lender Letter of Credit or a Single Lender Letter of Credit or both, as the context so requires.

LIBOR means for a Term of any Loan or overdue amount in a currency other than euro:

(a)	the applicable Screen Rate; or
(b)	if no Screen Rate is available for the relevant currency or Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the London interbank market,

as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the currency of that Loan or overdue amount for a period comparable to that Term.

5

Loan means, unless otherwise stated in this Agreement, the principal amount of each borrowing under this Agreement or the principal amount outstanding of that borrowing.

Majority Lenders means, at any time, Lenders:

(a)	whose share in the outstanding Credits and whose undrawn Commitments then aggregate 66 2/3 per cent. or more of the aggregate of all the outstanding Credits and the undrawn Commitments of all the Lenders;
(b)	if there is no Credit then outstanding, whose undrawn Commitments then aggregate 66 2/3 per cent. or more of the Total Commitments; or
(c)	if there is no Credit then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregated 66 2/3 per cent. or more of the Total Commitments immediately before the reduction.

For the purposes of this definition, the share in outstanding Credits or, as the case may be, Commitment of each Lender shall be deemed to comprise a number of distinct shares in outstanding Credits or, as the case may be, Commitments (corresponding to the number of Sub-participations entered into by that Lender and in amounts corresponding to the amounts of such participations). The Parties agree that each Lender shall be entitled to notify the Facility Agent of each of its Sub-participant’s directions and that Majority Lenders shall be determined accordingly.

Mandatory Cost means the cost of complying with certain regulatory requirements, expressed as a percentage rate per annum and calculated by the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost).

Margin means at any time twice the LC Commission applicable at that time.

Material Adverse Effect means a material adverse effect on:

(a)	the business, condition, (financial or otherwise), performance, assets or operations of the Group as a whole resulting in any of the foregoing being worse than they are on the date of this Agreement;
(b)	the ability of any Obligor to perform its payment obligations or other material obligations under any Finance Document (including, without limitation, the ability of the Company to comply with Clause 21 (Financial Covenant));
(c)	the validity or enforceability of any Finance Document; or
(d)	any right or remedy of a Finance Party in respect of a Finance Document.

Material Group means each Obligor and each Material Subsidiary.

Material Subsidiary means, at any time, a Subsidiary of the Company whose gross assets or pre-tax profits (consolidated in the case of a Subsidiary which itself has Subsidiaries) then equal or exceed 10 per cent. of the gross assets or pre-tax profits of the Group.

For this purpose:

6

(a)	the gross assets or pre-tax profits of a Subsidiary of the Company will be determined from its financial statements (consolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group have been based;
(b)	if a Subsidiary of the Company becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the gross assets or pre-tax profits of that Subsidiary will be determined from its latest financial statements;
(c)	the gross assets or pre-tax profits of the Group will be determined from its latest audited financial statements, adjusted (where appropriate) to reflect the gross assets or pre-tax profits of any company or business subsequently acquired or disposed of; and
(d)	if a Material Subsidiary disposes of all or substantially all of its assets to another Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not.

If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of the Company will be, in the absence of manifest error, conclusive.

Maturity Date means the last day of the Term of a Letter of Credit or a Loan.

Moody’s means Moody’s Investors Service Ltd.

Multiple Lender Letter of Credit means a standby letter of credit, substantially in the form set out in Schedule 9 Part 1 (Form of Multiple Lender Letter of Credit) together with such amendments requested by a Borrower and agreed by the Facility Agent which would not, in the opinion of the Facility Agent, substantively alter the nature or amount of any Lender’s liability thereunder as the Facility Agent may agree.

NAIC means The National Association of Insurance Commissioners.

NAIC Approved Bank means, at any time, a bank named on the then current list approved by NAIC.

Obligor means a Borrower or the Company.

Original Financial Statements means the audited consolidated financial statements of Holding for the year ended 31st December, 2002.

Original Obligor means the Company or an Original Borrower.

Participating Member State means a member state of the European Communities that adopts or has adopted the euro as its lawful currency under the legislation of the European Community for Economic Monetary Union.

Party means a party to this Agreement.

Permitted Reorganisation means an amalgamation, demerger, merger or reorganisation (a Reorganisation) between members of the Group which would not reasonably be expected to

7

result in a Rating Event or an Event of Default and, where the Reorganisation involves an Obligor:

(a) either:

(i)	that Obligor is the surviving entity and remains responsible for all of its obligations under the Finance Documents; or
(ii)	if the surviving entity is not that Obligor, the Facility Agent has first received legal opinions from external counsel addressed to the Finance Parties, in form and substance satisfactory to the Facility Agent (acting reasonably), confirming that the surviving entity will accede to the obligations of the Obligor under the Finance Documents in full upon the Reorganisation taking effect; and

(b) the Reorganisation taking effect would not reasonably be expected to have a Material Adverse Effect.

Pro Rata Share means:

(a)	for the purpose of determining a Lender’s share in a utilisation of the Facility, the proportion which its Commitment bears to the Total Commitments; and
(b)	for any other purpose on a particular date:

(i)	the proportion which a Lender’s share of the Credits (if any) bears to all the Credits;
(ii)	if there is no Credit outstanding on that date, the proportion which its Commitment bears to the Total Commitments on that date; or
(iii)	if the Total Commitments have been cancelled, the proportion which its Commitment bore to the Total Commitments immediately before being cancelled.

Rate Fixing Daymeans:

(a)	the first day of a Term for a Loan denominated in sterling;
(b)	the second Business Day before the first day of a Term for a Loan denominated in any other currency (other than euro); or
(c)	the second TARGET Day before the first day of a Term for a Loan denominated in euro,

or such other day as the Facility Agent determines is generally treated as the rate fixing day by market practice in the relevant interbank market.

Rating means the rating (without regard to outlook, whether positive or negative) attributed to the Company’s issuer credit rating and insurer financial strength rating by S&P or, if S&P does not attribute such a rating, by A.M. Best Company or, if neither S&P nor A.M. Best Company attribute such a rating, by Moody’s or, if none of S&P, A.M. Best or Moody’s attribute such a rating, by such other recognised rating agency as the Company and the Facility Agent (acting on the instructions of the Majority Lenders) may agree.

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Rating Event means either:

(a)	the Rating being reduced to below A- or, where the rating of a rating agency other than S&P is applicable, its equivalent (as determined by the Facility Agent (acting on the instructions of the Majority Lenders)); or
(b)	the Company ceasing to have a Rating.

Reference Banks means the Facility Agent, Barclays Bank PLC and Commerzbank Aktiengesellschaft and any other bank or financial institution appointed as such by the Facility Agent under this Agreement.

Repeating Representations means the representations which are deemed to be repeated under Clause 19.19 (Times for making representations).

Request means a request for a Credit, substantially in the form of Schedule 3 (Form of Request) or such other form (including an electronic form) as the Facility Agent may agree.

Required Security in respect of a Credit means:

(a) in the case of a Credit denominated in euro, sterling or US Dollars:

(i)	cash in the currency of that Credit in an amount equal to the outstanding amount of that Credit; or
(ii)	Eligible Investments denominated in the same currency as that Credit with a market value (as determined by the Facility Agent (acting reasonably)) in excess of 115 per cent. of the outstanding amount of that Credit),

or a combination of the foregoing; and

(b) in the case of a Credit denominated in a currency other than euro, sterling or US Dollars:

(i)	cash in US Dollars, euro or sterling in an amount equal to the amount of that Credit converted into US Dollars, euro or sterling (as applicable) at the relevant Agent’s Spot Rate of Exchange on the day the Required Security is required to be delivered; or
(ii)	Eligible Investments denominated in US Dollars, euro or sterling with a market value (as determined by the Facility Agent (acting reasonably)) in excess of 115 per cent. of the outstanding amount of that Credit converted into US Dollars, euro or sterling (as applicable) at the relevant Agent’s Spot Rate of Exchange on the day the Required Security is required to be delivered,

or a combination of the foregoing,

which in each case are held in a blocked account (which shall be interest bearing in the case of paragraphs (a)(i) and (b)(i) above) with the Facility Agent (or, in the case of Eligible Investments, with an entity acceptable to the Facility Agent (acting reasonably)) in the name of the Company and in relation to which the Company has executed a security document over that account, in form and substance satisfactory to the Facility Agent (acting reasonably) creating a first ranking security interest over that account (and provided that any interest

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earned on such cash or Eligible Investments shall, unless a Default is outstanding, be for the account of the Company). For these purposes the outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the relevant Borrower in respect of that Letter of Credit at that time.

Screen Rate means:

(a)	for LIBOR, the British Bankers Association Interest Settlement Rate; and
(b)	for EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union,

for the relevant currency and Term displayed on the appropriate page of the Reuters screen selected by the Facility Agent. If the relevant page is replaced or the service ceases to be available, the Facility Agent (acting reasonably) may specify another page or service displaying the appropriate rate.

SEC means the United States Securities and Exchange Commission.

Security means, at any time the cash and Eligible Investments held at that time by the Facility Agent pursuant to the obligations of the Company to provide Required Security.

Security Document means any security agreement entered into by an Obligor and the Facility Agent or a Lender in connection with Required Security or cash cover (as defined in Clause 7.1).

Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect.

Single Lender Letter of Credit means a standby letter of credit, substantially in the form set out in Schedule 9 Part 2 (Form of Single Lender Letter of Credit) together with such amendments requested by a Borrower and agreed by the Facility Agent as would not, in the opinion of the Facility Agent, substantively alter the nature or amount of a Lender’s liability thereunder as the Facility Agent may agree.

S&P means Standard & Poor’s, a division of the McGraw-Hill Companies, Inc.

sterling means the lawful currency for the time being of the United Kingdom.

Subsidiary means an entity of which a person has direct or indirect control or owns directly or indirectly more than 50 per cent. of the voting capital or similar right of ownership and control for this purpose means the power to direct the management and policies of the entity whether through the ownership of voting capital or similar rights of ownership, by contract or otherwise.

Sub-participant means any person with whom a Lender enters into a Sub-participation.

Sub-participation means any form of participation agreement entered into by a Lender with respect to this Agreement where such agreement relates to US$10,000,000 (or its equivalent) or more of that Lender’s Commitment and/or share in the outstanding Credits.

TARGET Day means a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer payment system is open for the settlement of payments in euro.

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Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest).

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

Tax Payment means a payment made by an Obligor to a Finance Party in any way relating to a Tax Deduction or under any indemnity given by that Obligor in respect of Tax under any Finance Document.

Term means each period determined under this Agreement:

(a)	on a Loan or an overdue amount is calculated; or
(b)	for which the Lenders may be under a liability under a Letter of Credit.

	Total Commitments means the aggregate of the Commitments of all the Lenders.
	Transfer Certificate means a certificate, substantially in the form of Schedule 5 (Form of Transfer Certificate), with such amendments as the Facility Agent may approve or reasonably require or any other form agreed between the Facility Agent and the Company.
	U.K. means the United Kingdom.
	U.S.A. means the United States of America.
	Utilisation Date means each date on which the Facility is utilised.
1.2	Construction
(a)	In this Agreement, unless the contrary intention appears, a reference to:

(i)	an amendment includes a supplement, novation, restatement or re-enactment and amended will be construed accordingly;
(ii)	assets includes present and future properties, revenues and rights of every description;
(iii)	an authorisation includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation;
(iv)	disposal means a sale, transfer, grant or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;
(v)	indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;
(vi)	a person includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality;
(vii)	a regulation includes any regulation, rule, official directive, request or guideline (when used in relation to a Finance Party, whether or not having the force of law but,

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	if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(viii)	a currency is a reference to the lawful currency for the time being of the relevant country;
(ix)	a Default being outstanding means that it has not been remedied or waived;
(x)	a wholly-owned subsidiary of a person shall be construed as a reference to any company or corporation which has no shareholders except that person and that person’s wholly-owned subsidiaries (save by reason of directors holding qualifying shares or another person or persons holding an immaterial amount of shares, in each case as required by law);
(xi)	a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;
(xii)	a Clause, a Subclause or a Schedule is a reference to a clause or subclause of, or a schedule to, this Agreement;
(xiii)	a Party or any other person includes its successors in title, permitted assigns and permitted transferees;
(xiv)	a Finance Document or another document is a reference to that Finance Document or other document as amended;
(xv)	a time of day is a reference to London time (unless otherwise stated); and
(xvi)	Barclays Capital is a reference to the investment banking division of Barclays Bank PLC and shall be construed as a reference to Barclays Bank PLC.

(b) Unless the contrary intention appears, a reference to a month or months is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:

(i)	if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not);
(ii)	if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and
(iii)	notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate.

(c) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999 and, notwithstanding any term of any Finance Document, no consent of any third party is required for any variation (including any release or compromise of any liability) or termination of that Finance Document.

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(d) Unless the contrary intention appears:

(i)	a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement;
(ii)	an amount in euro is payable only in the euro unit;
(iii)	a word or expression used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement unless otherwise specifically provided therein; and
(iv)	any obligation of an Obligor under the Finance Documents which is not a payment obligation remains in force for so long as any payment obligation of an Obligor is or may be outstanding under the Finance Documents.

(e)	References to Lenders, the share or participation of a Lender in a Credit or the utilisation of the Facility, a Lender paying a claim under a Letter of Credit or a Lender authorising the Facility Agent to issue a Letter of Credit and other relevant expressions in the Finance Documents shall be read in the light of Clause 2.4 (Affiliate Facility Offices).
(f)	The headings in this Agreement do not affect its interpretation.

2.	FACILITY
2.1	Facility
	Subject to the terms of this Agreement, the Lenders make available to the Borrowers a letter of credit facility in an aggregate amount equal to the Total Commitments. Subject to the terms of this Agreement, claims paid under Letters of Credit may be financed by short-term cash advances by the Lenders under the Facility.
2.2	Nature of a Finance Party’s rights and obligations
	Unless otherwise agreed by all the Finance Parties:

(a)	the obligations of a Finance Party under the Finance Documents are several;
(b)	failure by a Finance Party to perform its obligations does not affect the obligations of any other Party under the Finance Documents;
(c)	no Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents;
(d)	the rights of a Finance Party under the Finance Documents are separate and independent rights;
(e)	a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights; and
(f)	a debt arising under the Finance Documents to a Finance Party is a separate and independent debt.

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This Subclause shall not operate so as to limit the liability of any Lender to the Obligors as a result of a failure by that Lender to perform its obligations under the Finance Documents or any Letter of Credit.

2.3	Nature of an Obligor’s rights and obligations
	Unless otherwise agreed by all the Obligors:

(a)	the obligations of each Obligor (other than the Company) are several; and
(b)	no Obligor (other than the Company) is responsible for the obligations of any other Obligor under the Finance Documents.

	This Subclause shall not prejudice or limit the rights of any Finance Party to exercise or enforce its rights under the Finance Documents with respect to a Default against any Obligor , irrespective of whether that Default has arisen in relation to the Obligor against which the Finance Party is seeking to enforce or exercise those rights.
2.4	Affiliate Facility Offices
(a)	The Affiliate (if any) of a Lender appearing under the name of that Lender in Schedule 1 (Original Parties) or, as the case may be, referred to in a Transfer Certificate, shall act as that Lender’s Facility Office for the purpose of participating in Letters of Credit.
(b)	The Affiliate of a Lender referred to in paragraph (a) shall not have any Commitment, but shall be entitled to all rights and benefits under the Finance Documents relating to its participation in Letters of Credit, and shall have the corresponding duties of a Lender in relation thereto, and is a Party to this Agreement for those purposes.
(c)	A Lender which has an Affiliate appearing under its name in Schedule 1 (Original Parties), or, as the case may be, in a Transfer Certificate, will:

(i)	so long as the relevant Affiliate is able to do so, procure, subject to the terms of this Agreement, that the Affiliate participates in Letters of Credit and the payment of any claim under any Letter of Credit in place of that Lender; and
(ii)	remain liable for the relevant obligations under the Finance Documents in the event that the Affiliate fails to perform them.

3.	PURPOSE
3.1	Letters of Credit
	Each Letter of Credit may be issued for the collateralisation of claims (other than claims of a member of the Converium Group) arising under transactions which constitute, for the purpose of the laws or regulations to which the Group is subject in any Approved Jurisdiction, insurance or reinsurance business (provided that the aggregate amount of Credits made in connection with the insurance business of the Group shall not at any time exceed US$50,000,000 (or its equivalent)).
3.2	Loans
(a)	Each Bridge Loan may only be used to meet claims (as defined in Clause 7.3 (Claims under a Letter of Credit)) under Letters of Credit.

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(b)	Each Loan other than a Bridge Loan may only be used to repay a Bridge Loan (and for the avoidance of doubt may not be used to repay any other Loan other than a Bridge Loan).
3.3	No obligation to monitor
	No Finance Party is bound to monitor or verify the purposes for which any Letter of Credit or Loan is applied.
4.	CONDITIONS PRECEDENT
4.1	Conditions precedent documents
	A Request may not be acted upon by the Facility Agent until the Facility Agent has notified the Company and the Lenders that it has received all of the documents and evidence set out in Part 1 of Schedule 2 (Conditions precedent documents) in form and substance satisfactory to the Facility Agent. The Facility Agent must give this notification to the Company and the Lenders promptly upon being so satisfied.
4.2	Further conditions precedent
	The obligations of each Lender to participate in any Credit are subject to the further conditions precedent that on both the date of the Request and the Utilisation Date for that Credit:

(a)	the Repeating Representations are correct in all material respects; and
(b)	no Default is outstanding or would result from the Credit.

4.3	Further conditions precedent - Loans
	The obligations of each Lender to participate in any Loan (other than a Bridge Loan) are subject to the further condition precedent that on both the date of the Request and the Utilisation Date, the Required Security for that Loan is in place.
5.	UTILISATION – LETTERS OF CREDIT
5.1	Giving of Requests
(a)	A Borrower may request a Letter of Credit to be issued by giving to the Facility Agent a duly completed Request.
(b)	Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 10.00 a.m. (Central European time) five Business Days before the proposed Utilisation Date.
(c)	Each Request is irrevocable.
5.2	Completion of Requests
	A Request for a Letter of Credit will not be regarded as being duly completed unless:

(a)	it identifies the Borrower that is the applicant in respect of the Letter of Credit;
(b)	it specifies that it is for Letters of Credit;

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(c) the Utilisation Date is a Business Day falling within the Availability Period;

(d) the amount of the Letter of Credit requested is:

(i)	(other than in the case of a Letter of Credit issued in replacement of an Existing Letter of Credit and any subsequent replacements thereof) a minimum of US$25,000 or such other amount as the Facility Agent and the Company may agree; or
(ii)	the maximum undrawn amount available under the Facility on the proposed Utilisation Date;

(e)	the proposed currency complies with this Agreement;
(f)	it specifies the proposed beneficiary, which is operating in an Approved Jurisdiction and it identifies whether it is for a Multiple Lender Letter of Credit or for Single Lender Letters of Credit;
(g)	the form of Letter of Credit is attached;
(h)	the expiry date of the Letter of Credit (or each Letter of Credit in the LC Series) falls on or before the earlier of:

(i)	29th December, 2006 (without prejudice to Clause 9.1 (Repayment of Letters of Credit)); and
(ii)	the date falling 364 days after the proposed Utilisation Date; and

(i) the delivery instructions for the Letter of Credit are specified.

Only one Letter of Credit (or one LC Series) may be requested in a Request.

5.3 Renewals

Where a Letter of Credit is, by its terms, automatically renewed or extended on its expiry date unless cancelled, the Facility Agent will not cancel, or give a notice of non renewal in relation to, the Letter of Credit unless:

(a)	the Borrower in respect of that Letter of Credit has requested the Facility Agent to do so by no later than the third Business Day before the last day on which the Facility Agent can, under the terms of that Letter of Credit, give a notice of cancellation or non-renewal;
(b)	a Default is outstanding or would result from the renewal or extension of that Letter of Credit or a notice has been given by the Facility Agent under Clause 10.2(c) (Mandatory prepayment - change of control) or Clause 23.14 (Acceleration);
(c)	it would be unlawful for the Lenders in any jurisdiction to continue to make that Letter of Credit available;
(d)	it is required to do so pursuant to Clause 34.4 (Loss sharing); or
(e)	the expiry date of that Letter of Credit would, if renewed or extended, fall after 29th December, 2006.

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5.4	Issue of Letter of Credit
(a)	Subject to paragraph (b), each Letter of Credit issued will be a Multiple Lender Letter of Credit.
(b)	If a Borrower notifies the Facility Agent in a Request that a beneficiary will not accept a Multiple Lender Letter of Credit, the Facility Agent shall instead issue to that beneficiary in accordance with this Clause 5, Single Lender Letters of Credit with an aggregate amount equal to the Multiple Lender Letter of Credit which would otherwise have been issued (provided that that beneficiary has first returned to the Facility Agent and cancelled any Multiple Lender Letter of Credit issued to it in substitution for which the Single Lender Letters of Credit are to be issued).
(c)	Each set of Single Lender Letters of Credit issued instead of a Multiple Lender Letter of Credit to a beneficiary pursuant to paragraph (b) is an LC Series. References in Clause 5.2 (d) to a minimum amount for a Letter of Credit shall refer to the aggregate amount of the Single Lender Letters of Credit in the same LC Series. The aggregate amount of Single Lender Letters of Credit and Loans made in connection therewith shall not at any time exceed US$75,000,000 (or its equivalent).
(d)	The Facility Agent must promptly notify each Lender of:

(i)	the details of the requested Letter of Credit;
(ii)	whether the Letter of Credit is a Multiple Lender of Credit or a Single Lender Letter of Credit;
(iii)	in the case of a Multiple Lender Letter of Credit, the amount of its share of that Letter of Credit; and
(iv)	in the case of a Single Lender Letter of Credit, the amount of that Letter of Credit and the aggregate amount of the Letters of Credit in the same LC Series.

(e)

The amount of each Lender’s share in a Multiple Lender Letter of Credit will be its Pro Rata Share on the proposed Utilisation Date. The amount of each Lender’s Single Lender Letter of Credit will be its Pro Rata Share of the aggregate amount of all the Single Lender Letters of Credit in the same LC Series on the proposed Utilisation Date. Where a Lender is not able to participate in a Multiple Lender Letter of Credit or have issued on its behalf a Single Lender Letter of Credit by reason of it not being an NAIC Approved Bank and not having entered into a Confirming Bank Agreement, the Commitment of that Lender shall be ignored for the purposes of the definition of Total Commitments and the calculation of each other Lender’s Pro Rata Share in connection with that Letter of Credit or that LC Series.

(f)

No Lender is obliged to participate in any Letter of Credit (and the Facility Agent shall not issue any Letter of Credit on its behalf) if as a result:

(i)	a Lender’s share in the Credits (including, for the avoidance of doubt and without limitation, any Credits in respect of which cash cover or Required Security has been provided) would exceed its Commitment; or
(ii)	the Credits (including, for the avoidance of doubt and without limitation, any Credits in respect of which cash cover or Required Security has been provided) would exceed the Total Commitments.

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(g) If the conditions set out in this Agreement have been met, the Facility Agent must:

(i)	(in the case of a Multiple Lender Letter of Credit) issue the Letter of Credit on behalf of the Lenders severally in their Pro Rata Shares on the Utilisation Date; or
(ii)	(in the case of Single Lender Letters of Credit) issue a Letter of Credit on behalf of each Lender in the amount determined in accordance with paragraph (e).

(h)	Each Lender irrevocably authorises the Facility Agent to issue and sign Letters of Credit in its name and on its behalf in accordance with this Subclause. Promptly upon the Facility Agent’s request, each Lender will deliver to the Facility Agent such powers of attorney or other evidence of authority as the Facility Agent or any beneficiary of a Letter of Credit may request in connection with the Facility Agent’s authority to issue any Letter of Credit.
5.5	Loss of NAIC approval
(a)	If a Lender ceases after the date of this Agreement to be an NAIC Approved Bank (in this Clause 5.5, an Affected Lender), it must promptly inform the Company and the Facility Agent of this fact.
(b)	If there is an Affected Lender, it must (acting in good faith) consult with the Company for a period not exceeding five Business Days as to the course of action to be taken, which will be one of those set out in paragraphs (c) and (d) below.
(c)	If the course of action is for the Affected Lender’s obligations under Letters of Credit to be confirmed by a Confirming Bank:

(i)	the Affected Lender must, in consultation with the Company for a period not exceeding 20 Business Days, seek (acting in good faith) to invite other financial institutions that are NAIC Approved Banks to become a Confirming Bank in respect of the obligations of the Affected Lender under any outstanding Letters of Credit in which the Affected Lender has participated and any Letters of Credit that are subsequently to be issued;
(ii)	the Facility Agent must promptly notify the Company of any Confirming Bank Agreement;
(iii)	the Affected Lender must notify the Facility Agent (for the Company) of any relevant matter relating to the Confirming Bank Agreement of which it is notified; and
(iv)	unless the Affected Lender has ceased to be an NAIC Approved Bank by reason of its own default or negligence the Company must reimburse the Affected Lender for:

(A)	any reasonably incurred cost (including legal fees) of preparation and execution of the Confirming Bank Agreement; and
(B)	any fees payable by it to the Confirming Bank under the Confirming Bank Agreement.

(d) If the course of action is for a new Lender to be sought, the Affected Lender must, in consultation with the Company for a period not exceeding 20 Business Days, seek (acting in good faith) to invite other financial institutions that are NAIC Approved Banks to become a Lender in place of the Affected Lender in accordance with Clause 31 (Changes to the Parties) (provided that nothing in this paragraph (d) shall have the effect of requiring an Affected Lender to effect any below par transfer of its participation in this Agreement).

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(e)	An Affected Lender’s obligation under paragraph (c) or (d) to co-operate with the Company in seeking to invite institutions consists only of assisting the Company in identifying banks to invite, and preparing and despatching the invitations.
(f)	If a Lender is not an NAIC Approved Bank at the date of this Agreement and that Lender has entered into arrangements for its obligations under Letters of Credit to be confirmed by a Confirming Bank which is an NAIC Approved Bank, that Lender must notify the Facility Agent of:

(i)	any Confirming Bank Agreement; and
(ii)	any relevant matter relating to the Confirming Bank Agreement of which it is notified,

	and the Facility Agent shall notify the Company accordingly.
6.	UTILISATION - LOANS
6.1	Giving of Requests
(a)	This Subclause shall not apply to Bridge Loans.
(b)	A Borrower may borrow a Loan by giving to the Facility Agent a duly completed Request.
(c)	Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 10.00 a.m. (Central European time) one Business Day before the Rate Fixing Day for the proposed borrowing.
(d)	Each Request is irrevocable.
6.2	Completion of Requests
	A Request for a Loan will not be regarded as having been duly completed unless:

(a)	it identifies the Bridge Loan which is to be repaid by that Loan;
(b)	the Borrower is either (i) the Company or (ii) an Obligor of which the Borrower of the Bridge Loan which is to be repaid by that Loan is a Subsidiary or (iii) that Borrower;
(c)	the Utilisation Date is a Business Day falling within the Availability Period and is the Maturity Date for the Bridge Loan which is to be repaid by that Loan;
(d)	the amount of the Loan requested is an amount equal to the amount of the Bridge Loan which is to be repaid by that Loan or, if less, the maximum undrawn amount available under the Facility on the proposed Utilisation Date.
(e)	the currency of the Loan is the same as the currency of the Bridge Loan which is to be repaid by that Loan; and
(f)	the proposed Term complies with this Agreement.

Only one Loan may be requested in a Request.

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6.3	Advance of Loan
(a)	The Facility Agent must promptly notify each Lender that participated in the relevant Bridge Loan (or the Lender that made the relevant Bridge Loan in the case of a Loan made in connection with a Single Lender Letter of Credit) of the details of each Loan and (in the case of a Loan made in connection with a Multiple Lender Letter of Credit) the amount of its share in that Loan.
(b)	The amount of each such Lender’s share of a Loan made in connection with a Multiple Lender Letter of Credit will be its Pro Rata Share on the proposed Utilisation Date.
(c)	No Lender is obliged to participate in a Loan if, as a result:

(i)	its share in the Credits (including, for the avoidance of doubt and without limitation, any Credits in respect of which cash cover or Required Security has been provided) would exceed its Commitment; or
(ii)	the Credits (including, for the avoidance of doubt and without limitation, any Credits in respect of which cash cover or Required Security has been provided) would exceed the Total Commitments.

(d) If the conditions set out in this Agreement have been met:

(i)	(in the case of a Loan made in connection with a Multiple Lender Letter of Credit) each such Lender must make its share in the Loan; or
(ii)	(in the case of a Loan made in connection with a Single Lender Letter of Credit) the Lender on whose behalf that Single Letter of Credit was issued must make the amount of that Loan,

	available to the Facility Agent for the relevant Borrower through its Facility Office on the Utilisation Date.
(e)	On the Utilisation Date, the Facility Agent shall apply the proceeds of the Loan directly in repayment of the relevant Bridge Loan.
7.	LETTERS OF CREDIT
7.1	General
(a)	A Letter of Credit is repaid or prepaid if:

(i)	a Borrower provides cash cover for that Letter of Credit;
(ii)	the maximum amount payable under the Letter of Credit is reduced in accordance with its terms; or
(iii)	the Facility Agent is satisfied that no Lender has any further liability under that Letter of Credit.

The amount by which a Letter of Credit is repaid or prepaid under sub-paragraphs (i) and (ii) above is the amount of the relevant cash cover or reduction.

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(b)	If a Letter of Credit or any amount outstanding under a Letter of Credit is expressed to be immediately payable, the Borrower that requested the issue of that Letter of Credit must repay or prepay that amount immediately.
(c)	Cash cover is provided for a Letter of Credit if a Borrower or the Company on its behalf pays an amount in the currency of the Letter of Credit to an account with a Finance Party specified by that Finance Party in the name of the Borrower and the following conditions are met:

(i)	the account is with the Facility Agent (if, subject as provided below, the cash cover is to be provided for all the Lenders) or with a Lender (if the cash cover is to be provided for that Lender);
(ii)	until no amount is or may be outstanding under that Letter of Credit, withdrawals from the account may only be made to pay a Finance Party amounts due and payable to it under that Letter of Credit or this Clause; and
(iii)	the Borrower has executed a security document over that account, in form and substance satisfactory to the Facility Agent or the relevant Lender (in each case acting reasonably), creating a first ranking security interest over that account.

	Where cash cover is to be provided to all the Lenders, a Lender may require its portion of the cash cover to be paid into its account (which account shall be in the name of the Borrower) instead of an account with the Facility Agent. The account will in all cases be an interest bearing account (and the interest will be for the account of the relevant Borrower) except in the case of cash cover provided or held after the Facility Agent has given a notice under Clause 23.14 (Acceleration). In determining whether a Letter of Credit has been repaid or prepaid by the provision of cash cover, any Security comprised by Eligible Investments shall be ignored.
(d)	The outstanding or principal amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the relevant Borrower in respect of that Letter of Credit at that time.
7.2	Commission in respect of Letters of Credit
(a)	Each Borrower must pay to the Facility Agent for each Lender a letter of credit commission computed at the rate determined in accordance with paragraph (b) below on the US Dollar Amount (as defined in Clause 8 (Optional Currencies)) of each outstanding Letter of Credit requested by it (irrespective of whether or not cash cover or Required Security has been provided for a Letter of Credit) for the period from the issue of that Letter of Credit until its Maturity Date (the LC Commission). The LC Commission will be distributed by the Facility Agent according to each Lender’s Pro Rata Share, adjusted to reflect any assignment or transfer to or by that Lender.
(b)	The LC Commission is determined by reference to the Rating, such that when the Rating is that set out in Column 1 of the table below (or, where the rating of a rating agency other than S&P is applicable, its equivalent (as determined by the Facility Agent (acting on the instructions of the Majority Lenders))), the LC Commission shall be the rate set out next to that Rating in Column 2.

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Column 1		Column 2
		LC Commission (per cent.
Rating		per annum)
A+ or above			0.50
	A		0.60
A- or below			0.70

	Any change in the LC Commission pursuant to this paragraph (b) shall take effect from (and including) the date which is five days after the relevant change in the Rating.
(c)	The Company must immediately upon becoming aware of the same notify the Facility Agent of any change in the Rating together with details of the new Rating. The Facility Agent will notify the Lenders of any change in the rate of LC Commission resulting from a change in the Rating so notified by the Company.
(d)	Accrued LC Commission is payable quarterly in arrear with respect to each period ending on 31st March, 30th June, 30th September and 31st December and shall be paid by the Borrowers within 5 Business Days of the Facility Agent notifying the Company of the amount due.
(e)	Accrued LC Commission is also payable to the Facility Agent on the Maturity Date for that Letter of Credit and on the cancelled amount of any Lender’s Commitment at the time the cancellation is effective if that Commitment is cancelled in full and the participation of that Lender in the Letters of Credit is prepaid or repaid in full.
7.3	Claims under a Letter of Credit
(a)	Each Borrower irrevocably and unconditionally authorises each Lender and the Facility Agent to pay any claim made or purported to be made under a Letter of Credit requested by it and which appears on its face to be in order (a claim). Each Lender irrevocably and unconditionally authorises the Facility Agent to pay any claim.
(b)	The Facility Agent shall promptly notify each Lender participating in the relevant Letter of Credit (or the relevant Lender in the case of a Single Lender Letter of Credit) and the relevant Borrower of the details of any claim, the date the claim is due to be paid (the claim payment date) and (in the case of each Lender and a Multiple Lender Letter of Credit) the amount of its share in that claim. The amount of each such Lender’s share of a claim under a Multiple Lender Letter of Credit will be its Pro Rata Share on the claim payment date. Each such Lender must make its share in the claim (or the amount of the claim in the case of a Single Lender Letter of Credit) available to the Facility Agent through its Facility Office on the claim payment date.
(c)	Unless a Borrower notifies the Facility Agent before the Lenders make a payment consequent upon a claim stating that that Borrower wishes to reimburse the Lenders in respect of the amount of the claim, the amount paid by Lenders consequent on and in accordance with a claim under a Letter of Credit shall, provided:

(i)	the requirements of Clause 4.2 (Further conditions precedent) are met on the claim payment date; and
(ii)	the claim payment date falls within the Availability Period,

be deemed to be a Loan to that Borrower made on the claim payment date (in the case of a payment under a Single Lender Letter of Credit, by the Lender on whose behalf that Single

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	Lender Letter of Credit was issued). A Loan made pursuant to paragraph (c) above is a Bridge Loan.
(d)	Each Borrower must immediately on demand pay to the Facility Agent for the relevant Lenders an amount equal to the amount of any claim unless a Bridge Loan is borrowed.
(e)	Each Borrower acknowledges that each Lender and the Facility Agent:

(i)	is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and
(ii)	deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

(f) The obligations of a Borrower under this Clause will not be affected by:

(i)	the sufficiency, accuracy or genuiness of any claim or any other document; or
(ii)	any incapacity of, or limitation on the powers of, any person signing a claim or other document.

(g)	References in this Subclause to a Lender paying an amount consequent on and in accordance with a claim under a Letter of Credit shall be construed so as to include a Lender making a payment under a Confirming Bank Agreement to which it is party to reimburse another bank or financial institution which has itself made a payment in respect of the relevant claim.
7.4	Indemnities
	Without prejudice to Clause 7.3(c) a Borrower must immediately on demand indemnify each Lender against any loss or liability which the Lender incurs under or in connection with:

(a)	any Letter of Credit requested by it; and
(b)	any claim or any Bridge Loan,

	except to the extent that the loss or liability is directly caused by the gross negligence or wilful misconduct of the Lender.
7.5	Rights of contribution
	No Borrower will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause.
8.	OPTIONAL CURRENCIES
8.1	General
	In this Clause:
	US Dollar Amount of a Credit or part of a Credit means:

(a) if the Credit is denominated in US Dollars, its amount;

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(b)	if the Credit is a Loan denominated in an Optional Currency, its equivalent in US Dollars (determined in accordance with Clause 8.3(c)) if it had first been drawn down and had remained denominated in US Dollars, adjusted to reflect any repayment, prepayment, consolidation or splitting of that Loan; or
(c)	if the Credit is a Letter of Credit denominated in an Optional Currency, its equivalent in US Dollars calculated on the basis of the Agent’s Spot Rate of Exchange three Business Days before the Utilisation Date for that Letter of Credit, as adjusted in accordance with clause 8.7 (Letters of Credit in Optional Currency) at three monthly intervals.

	Optional Currency means any currency (other than US Dollars) in which a Credit may be denominated under this Agreement.
8.2	Selection
(a)	A Borrower must select the currency of a Credit in its Request.
(b)	The amount of a Letter of Credit requested in an Optional Currency must be:

(i)

(other than in the case of a Letter of Credit issued in replacement of an Existing Letter of Credit and any subsequent replacements thereof) a minimum amount of the equivalent of US$25,000 or such other amount as the Facility Agent and the Company may agree (and in the case of Single Lender Letters of Credit, references in this paragraph (i) to a minimum amount for a Letter of Credit shall refer to the aggregate amount of the Single Lender Letters of Credit in the same LC Series); or

(ii)

in relation to a Letter of Credit issued to replace an Existing Letter of Credit and any other replacements of Letters of Credit, the amount of the Letter of Credit replaced.

(c)	Unless the Facility Agent otherwise agrees, the Credits may not be denominated at any one time in more than six currencies.
8.3	Conditions relating to Optional Currencies
(a)	A Credit may be denominated in an Optional Currency for a Term if:

(i)	that Optional Currency is readily available in the amount required and freely convertible into US Dollars in the relevant interbank market on the Rate Fixing Day and the first day of that Term; and
(ii)	that Optional Currency is Australian Dollars, Canadian Dollars, euro, Singapore Dollars, sterling or Swiss Francs or has been previously approved by the Facility Agent (acting on the instructions of all the Lenders).

(b) If the Facility Agent has received a request from the Company for a currency to be approved as an Optional Currency, the Facility Agent must, within five Business Days, confirm to the Company:

(i)	whether or not the Lenders have given their approval; and
(ii)	if approval has been given, the minimum amount (and, if required, integral multiples) for any Credit in that currency.

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(c)	When a Loan is drawn down in an Optional Currency, the amount of the Loan in that Optional Currency will be its US Dollar Amount notionally converted into that Optional Currency at the Agent’s Spot Rate of Exchange one Business Day before the Rate Fixing Day for the Term of that Loan.
8.4	Revocation of currency
(a)	Notwithstanding any other term of this Agreement, if before 9.30 a.m. on any Rate Fixing Day the Facility Agent receives notice from a Lender that:

(i)	the Optional Currency requested is not readily available to it in the relevant interbank market in the amount and for the period required; or
(ii)	participating in a Loan in the proposed Optional Currency might contravene any law or regulation applicable to it,

	the Facility Agent must give notice to the Company to that effect promptly and in any event before 11.00 a.m. on that day.
(b)	In this event:

(i)	that Lender must participate in the Loan in US Dollars; and
(ii)	the share of that Lender in the Loan and any other similarly affected Lender(s) will be treated as a separate Loan denominated in US Dollars during that Term.

(c)	Any part of a Loan treated as a separate Loan under this Subclause will not be taken into account for the purposes of any limit on the number of Loans or Bridge Loans or currencies outstanding at any one time.
8.5	Optional Currency equivalents
(a)	The equivalent in US Dollars of a Credit or part of a Credit in an Optional Currency for the purposes of calculating:

(i)	whether any limit under this Agreement has been exceeded;
(ii)	the amount of a Credit;
(iii)	the share of a Lender in a Credit;
(iv)	the amount of any repayment of a Credit; or
(v)	the undrawn amount of a Lender’s Commitment,

	is its US Dollar Amount.
(b)	The rate of exchange to be used for calculating the amount in US Dollars of any repayment or prepayment of a Loan in an Optional Currency is that last used for determining the amount of that Loan in that Optional Currency.

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8.6	Notification
	The Facility Agent must notify the Lenders and the Company of the relevant US Dollar Amount (and the applicable Agent’s Spot Rate of Exchange) promptly after they are ascertained.
8.7	Letters of Credit in Optional Currency
(a)	If a Letter of Credit is denominated in an Optional Currency, the Facility Agent must at three monthly intervals after the date of this Agreement, recalculate the US Dollar Amount of that Letter of Credit by notionally converting the outstanding amount of that Letter of Credit into US Dollars on the basis of the Agent’s Spot Rate of Exchange on the date of calculation.
(b)	Each Borrower must, if requested by the Facility Agent within 5 days of any calculation under paragraph (a) above, ensure that sufficient Credits are prepaid to prevent the US Dollar Amount of the Credits under the Facility exceeding an amount equal to 105 per cent. of the Total Commitments following any adjustment to a US Dollar Amount under paragraph (a) above.
9.	REPAYMENT
9.1	Repayment of Letters of Credit
	Without prejudice to Clause 7.3 and 7.4, each Borrower must repay each Letter of Credit issued on its behalf in full on the Final Maturity Date.
9.2	Repayment of Loans
	Each Borrower must repay each Loan made to it in full on its Maturity Date.
10.	PREPAYMENT AND CANCELLATION
10.1	Mandatory prepayment - illegality
(a)	A Lender must notify the Company promptly if it becomes aware that it is unlawful in any jurisdiction for that Lender to perform any of its obligations under a Finance Document or to fund or maintain its share in any Credit.
(b)	After notification under paragraph (a) above:

(i)	each Borrower must repay or prepay the share of that Lender in each Credit utilised by it on the date specified in paragraph (c) below; and
(ii)	the Commitment of that Lender will be immediately cancelled.

(c) The date for repayment or prepayment of a Lender’s share in a Credit will be:

(i)	the last day of the current Term of that Credit; or
(ii)	if earlier, the date specified by the Lender in the notification under paragraph (a) above and which must not be earlier than the last day of any applicable grace period allowed by law.

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10.2	Mandatory prepayment - change of control
(a)	For the purposes of this Clause:
	a change of control occurs if:

(i)	any person (other than Holding) or group of persons acting in concert acquires control (directly or indirectly) of the Company or Holding ceases to own directly or indirectly more than 50 per cent. of the voting shares of the Company; or
(ii)	any Obligor (other than the Company) ceases to be a wholly-owned Subsidiary (directly or indirectly) of the Company;

	acting in concert means acting together pursuant to an agreement or understanding (whether formal or informal); and
	control means the power to direct the management and policies of an entity, whether through the ownership of voting capital, by contract or otherwise.
(b)	The Company must promptly notify the Facility Agent (which shall promptly notify the Lenders) if it becomes aware of any change of control.
(c)	After a change of control, if the Majority Lenders so require the Facility Agent must, by notice to the Company:

(i)	cancel the Total Commitments;
(ii)	declare all outstanding Credits, together with accrued interest and all other amounts accrued under the Finance Documents, to be immediately due and payable; and
(iii)	declare that full cash cover in respect of each Letter of Credit is immediately due and payable.

	Any such notice will take effect in accordance with its terms.
10.3	Mandatory cancellation - Rating Event
(a)	By no later than five Business Days after the occurrence of a Rating Event, the Company must provide Required Security in respect of all the Credits then outstanding.
(b)	On the date falling five Business Days after a Rating Event:

(i)	the undrawn Total Commitments shall be cancelled in the amount by which the Total Commitments then exceed the amount of Required Security actually delivered under paragraph (a) above; and
(ii)	the Borrowers must prepay the Credits in full in the amount by which the then outstanding Credits exceed the amount of the Required Security actually delivered under paragraph (a) above.

(c) At monthly intervals from the date on which the Company provides Required Security under paragraph (a) above the Facility Agent shall calculate the then value of the Security. For these purposes the Facility Agent shall notionally convert (in whole or in part) Credits denominated in currencies other than US Dollars, sterling or euro into the currencies in which

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	the Security is then denominated at the appropriate Agent’s Spot Rate of Exchange on the day the valuation is made.
(d)	If the Facility Agent determines that the value of the Security does not then constitute Required Security in respect of all the Credits then outstanding, the Company must within five Business Days of demand by the Facility Agent provide such cash or Eligible Investments as the Facility Agent shall direct to ensure that there is Required Security in respect of all the Credits then outstanding.
10.4	Voluntary prepayment
(a)	The Company may, by giving not less than three Business Days’ prior notice to the Facility Agent, prepay (or ensure that a Borrower prepays) any Loan at any time in whole or in part. Any prepayment in part shall be applied against the participation in that Loan of the relevant Lenders pro rata.
(b)	A prepayment of part of a Loan must be in a minimum amount of US$100,000, and an integral multiple, of US$25,000.
10.5	Automatic cancellation
	The Commitment of each Lender will be automatically cancelled at the close of business on the last day of the Availability Period.
10.6	Voluntary cancellation
(a)	The Company may, by giving not less than 15 Business Days’ prior notice to the Facility Agent, cancel the unutilised amount of the Total Commitments in whole or in part.
(b)	Partial cancellation of the Total Commitments must be in a minimum amount of US$10,000,000 and an integral multiple of US$5,000,000.
(c)	Any cancellation in part will be applied against the Commitment of each Lender pro rata.
10.7	Involuntary prepayment and cancellation
(a)	If an Obligor is, or will be, required to pay to a Lender a Tax Payment or an Increased Cost or if a Lender ceases to be an NAIC Approved Bank, the Company may, while the requirement continues or following the relevant loss of approval, give notice to the Facility Agent requesting prepayment and cancellation in respect of that Lender.
(b)	After notification under paragraph (a) above:

(i)	each Borrower must repay or prepay that Lender’s share in each Credit utilised by it on the date specified in paragraph (c) below; and
(ii)	the Commitment of that Lender will be immediately cancelled.

(c) The date for repayment or prepayment of a Lender’s share in a Credit will be the last day of the current Term for that Credit or, if earlier, the date specified by the Company in its notification.

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10.8	Re-borrowing
	No amount of a Loan prepaid under this Agreement may subsequently be re-borrowed.
10.9	Miscellaneous provisions
(a)	Any notice of prepayment and/or cancellation under this Agreement is irrevocable and must specify the relevant date(s) and the affected Credits and Commitments. The Facility Agent must notify the Lenders promptly of receipt of any such notice.
(b)	All prepayments under this Agreement must be made with accrued interest on the amount prepaid. No premium or penalty is payable in respect of any prepayment except for Break Costs.
(c)	The Majority Lenders may agree a shorter notice period for a voluntary prepayment or a voluntary cancellation.
(d)	No prepayment or cancellation is allowed except in accordance with the express terms of this Agreement.
(e)	No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated.
11.	INTEREST
11.1	Calculation of interest
	The rate of interest on each Loan for its Term is the percentage rate per annum equal to the aggregate of the applicable:

(a)	Margin;
(b)	IBOR; and
(c)	Mandatory Cost.

11.2	Payment of interest
	Except where it is provided to the contrary in this Agreement, each Borrower must pay accrued interest on each Loan made to it on its Maturity Date.
11.3	Interest on overdue amounts
(a)	If an Obligor fails to pay any amount payable by it under the Finance Documents, it must (unless prohibited from doing so by applicable law) immediately on demand by the Facility Agent pay interest on the overdue amount from its due date up to the date of actual payment, before, on and after judgment.
(b)	Interest on an overdue amount is payable at a rate determined by the Facility Agent to be one per cent. per annum above the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount. For this purpose, the Facility Agent may (acting reasonably):

(i) select successive Terms of any duration of up to one month; and

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(ii) determine the appropriate Rate Fixing Day for that Term.

(c) Notwithstanding paragraph (b) above, if the overdue amount is a principal amount of a Loan and becomes due and payable prior to the last day of its current Term, then:

(i)	the first Term for that overdue amount will be the unexpired portion of that Term; and
(ii)	the rate of interest on the overdue amount for that first Term will be one per cent. per annum above the rate then payable on that Loan.

	After the expiry of the first Term for that overdue amount, the rate on the overdue amount will be calculated in accordance with paragraph (b) above.
(d)	Interest (if unpaid) on an overdue amount will, to the fullest extent permitted by applicable law, be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable.
11.4	Notification of rates of interest
	The Facility Agent must promptly notify each relevant Party of the determination of a rate of interest under this Agreement.
12.	TERMS
12.1	Selection
(a)	Each Loan has one Term. Each Term for a Loan will start on its Utilisation Date.
(b)	The Term for each Bridge Loan shall be five Business Days.
(c)	A Borrower must select the Term for a Loan (other than a Bridge Loan) in the relevant Request.
(d)	Subject to the following provisions of this Clause, each Term for a Loan (other than a Bridge Loan) will be one or two weeks or one month or any other period agreed by the Company and all the Lenders.
12.2	No overrunning the Final Maturity Date
	If a Term for a Loan would otherwise overrun the Final Maturity Date, it will be shortened so that it ends on the Final Maturity Date.
12.3	Other adjustments
	The Facility Agent and the Company may enter into such other arrangements as they may agree for the adjustment of Terms and the consolidation and/or splitting of Loans.
12.4	Notification
	The Facility Agent must notify the relevant Borrower and the relevant Lenders of the duration of each Term promptly after ascertaining its duration.

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13.	MARKET DISRUPTION
13.1	Failure of a Reference Bank to supply a rate
	If IBOR is to be calculated by reference to the Reference Banks but a Reference Bank does not supply a rate by 12.00 noon (local time) on a Rate Fixing Day, the applicable IBOR will, subject as provided below, be calculated on the basis of the rates of the remaining Reference Banks.
13.2	Market disruption
(a)	In this Clause, each of the following events is a market disruption event:

(i)	IBOR is to be calculated by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 12.00 noon (local time) on the Rate Fixing Day; or
(ii)	the Facility Agent receives by close of business on the Rate Fixing Day notification from Lenders whose shares in the relevant Loan exceed 35 per cent. of that Loan that the cost to them of obtaining matching deposits in the relevant interbank market is in excess of IBOR for the relevant Term.

(b)	The Facility Agent must promptly notify the Company and the Lenders of a market disruption event.
(c)	After notification under paragraph (b) above, the rate of interest on each Lender’s share in the affected Loan for the relevant Term will be the aggregate of the applicable:

(i)	Margin;
(ii)	rate notified to the Facility Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Term, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its share in that Loan from whatever source it may reasonably select; and
(iii)	Mandatory Cost.

13.3	Alternative basis of interest or funding
(a)	If a market disruption event occurs and the Facility Agent or the Company so requires, the Company and the Facility Agent must enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining the rate of interest and/or funding for the affected Loan and any future Loan.
(b)	Any alternative basis agreed will be, with the prior consent of all the Lenders, binding on all the Parties.

14.	TAXES
14.1	General
	In this Clause:
	Tax Credit means a credit against any Tax or any relief or remission for Tax (or its repayment).

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14.2	Tax gross-up
(a)	Each Obligor must make all payments to be made by it under the Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law.
(b)	If an Obligor or a Lender is aware that an Obligor must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it must promptly notify the Facility Agent. The Facility Agent must then promptly notify the affected Parties.
(c)	If a Tax Deduction is required by law to be made by an Obligor or the Facility Agent, the amount of the payment due from the Obligor will be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)	If an Obligor is required to make a Tax Deduction, that Obligor must make the minimum Tax Deduction allowed by law and must make any payment required in connection with that Tax Deduction within the time allowed by law.
(e)	Within 30 days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Obligor making that Tax Deduction or payment must deliver to the Facility Agent for the relevant Finance Party evidence satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority.
(f)	An Obligor is not obliged to pay any additional amount under paragraph (c) above for the account of a Finance Party in respect of any Tax Deduction to the extent that the Tax Deduction would not have arisen but for the failure by that Finance Party to provide (within a reasonable period after being requested to do so by an Obligor or the Facility Agent) any form, certificate or other documentation (i) the provision of which would have relieved the Obligor from the relevant withholding obligation and (ii) which is within the power of such Finance Party to provide.
14.3	Tax indemnity
(a)	Except as provided below, each Obligor must indemnify a Finance Party against any loss or liability which that Finance Party (in its absolute discretion and acting in good faith) determines will be or has been suffered (directly or indirectly) by that Finance Party for or on account of Tax in relation to a payment received or receivable (or any payment deemed to be received or receivable) under a Finance Document from that Obligor.
(b)	Paragraph (a) above does not apply to any Tax assessed on a Finance Party under the laws of the jurisdiction in which:

(i)	that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party has a Facility Office and is treated as resident for tax purposes; or
(ii)	that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable by that Finance Party. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Finance Party, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose.

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(c)	A Finance Party making, or intending to make, a claim under paragraph (a) above must promptly notify the Company of the event which will give, or has given, rise to the claim.
14.4	Tax Credit
(a)	If an Obligor makes a Tax Payment and the relevant Finance Party (in its absolute discretion but acting in good faith) determines that:

(i)	a Tax Credit is attributable to that Tax Payment; and
(ii)	it has used and retained that Tax Credit,

	the Finance Party must pay an amount to the Obligor which that Finance Party determines (in its absolute discretion but acting in good faith) will leave it (after that payment) in the same after-tax position as it would have been if the Tax Payment had not been required to be made by the Obligor.
(b)	Each Lender shall use its reasonable endeavours to determine whether it is entitled to receive a Tax Credit and, if it determines that it is, to obtain the same, unless to do so or attempt to do so might, in the reasonable opinion of the Lender, be in any way prejudicial to the Lender (provided that where a Lender claims a Tax Credit under this paragraph (b), the extent, order and manner in which it does so shall be in the absolute discretion of that Lender (acting in good faith)). No Lender shall be obliged to disclose any information regarding its tax affairs or computations to any other Party.
14.5	Stamp taxes
	The Obligors must pay and indemnify each Finance Party against any stamp duty, registration or other similar Tax payable in connection with the entry into, performance or enforcement of any Finance Document, except for any such Tax payable in connection with the entry into a Transfer Certificate. Each Obligor’s liability for any amount due under this Clause shall be limited to the proportion of that amount which is equal to the proportion which the outstanding amount of all Letters of Credit in respect of which it is Borrower bears to the outstanding amount of all Letters of Credit. Where there are no Letters of Credit outstanding, the Company alone shall be liable for any amount due under this Clause.
14.6	Value added taxes
(a)	Any amount (including costs and expenses) payable under a Finance Document by an Obligor is exclusive of any value added tax or any other Tax of a similar nature which might be chargeable in connection with that amount. If any such Tax is chargeable, the Obligor must pay to the Finance Party (in addition to and at the same time as paying that amount) an amount equal to the amount of that Tax.
(b)	The obligation of any Obligor under paragraph (a) above will be reduced to the extent that the Finance Party determines (acting reasonably) that it is entitled to repayment or a credit in respect of the relevant Tax.
14.7	Banks
(a)	Each Lender confirms, on the date it becomes a Lender, that it is a Bank.
(b)	If a Lender ceases to be a Bank it shall promptly notify the Facility Agent, which shall notify the Company. Thereafter that Lender shall use its reasonable endeavours to transfer its rights

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	and obligations under this Agreement at par to a Bank in accordance with Clause 31 (Changes to the Parties).
15.	INCREASED COSTS
15.1	Increased Costs
(a)	Except as provided below in this Clause, each Obligor must pay to a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates as a result of:

(i)	the introduction of, or any change in, or any change in the interpretation, administration or application of, any law or regulation; or
(ii)	compliance with any law or regulation,

	made after the date of this Agreement.
(b)	Each Obligor’s liability for any amount due under this Clause shall be limited to the proportion of that amount which is equal to the proportion which the outstanding amount of all Letters of Credit in respect of which it is Borrower bears to the outstanding amount of all Letters of Credit. Where there are no Letters of Credit outstanding, the Company alone shall be liable for any amount due under this Clause.
15.2	Exceptions
	An Obligor need not make any payment for an Increased Cost to the extent that the Increased Cost is:

(a)	compensated for under another Clause or would have been but for an exception to that Clause;
(b)	a tax on the overall net income of a Finance Party or any of its Affiliates; or
(c)	attributable to a Finance Party or its Affiliate wilfully failing to comply with any law or regulation.

15.3	Claims
(a)	A Finance Party intending to make a claim for an Increased Cost must notify the Obligors concerned promptly of the circumstances giving rise to, and the amount of, the claim. Unless to do so would involve the disclosure of any information considered by the Finance Party to be commercially sensitive or confidential, a Finance Party’s notification under this paragraph (a) shall include calculations in reasonable detail evidencing the Increased Cost.
(b)	A Finance Party will not be able to make a claim for an Increased Cost under paragraph (a) above if it fails to notify the Company within six months of the date on which the individuals responsible for the administration of this Agreement within that Finance Party became aware of the circumstances giving rise to that Increased Cost.

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16.	MITIGATION
16.1	Mitigation
(a)	Each Finance Party must, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which result or would result in:

(i)	any Tax Payment or Increased Cost being payable to that Finance Party;
(ii)	that Finance Party being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality; or
(iii)	that Finance Party incurring any cost of complying with the minimum reserve requirements of the European Central Bank,

	including changing its Facility Office or transferring its rights and obligations under the Finance Documents to an Affiliate or to another Bank (the new Bank) introduced by the Company provided such transfer is at par and the new Bank sub-participates in full in any outstanding Letters of Credit in which the Finance Party is participating.
(b)	Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
(c)	The Company must indemnify each Finance Party for all duly documented costs and expenses reasonably incurred by that Finance Party as a result of any step taken by it under this Subclause.
(d)	A Finance Party is not obliged to take any step under this Subclause if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it (provided that the fact that a Finance Party will not receive any further remuneration under this Agreement after it ceases to be a Party shall not be considered prejudicial to it).
16.2	Conduct of business by a Finance Party
	No term of this Agreement will:

(a)	interfere with the right of any Finance Party to arrange its affairs (Tax or otherwise) in whatever manner it thinks fit;
(b)	oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it in respect of Tax or the extent, order and manner of any claim; or
(c)	oblige any Finance Party to disclose any information relating to its affairs (Tax or otherwise) or any computation in respect of Tax.

17.	PAYMENTS
17.1	Place
	Unless a Finance Document specifies that payments under it are to be made in another manner, all payments by a Party (other than the Facility Agent) under the Finance Documents must be made to the Facility Agent to its account at such office or bank:

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(a)	in the principal financial centre of the country of the relevant currency; or
(b)	in the case of euro, in the principal financial centre of a Participating Member State or London,

	as it may notify to that Party for this purpose by not less than five Business Days’ prior notice.
17.2	Funds
	Payments under the Finance Documents to the Facility Agent must be made for value on the due date at such times and in such funds as the Facility Agent may specify to the Party concerned as being customary at the time for the settlement of transactions in the relevant currency in the place for payment.
17.3	Distribution
(a)	Each payment received by the Facility Agent under the Finance Documents for another Party must, except as provided below, be made available by the Facility Agent to that Party by payment (as soon as practicable after receipt) to its account with such office or bank:

(i)	in the principal financial centre of the country of the relevant currency; or
(ii)	in the case of euro, in the principal financial centre of a Participating Member State or London,

	as it may notify to the Facility Agent for this purpose by not less than five Business Days’ prior notice.
(b)	The Facility Agent may apply any amount received by it for an Obligor in or towards payment (as soon as practicable after receipt) of any amount due from that Obligor under the Finance Documents or in or towards the purchase of any amount of any currency to be so applied.
(c)	Where a sum is paid to the Facility Agent under this Agreement for another Party, the Facility Agent is not obliged to pay that sum to that Party until it has established that it has actually received it. However, the Facility Agent may assume that the sum has been paid to it, and, in reliance on that assumption, make available to that Party a corresponding amount. If it transpires that the sum has not been received by the Facility Agent, that Party must immediately on demand by the Facility Agent refund any corresponding amount made available to it together with interest on that amount from the date of payment to the date of receipt by the Facility Agent at a rate calculated by the Facility Agent to reflect its cost of funds.
17.4	Currency
(a)	Unless a Finance Document specifies that payments under it are to be made in a different manner, the currency of each amount payable under the Finance Documents is determined under this Clause.
(b)	Interest is payable in the currency in which the relevant amount in respect of which it is payable is denominated.
(c)	A repayment or prepayment of any principal amount is payable in the currency in which that principal amount is denominated on its due date.

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(d)	Amounts payable in respect of costs and expenses are payable in the currency in which they are incurred.
(e)	Each other amount payable under the Finance Documents is payable in US Dollars.
17.5	No set-off or counterclaim
	All payments made by an Obligor under the Finance Documents must be made without set-off or counterclaim.
17.6	Business Days
(a)	If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not) or whatever day the Facility Agent determines is market practice.
(b)	During any extension of the due date for payment of any principal under this Agreement interest is payable on that principal at the rate payable on the original due date.
17.7	Partial payments
(a)	If any Administrative Party receives a payment insufficient to discharge all the amounts then due and payable by the Obligors under the Finance Documents, the Administrative Party must apply that payment towards the obligations of the Obligors under the Finance Documents in the following order:

(i)	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Administrative Parties under the Finance Documents;
(ii)	secondly, in or towards payment pro rata of any accrued interest or fee due but unpaid under this Agreement;
(iii)	thirdly, in or towards payment pro rata of any principal amount due but unpaid under this Agreement; and
(iv)	fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b)	The Facility Agent must, if so directed by all the Lenders, vary the order set out in sub-paragraphs (a)(ii) to (iv) above.
(c)	This Subclause will override any appropriation made by an Obligor.
17.8	Timing of payments
	If a Finance Document does not provide for when a particular payment is due, that payment will be due within three Business Days of demand by the relevant Finance Party.
18.	GUARANTEE AND INDEMNITY
18.1	Guarantee and indemnity
	The Company irrevocably and unconditionally:

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(a)	guarantees to each Finance Party punctual performance by each Borrower of all its obligations under the Finance Documents;
(b)	undertakes with each Finance Party that, whenever a Borrower does not pay any amount when due under any Finance Document, it must immediately on demand by the Facility Agent pay that amount as if it were the principal obligor; and
(c)	indemnifies each Finance Party immediately on demand against any loss or liability suffered by that Finance Party if any payment obligation guaranteed by it is or becomes unenforceable, invalid or illegal; the amount of the loss or liability under this indemnity will be equal to the amount the Finance Party would otherwise have been entitled to recover.

18.2	Continuing guarantee
	This guarantee is a continuing guarantee and will extend to the ultimate balance of all sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
18.3	Reinstatement
(a)	If any discharge (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) or arrangement is made in whole or in part on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation or otherwise without limitation, the liability of the Company under this Clause will, to the fullest extent permitted by applicable law, continue as if the discharge or arrangement had not occurred.
(b)	Each Finance Party may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration.
18.4	Waiver of defences
	The obligations of the Company under this Clause will not be affected by any act, omission or thing which, but for this provision, would reduce, release or prejudice any of its obligations under this Clause (whether or not known to it or any Finance Party). This includes:

(a)	any time or waiver granted to, or composition with, any person;
(b)	any release of any person under the terms of any composition or arrangement;
(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any person;
(d)	any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(e)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any person;
(f)	any amendment (however fundamental) of a Finance Document or any other document or security; or

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(g) any unenforceability, illegality, invalidity or non-provability of any obligation of any person under any Finance Document or any other document or security.

18.5	Immediate recourse
	The Company waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other right or security or claim payment from any person before claiming from the Company under this Clause.
18.6	Appropriations
	Until all amounts which may be or become payable by the Obligors under the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may without affecting the liability of the Company under this Clause:

(a)	refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts; or
(b)	apply and enforce them in such manner and order as it sees fit (whether against those amounts or otherwise); and
(c)	hold in an interest-bearing suspense account any moneys received from the Company or on account of the Company’s liability under this Clause.

18.7	Non-competition
	Unless:

(a)	all amounts which may be or become payable by the Obligors under the Finance Documents have been irrevocably paid in full; or
(b)	the Facility Agent otherwise directs,

the Company will not, after a claim has been made or by virtue of any payment or performance by it under this Clause:

(i)	be subrogated to any rights, security or moneys held, received or receivable by any Finance Party (or any trustee or agent on its behalf);
(ii)	be entitled to any right of contribution or indemnity in respect of any payment made or moneys received on account of the Company’s liability under this Clause;
(iii)	claim, rank, prove or vote as a creditor of any Obligor or its estate in competition with any Finance Party (or any trustee or agent on its behalf); or
(iv)	receive, claim or have the benefit of any payment, distribution or security from or on account of any Obligor, or exercise any right of set-off as against any Obligor, in each case in respect of which any amount is or may be outstanding under the Finance Documents.

The Company must hold in trust for and immediately pay or transfer to the Facility Agent for the Finance Parties any payment or distribution or benefit of security received by it contrary

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	to this Clause or in accordance with any directions given by the Facility Agent under this Clause.
18.8	Additional security
	This guarantee is in addition to and is not in any way prejudiced by any other security now or subsequently held by any Finance Party.
19.	REPRESENTATIONS
19.1	Representations
	The representations set out in this Clause are made by each Obligor or (if it so states) the Company to each Finance Party.
19.2	Status
(a)	It is a stock corporation, duly organised and validly existing under the laws of the jurisdiction of its organisation.
(b)	It and each of its Subsidiaries which is a Material Subsidiary has the power to own its assets in all material respects and carry on its business substantially as it is being conducted on any day on which the representation in this paragraph (b) is made or deemed to be repeated.
19.3	Powers and authority
	It has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
19.4	Legal validity
	Subject to any principles of law referred to in any legal opinion required under this Agreement, each Finance Document to which it is a party is its legally binding, valid and enforceable obligation.
19.5	Non-conflict
	The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not conflict with:

(a)	any law or regulation applicable to it;
(b)	its or any of its Subsidiaries’ which is a Material Subsidiary constitutional documents; or
(c)	any document which is binding upon it or any of its Subsidiaries or any of its or its Subsidiaries’ assets where such conflict would reasonably be expected to have a Material Adverse Effect.

19.6	No default
(a)	No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, any Finance Document; and

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(b)	no other event is outstanding which constitutes a default under any document which is binding on it or any of its Subsidiaries or any of its or its Subsidiaries’ assets to an extent or in a manner which would reasonably be expected to have a Material Adverse Effect.
19.7	Authorisations
	All authorisations required by it in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, the Finance Documents to which it is party have been obtained or effected (as appropriate) and are in full force and effect.
19.8	Financial statements
	Its audited financial statements most recently delivered to the Facility Agent (and the Original Financial Statements):

(a) have been prepared in accordance with:

(i)	(in the case of Holding) GAAP; or
(ii)	(in the case of an Obligor) accounting principles and practices generally accepted or (as applicable) required for insurance or reinsurance companies, in the jurisdiction of its incorporation or organisation,

	in each case consistently applied; and
(b)	present fairly in all material respects its or Holding’s financial condition (consolidated, if applicable) as at the date to which they were drawn up,

	except, in each case, as disclosed to the contrary in those financial statements.
19.9	No material adverse change
	As at the date of this Agreement, since the date to which the Original Financial Statements were drawn up:

(a)	there has been no material adverse change in Holding’s consolidated financial condition; and
(b)	neither any Obligor nor Holding has incurred any actual or contingent liabilities and no circumstances have occurred that may give rise to it or Holding incurring actual or contingent liabilities which in each case would reasonably be expected to have a Material Adverse Effect.

19.10	Litigation
(a)	Save:

(i)	as disclosed in writing to the Facility Agent prior to the date of this Agreement; and
(ii)	for claims in respect of which the Group has (A) full insurance coverage which has not been denied, withdrawn or rescinded in writing, or (B) made reserves in accordance with GAAP or other applicable statutory accounting principles,

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no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which are reasonably likely to be adversely determined and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect.

(b)	No proceedings of any nature are current or, to its knowledge, pending or threatened, for its winding-up, administration or dissolution.
19.11	Information
(a)	In this Subclause, Information Memorandum means the information memorandum prepared on behalf of, and approved by, the Company in connection with this Agreement and Information means the Information Memorandum and all other written information delivered by any member of the Group in connection with the Finance Documents prior to the date of this Agreement.
(b)	In the case of the Company only:

(i)	the factual information contained in the Information was true and accurate in all material respects as at its date or (if appropriate) as at the date (if any) at which it is stated to be given;
(ii)	each expression of opinion or intention contained in the Information was made after careful consideration and enquiry and is believed by the Company to be reasonable as at the date at which it is stated to be given;
(iii)	the Information Memorandum did not omit as at its date any information which, if disclosed, would make the Information Memorandum untrue or misleading in any material respect; and
(iv)	as at the date of this Agreement and save as disclosed in writing to the Facility Agent prior to the date of this Agreement, nothing has occurred since the date of the Information Memorandum which, if disclosed, would make the Information Memorandum untrue or misleading in any material respect.

19.12	Pari passu ranking
	Its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to insurance or reinsurance companies generally.
19.13	Taxes on payments
	As at the date of this Agreement, all amounts payable by it under the Finance Documents may be made without any Tax Deduction.
19.14	Stamp duties
	As at the date of this Agreement, no stamp or registration duty or similar Tax or charge is payable in its jurisdiction of incorporation or organisation in respect of any Finance Document.

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19.15	Immunity
(a)	The execution by it of each Finance Document to which it is party constitutes, and the exercise by it of its rights and performance of its obligations under each such Finance Document will constitute, private and commercial acts performed for private and commercial purposes; and
(b)	it will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in its jurisdiction of incorporation or organisation in relation to any Finance Document.
19.16	Jurisdiction/governing law
(a)	Its:

(i)	irrevocable submission under this Agreement to the jurisdiction of the courts of England;
(ii)	agreement that this Agreement is governed by English law; and
(iii)	agreement not to claim any immunity to which it or its assets may be entitled,

	are legal, valid and binding under the laws of its jurisdiction of incorporation (subject, in the case of paragraph (iii) to insolvency laws affecting the rights of creditors of insurance and reinsurance companies); and
(b)	Subject to any general principles of law referred to in any legal opinion required to be delivered under this Agreement, any judgment obtained in England will be recognised and be enforceable by the courts of its jurisdiction of incorporation.
19.17	Ownership
(a)	Each Obligor (other than the Company) is a wholly-owned subsidiary of the Company.
(b)	The Company is controlled by Holding.
19.18	United States laws
(a)	In this Subclause:
	holding company, affiliate and subsidiary company have the meanings given to them in the United States Public Utility Holding Company Act of 1935.
	investment company and controlled have the meanings given to them in the United States Investment Company Act of 1940.
	public utility has the meaning given to it in the United States Federal Power Act of 1920.
(b)	It is not:

(i) a holding company, an affiliate of a holding company or a subsidiary company of a holding company, or subject to regulation, under the United States Public Utility Holding Company Act of 1935;

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(ii)	a public utility, or subject to regulation, under the United States Federal Power Act of 1920;
(iii)	an investment company or a company controlled by an investment company; or
(iv)	subject to regulation under any United States Federal or State law or regulation that limits its ability to incur or guarantee indebtedness in such a way as would conflict with its obligations under this Agreement.

19.19	Times for making representations
(a)	The representations set out in this Clause are made by each Original Obligor on the date of this Agreement.
(b)	Unless a representation is expressed to be given at a specific date, each representation is deemed to be repeated by:

(i)	each Additional Borrower and the Company on the date that Additional Borrower becomes an Obligor; and
(ii)	each Obligor on the date of each Request, each Utilisation Date, the date on which any Letter of Credit is automatically extended in accordance with its terms and at six monthly intervals from the date of this Agreement.

(c)	When a representation is repeated, it is applied to the circumstances existing at the time of repetition.
20.	INFORMATION COVENANTS
20.1	Financial statements
(a)	The Company must supply to the Facility Agent in sufficient copies for all the Lenders:

(i)	the audited consolidated financial statements of Holding for each of its financial years; and
(ii)	the audited financial statements of each Obligor for each of its financial years; and
(iii)	the unaudited consolidated financial statements of Holding for each of the first three of its financial quarters in each of its financial years.

(b) All financial statements must be supplied as soon as they are available and:

(i)	in the case of Holding’s audited consolidated financial statements, within 180 days;
(ii)	in the case of each Obligor’s audited financial statements, within 180 days or within such longer period as may permitted by applicable law; and
(iii)	in the case of the Holding’s quarterly financial statements, within 45 days,
of the end of the relevant financial period.

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20.2	Form of financial statements
(a)	The Company must ensure that each set of financial statements supplied under this Agreement presents fairly in all material respects the financial condition (consolidated or otherwise) of the relevant person as at the date to which those financial statements were drawn up.
(b)	The Company must notify the Facility Agent of any change to the manner in which Holding’s audited consolidated financial statements are prepared from that used in relation to the Original Financial Statements.
(c)	If requested by the Facility Agent, the Company must supply to the Facility Agent:

(i)	a full description of any change notified under paragraph (b) above; and
(ii)	sufficient information to enable the Finance Parties to make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and the financial position which would have been shown by those financial statements had they been prepared in the same manner as the Original Financial Statements.

(d)	If requested by the Facility Agent, the Company must enter into discussions for a period of not more than 30 days with a view to agreeing any amendments required to be made to this Agreement to place the Company and the Lenders in the same position as they would have been in if the change had not happened. Any agreement between the Company and the Facility Agent will be, with the prior consent of the Majority Lenders, binding on all the Parties.
(e)	If no agreement is reached under paragraph (d) above on the required amendments to this Agreement, the Company must supply with each set of Holding’s financial statements another set of its financial statements prepared on the same basis as the Original Financial Statements.
20.3	Compliance Certificate
(a)	The Company must supply to the Facility Agent a Compliance Certificate with each set of Holding’s financial statements sent to the Facility Agent under this Agreement.
(b)	A Compliance Certificate must be signed by two authorised signatories of the Company (one of which must be the finance director).
20.4	Information - miscellaneous
	The Company must supply to the Facility Agent, in sufficient copies for all the Lenders if the Facility Agent so requests:

(a)	copies of all documents despatched by Holding to its shareholders (or any class of them) or its creditors generally or any class of them at the same time as they are despatched;
(b)	promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending which are reasonably likely to be adversely determined and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect; and

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(c) promptly on request, such further information regarding the financial condition and operations of the Group as any Finance Party through the Facility Agent may reasonably request.

20.5	SEC information
	The Company must promptly supply to the Facility Agent such information as any Obligor is required to provide to the SEC pursuant to Sections 13 or 15(d) of the Securities Exchange Act, 1934. The Company may satisfy its obligations under this Subclause 20.5 by referring the Facility Agent to a location on the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) on which the information appears.
20.6	Notification of Default
(a)	Unless the Facility Agent has already been so notified by another Obligor, each Obligor must notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
(b)	Promptly on request by the Facility Agent, the Company must supply to the Facility Agent a certificate, signed by two of its authorised signatories on its behalf, certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it.
20.7	Year end
	The Company must not change its financial year end.
20.8	Use of websites
(a)	Except as provided below, the Company may deliver any information under this Agreement to a Lender by posting it on to an electronic website if:

(i)	the Facility Agent and the Lender agree;
(ii)	the Company and the Facility Agent designate an electronic website for this purpose;
(iii)	the Company notifies the Facility Agent of the address of and password for the website; and
(iv)	the information posted is in a format agreed between the Company and the Facility Agent.

	The Facility Agent must supply each relevant Lender with the address of and password for the website.
(b)	Notwithstanding the above, the Company must supply to the Facility Agent in paper form a copy of any information posted on the website together with sufficient copies for:

(i)	any Lender not agreeing to receive information via the website; and
(ii)	within ten Business Days of request any other Lender, if that Lender so requests.

(c) The Company must promptly upon becoming aware of its occurrence, notify the Facility Agent if:

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(i)	the website cannot be accessed;
(ii)	the website or any information on the website is infected by any electronic virus or similar software;
(iii)	the password for the website is changed; or
(iv)	any information to be supplied under this Agreement is posted on the website or amended after being posted.

	If the circumstances in paragraphs (i) or (ii) above occur, the Company must supply any information required under this Agreement in paper form.
21.	FINANCIAL COVENANT
21.1	Definitions
	In this Clause:
	Consolidated Tangible Net Worth means at any time Holding’s Total equity (as determined from the line item so described under the heading Liabilities and equity in the consolidated financial statements of Holding most recently delivered under Clause 20.1 (Financial statements), adjusted, if necessary, to reflect the principles applied in connection with the Original Financial Statements) less any amount identified in those financial statements as goodwill.
	Consolidated Total Borrowings means, in respect of the Converium Group, at any time Holding’s Debt (as determined from the line item so described under the heading Liabilities and equity in the consolidated financial statements of Holding most recently delivered under Clause 20.1 (Financial statements) adjusted, if necessary, to reflect the principles applied in connection with the Original Financial Statements).
21.2	Interpretation
(a)	Except as provided to the contrary in this Agreement, an accounting term used in this Clause is to be construed in accordance with the principles applied in connection with the Original Financial Statements.
(b)	Any amount in a currency other than US Dollars is to be taken into account at its US Dollar equivalent calculated on the basis of:

(i)	the Agent’s Spot Rate of Exchange on the day the relevant amount falls to be calculated; or
(ii)	if the amount is to be calculated on the last day of a financial period of Holding, the relevant rates of exchange used by Holding in, or in connection with, its financial statements for that period.

(c)	No item must be credited or deducted more than once in any calculation under this Clause.
21.3	Gearing
	The Company must ensure that Consolidated Total Borrowings do not at any time exceed 35 per cent. of Consolidated Tangible Net Worth at that time.

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22.	GENERAL COVENANTS
22.1	General
	Each Obligor agrees to be bound by the covenants set out in this Clause relating to it and, where the covenant is expressed to apply to each member of the Group or the Material Group, the Company must ensure that each of its Subsidiaries or Material Subsidiaries (as applicable) performs that covenant.
22.2	Authorisations
	Each Obligor must promptly obtain, maintain and comply with the terms of any authorisation required under any law or regulation to enable it to perform its obligations under, or for the validity or enforceability of, any Finance Document.
22.3	Compliance with laws
	Each member of the Group must comply in all respects with all laws to which it is subject where failure to do so would reasonably be expected to have a Material Adverse Effect.
22.4	Pari passu ranking
	Each Obligor must ensure that its payment obligations under the Finance Documents rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to insurance and reinsurance companies generally.
22.5	Negative pledge
(a)	Except as provided below, no member of the Material Group may create or allow to exist any Security Interest on any of its assets.
(b)	Paragraph (a) does not apply to:

(i)	any Security Interest constituted by the Security Documents;
(ii)	Security Interests existing on the date of this Agreement securing indebtedness of not more than US$700,000,000 (or its equivalent) in aggregate (approximately US$230,000,000 of which is indebtedness in respect of Existing Letters of Credit which are to be cancelled and replaced by Letters of Credit issued under this Agreement) or any replacement or renewals thereof;
(iii)	any Security Interest comprising a netting or set-off arrangement entered into by a member of the Material Group in the ordinary course of its banking or brokerage arrangements for the purpose of netting debit and credit balances;
(iv)	any lien arising by operation of law and in the ordinary course of trading;
(v)	any Security Interest on an asset, or an asset of any person, acquired by a member of the Material Group after the date of this Agreement but only for the period of 6 months from the date of acquisition and to the extent that the principal amount secured by that Security Interest has not been incurred or increased in contemplation of, or since, the acquisition;

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(vi)	any Security Interest or trust arrangement over or in respect of cash required pursuant to the terms of contracts of reinsurance entered into between members of the Material Group to cash collateralise claims under those contracts;
(vii)	any Security Interest for taxes or other governmental charges, but only if the taxes are not more than 60 days overdue or are being contested in good faith by appropriate measures and provided that any reserve or provision in relation thereto required by GAAP has been made;
(viii)	any Security Interest over cash deposits or marketable investment securities in favour of any exchange or financial institution by way of margin collateral for dealings in securities, foreign exchange or derivatives in the ordinary course of trading but only if the total value of such collateral does not exceed, in aggregate, US$100,000,000 (or its equivalent);
(ix)	any Security Interest securing judgments which do not constitute an Event of Default;
(x)	any Security Interest constituted by easements, rights of way, zoning restrictions or similar charges and encumbrances in respect of real property owned or occupied by any member of the Material Group;
(xi)	any Security Interests existing on the assets of a company with which a member of the Material Group is merged but only if (1) the Security Interest was existing at the time of the merger, (2) the Security Interest was not created in contemplation of the merger, (3) the principal amount secured by the Security Interest is not increased after the merger, and (4) the Security Interest is discharged within six months of the merger;
(xii)	any Security Interest over or affecting any asset acquired by a member of the Material Group (other than inventory or receivables) after the date of this Agreement if (1) the Security Interest is created within 3 months of the date of the acquisition of the asset to secure indebtedness incurred to finance the acquisition of the relevant asset (2) the principal amount secured does not exceed 100 per cent. of the value of that asset, and (3) the Security Interest does not affect any other asset of any member of the Material Group;
(xiii)	any Security Interest created in connection with, or contemplation of, a disposal permitted by Clause 22.6 (Disposals) over the asset the subject of that disposal or over the proceeds of that disposal under an escrow arrangement;
(xiv)	any Security Interest created in favour of another member of the Group, provided that where that Security Interest is created by an Obligor, the person in whose favour that Security Interest is created is also an Obligor and that person remains beneficially entitled to the Security Interest;
(xv)	any Security Interest securing a reimbursement obligation with respect to a letter of credit which encumbers documents and other property relating to such letter of credit;
(xvi)	any Security Interest constituted by the withholding or retention of premiums due to a member of the Group from Zurich Insurance Company or Zurich International (Bermuda) Limited under quota share retrocession agreements (as amended or supplemented) dated 1st July, 2001;

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(xvii)	any Security Interest over cash or marketable securities created in favour of a ceding company to secure the obligations to that ceding company of an Obligor or a Material Subsidiary under a contract of reinsurance to which it is party where the creation of that Security Interest satisfies a regulatory requirement;
(xviii)	any Security Interest renewing or replacing those referred to in the preceding paragraphs of this sub-paragraph (b) provided (1) the Security Interest secures a principal amount not exceeding that outstanding and secured by the previous Security Interest at the time of renewal and replacement and (2) the Security Interest is over the same assets; and
(xix)	any Security Interest securing indebtedness the amount of which (when aggregated with the amount of any other indebtedness which has the benefit of a Security Interest not allowed under the preceding sub-paragraphs and the aggregate principal amount of transactions permitted under paragraph (c) below) does not at any time exceed ten per cent. of Consolidated Tangible Net Worth (as defined in Clause 21 (Financial Covenant), determined by reference to the Original Financial Statements or, as the case may be, the financial statements most recently delivered under Clause 20.1 (Financial statements).

(c) No member of the Material Group may:

(i)	sell, transfer or otherwise dispose of any of its assets on terms where it is or may be leased to or re-acquired or acquired by a member of the Group or any of its related entities; or
(ii)	sell, transfer or otherwise dispose of any of its receivables on recourse terms,

	in circumstances where the transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset unless the proceeds of the transaction are applied in repaying or prepaying the Facility in full. This paragraph (c) does not apply to any transaction, the principal amount of which (when aggregated with the amount of an indebtedness which has the benefit of a Security Interest permitted by paragraph (b)(xix) above) does not exceed ten per cent. of Consolidated Tangible Net Worth (as defined in Clause 21 (Financial Covenant)), determined by reference to the Original Financial Statements or, as the case may be, the financial statements most recently delivered under Clause 20.1. (Financial statements). For these purposes, the principal amount of any transaction referred to in paragraph (c)(ii) above shall be the maximum amount of any recourse to a member of the Material Group in connection with that transaction.
22.6	Disposals
(a)	Except as provided below, no member of the Material Group may, either in a single transaction or in a series of transactions and whether related or not, dispose of all or any part of its assets.
(b)	Paragraph (a) does not apply to any disposal:

(i)	made in the ordinary course of business of the disposing entity and on arm’s length terms;
(ii)	of assets in exchange for other assets comparable or superior as to type, value and quality;

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(iii)	of an asset which is redundant or obsolete for the purposes for which such asset is normally utilised;
(iv)	of shares in a member of the Group to another member of the Group as part of a Permitted Reorganisation;
(v)	by a member of the Group which is not an Obligor to another member of the Group or by an Obligor to another Obligor; and
(vi)	not otherwise permitted by the preceding sub-paragraphs provided that the aggregate of the higher of the market value or consideration receivable in respect of all disposals permitted by this sub-paragraph (vi) occurring in any financial year of the Company does not exceed ten per cent. of Consolidated Tangible Net Worth (as defined in Clause 21 (Financial Covenant)) determined by reference to the Original Financial Statements or, as the case may be, the financial statements most recently delivered under Clause 20.1 (Financial statements).

22.7	Subsidiary indebtedness
	The Company must ensure that the aggregate amount of Financial Indebtedness which would fall within the definition of Consolidated Total Borrowings in Clause 21 (Financial Covenant) in respect of which the creditor is not a member of the Group incurred by its Subsidiaries which are not Obligors does not (other than in the case of such Financial Indebtedness outstanding on the date of this Agreement (of which the amount is US$400,000,000) and any subsequent refinancing thereof) at any time exceed US$150,000,000.
22.8	Loans out
(a)	Except as provided below, no member of the Material Group may be the creditor in respect of any Financial Indebtedness.
(b)	Paragraph (a) does not apply to:

(i)	any Financial Indebtedness acquired by a member of the Material Group as creditor prior to the date of this Agreement;
(ii)	a loan made by a member of the Material Group to another member of the Converium Group (provided that in the case of a loan to Holding, the proceeds of that loan are on-lent, or otherwise made available, by Holding to a member of the Group);
(iii)	any receivable acquired as consideration for a disposal permitted by Clause 22.6 (Disposals);
(iv)	a loan made by a member of the Group under the terms of any Insurance Arrangement;
(v)	any Eligible Investment; and
(vi)	any Financial Indebtedness acquired as creditor in the ordinary course of a member of the Material Group’s investment activities, portfolio operations and management or liquidity and cash management operations.

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22.9	Change of business
	The Company must ensure that no material change is made to the business of the Company or the Group which would result in the Company or Group not being primarily engaged in the business of insurance or reinsurance.
22.10	Mergers
	No Obligor may consummate or implement any amalgamation, demerger, merger or reconstruction otherwise than pursuant to a Permitted Reorganisation or other transaction agreed by the Majority Lenders.
22.11	Acquisitions
	No member of the Group may acquire any equity interest in any person other than a member of the Group (the target) if, upon such acquisition taking effect and, if applicable, the target being consolidated with the Company in accordance with GAAP, a Rating Event or an Event of Default would reasonably be expected to occur.
22.12	Pension schemes
	Each member of the Group must be:

(a)	in substantial compliance with any laws or contract relating to any of its pension schemes; and
(b)	maintain and fund its pension schemes to at least the extent required by local law and practice.

22.13	Taxes
	Each member of the Group must pay all Taxes due and payable by it, unless:

(a)	(i) payment of those Taxes is being contested in good faith; and
	(ii) adequate reserves are being maintained for those Taxes; and
(b)	failure to pay those Taxes could not reasonably be expected to have a Material Adverse Effect.

22.14	Share capital
	No member of the Group may:

(a)	redeem, repurchase, defease, retire or repay any of its share capital or loan stock or resolve to do so; or
(b)	issue any shares which by their terms are redeemable,

if upon the transaction taking effect an Event of Default would reasonably be expected to occur.

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22.15	Required Security
	The Company shall ensure that at all times it has sufficient unencumbered cash and Eligible Investments available to it to meet its obligations under this Agreement to deliver (or supplement) Required Security when required.
22.16	United States laws
(a)	In this Subclause:
	Code means the United States Internal Revenue Code of 1986.
	ERISA means the United States Employee Retirement Income Security Act of 1974.
	ERISA Affiliate means any person treated as a single employer with any Obligor for the purpose of section 414 of the Code.
	Margin Stock has the meaning given to it in Regulations U and X issued by the Board of Governors of the United States Federal Reserve System.
	Plan means an employee benefit plan as defined in section 3(3) of ERISA:

(a)	maintained by any Obligor or any ERISA Affiliate; or
(b)	to which any Obligor or any ERISA Affiliate is required to make any payment or contribution.

Reportable Event means:

(a)	an event specified as such in section 4043 of ERISA or any related regulation, other than an event in relation to which the requirement to give notice of that event is waived by any regulation; or
(b)	a failure to meet the minimum funding standard under section 412 of the Code or section 302 of ERISA, whether or not there has been any waiver of notice or waiver of the minimum funding standard under section 412 of the Code.

(b) No Obligor may:

(i)	extend credit for the purpose, directly or indirectly, of buying or carrying Margin Stock; or
(ii)	use any Credit, directly or indirectly, to buy or carry Margin Stock or to extend credit to others for the purpose of buying or carrying Margin Stock.

(c)	No Obligor may use any part of any Credit to acquire any security in a transaction that is subject to section 13 or 14 of the United States Securities Exchange Act of 1934.
(d)	Each Obligor must promptly upon becoming aware of it notify the Facility Agent of:

(i) any Reportable Event;

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(ii)	the termination of or withdrawal from, or any circumstances reasonably likely to result in the termination of or withdrawal from, any Plan subject to Title IV of ERISA; and
(iii)	a claim or other communication alleging material non-compliance with any law or regulation relating to any Plan.

(e)	Each Obligor and its ERISA Affiliates must be, and remain, in compliance in all material respects with all laws and regulations relating to each of its Plans.
(f)	Each of the Obligors and its ERISA Affiliates must ensure that no event or condition exists at any time in relation to a Plan which is reasonably likely to result in the imposition of a Security Interest on any of its assets or which is reasonably likely to have a Material Adverse Effect.
23.	DEFAULT
23.1	Events of Default
(a)	Each of the events set out in this Clause is an Event of Default.
(b)	In this Clause, Material Converium Group Member means Holding, each Obligor and each Material Subsidiary.
23.2	Non-payment
	An Obligor does not pay on the due date any amount payable by it under the Finance Documents in the manner required under the Finance Documents, unless the non-payment:

(a)	is caused by technical or administrative error; and
(b)	is remedied within three Business Days of the due date.

23.3	Breach of other obligations
(a)	An Obligor does not comply with any term of Clause 22.4 (Pari passu ranking), 22.5 (Negative pledge), 22.6 (Disposals), 22.9 (Change of business), 22.10 (Mergers), 22.15 (Required Security) or Clause 21 (Financial Covenant); or
(b)	an Obligor does not comply with any other term of the Finance Documents not already referred to in this Clause, unless the non-compliance:

(i)	is capable of remedy (including, without limitation, by the relevant Obligor (not being the Company) resigning in accordance with Clause 31.8 (Resignation of the Borrower (other than the Company)); and
(ii)	is remedied within ten Business Days of the earlier of the Facility Agent giving notice and the Obligor becoming aware of the non-compliance.

23.4	Misrepresentation
	A representation made or repeated by an Obligor in any Finance Document or in any document delivered by or on behalf of any Obligor under any Finance Document is incorrect

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in any material respect when made or deemed to be repeated, unless the circumstances giving rise to the misrepresentation:

(a)	are capable of remedy (including, without limitation, by the relevant Obligor (not being the Company) resigning in accordance with Clause 31.8 (Resignation of the Borrower (other than the Company)); and
(b)	are remedied within ten Business Days of the earlier of the Facility Agent giving notice and the Obligor becoming aware of the non-compliance.

23.5	Cross-default
	Any of the following occurs in respect of a Material Converium Group Member :

(a)

any of its Financial Indebtedness is not paid when due (after the expiry of any originally applicable grace period or any grace period subsequently agreed provided that such agreement was not made in contemplation of, or after, the relevant failure to pay)) unless, where that Financial Indebtedness is an Insurance Arrangement, the relevant Material Converium Group Member is contesting in good faith and with due diligence that the relevant amount is due;

(b)

any of its Financial Indebtedness:

(i)	becomes prematurely due and payable;
(ii)	is placed on demand; or
(iii)	is capable of being declared by a creditor to be prematurely due and payable or being placed on demand,

in each case, as a result of an event of default (howsoever described); or

(c) any commitment for its Financial Indebtedness is cancelled or suspended as a result of an event of default (howsoever described),

	unless the aggregate amount of Financial Indebtedness falling within all or any of paragraphs (a)-(c) above is less than US$20,000,000 or its equivalent.
23.6	Insolvency
	Any of the following occurs in respect of a Material Converium Group Member:

(a)	it is, or is deemed for the purposes of any law to be, unable to pay its debts as they fall due, over-indebted or insolvent;
(b)	it admits its inability to pay its debts as they fall due;
(c)	it suspends making payments on any of its debts (other than under a contractually agreed suspension or break clause relating to the relevant debts) or announces an intention to do so;
(d)	by reason of actual or anticipated financial difficulties, it begins negotiations with any creditor for the rescheduling of any of its indebtedness; or

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(e) a moratorium is declared in respect of any of its indebtedness.

	If a moratorium occurs in respect of any Material Converium Group Member, the ending of the moratorium will not remedy any Event of Default caused by the moratorium if a notice has already been given to the Company under Clause 23.14(b) (Acceleration).
23.7	Insolvency proceedings
(a)	Except as provided below, any of the following occurs in respect of a Material Converium Group Member:

(i)	any step is taken with a view to a moratorium or a composition, assignment or similar arrangement with any of its creditors;
(ii)	a meeting of its shareholders, directors or other officers is convened for the purpose of considering any resolution for, to petition for or to file documents with a court or any registrar for, its winding-up, administration or dissolution or any such resolution is passed;
(iii)	any person presents a petition (other than frivolously or vexatiously), or files documents with a court or any registrar, for its winding-up, administration or dissolution;
(iv)	an order for its winding-up, administration or dissolution is made;
(v)	any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets;
(vi)	its shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint, a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or
(vii)	any other analogous step or procedure is taken in any jurisdiction.

(b)	Paragraph (a) does not apply to a petition for winding-up presented by a creditor which is being contested in good faith and with due diligence and is discharged or struck out within 21 days.
23.8	United States Bankruptcy Laws
(a)	In this Subclause:
	U.S. Bankruptcy Law means the United States Bankruptcy Code of 1978 or any other United States Federal or State bankruptcy, insolvency or similar law.
	U. S. Group Member means any Material Converium Group Member incorporated or organised under the laws of the United States of America or any state of the United States of America (including the District of Columbia).
(b)	Any of the following occurs in respect of a U.S. Group Member:

(i) it makes a general assignment for the benefit of creditors;

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(ii)	it commences a voluntary case or proceeding under any U.S. Bankruptcy Law; or
(iii)	an involuntary case under any U.S. Bankruptcy Law is commenced against it and is not controverted within 30 days or is not dismissed or stayed within 90 days after commencement of the case.

(c)	In the event of any inconsistency between paragraph (iii) above and Clause 23.7(a)(iii) (Insolvency proceedings) in relation to events occurring in connection with a U.S. Group Member, paragraph (iii) above shall prevail.
23.9	Creditors’ process/final judgment
(a)	Any attachment, sequestration, distress, execution or analogous event affects, any asset(s) of a Material Converium Group Member, having an aggregate value of at least US$10,000,000, unless it is (a) stayed within 30 days, (b) contested in good faith and with due diligence and (c) ultimately discharged.
(b)	A final judgment or court order for the payment of US$20,000,000 (or its equivalent) or more is made against any Material Converium Group Member and continues unsatisfied and unstayed for a period of 30 days after the date of judgment or order or, if later, the date specified for payment.
23.10	Cessation of business
	A Material Converium Group Member ceases, or threatens to cease, to carry on business except:

(a)	as part of a Permitted Reorganisation; or
(b)	as a result of any disposal allowed under this Agreement.

23.11	Effectiveness of Finance Documents
(a)	It is or becomes unlawful for any Obligor to perform any of its obligations under the Finance Documents and, in the case of an Obligor other than the Company, the relevant Obligor does not resign in accordance with Clause 31.8 (Resignation of a Borrower (other than the Company)) within five Business Days of the unlawfulness arising.
(b)	Any Finance Document is not effective or is alleged by an Obligor to be ineffective for any reason.
(c)	An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.
23.12	Audit qualification
	The auditors of Holding qualify their report on any of the audited consolidated financial statements of the Converium Group.
23.13	Material adverse change
	Any event or series of events occurs which, in the opinion of the Majority Lenders (acting reasonably), would reasonably be expected to have a Material Adverse Effect.

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23.14	Acceleration
(a)	If an Event of Default described in Subclause 23.8 (U.S. Bankruptcy Laws) occurs, the Total Commitments will, if not already cancelled under this Agreement, be immediately and automatically cancelled.
(b)	If an Event of Default is outstanding, the Facility Agent may, and must if so instructed by the Majority Lenders, by notice to the Company:

(i)	cancel the Total Commitments; and/or
(ii)	declare that all or part of any amounts outstanding under the Finance Documents are:

(A)	immediately due and payable; and/or
(B)	payable on demand by the Facility Agent acting on the instructions of the Majority Lenders; and/or

(iii) declare that full cash cover in respect of each Letter of Credit is immediately due and payable.

	Any notice given under this Subclause will take effect in accordance with its terms.
24.	SECURITY
24.1	Facility Agent as trustee
	Unless expressly provided to the contrary, the Facility Agent holds any security created by a Security Document on trust for the Finance Parties.
24.2	Responsibility
	The Facility Agent is not liable or responsible to any other Finance Party for:

(a)	any failure in perfecting or protecting the security created by any Security Document;
(b)	any other action taken or not taken by it in connection with any Security Document,

	unless directly caused by its gross negligence or wilful misconduct.
24.3	Title
	The Facility Agent may accept, without enquiry, the title (if any) an Obligor may have to any asset over which security is intended to be created by any Security Document.
24.4	Possession of documents
	The Facility Agent is not obliged to hold in its own possession any Security Document, title deed or other document in connection with any asset over which security is intended to be created by a Security Document.
24.5	Investments
	Except as otherwise provided in this Agreement or any Security Document, all moneys received by the Facility Agent under a Security Document may be invested in the name of, or

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	under the control of, the Facility Agent in any investments which by their terms are interest bearing selected by the Facility Agent. Additionally, those moneys may be placed on deposit in the name of, or under the control of, the Facility Agent at any bank or institution (including itself) and upon such terms as it may think fit.
24.6	Co-security Agent
(a)	The Facility Agent may appoint a separate security agent or a co-security agent:

(i)	if the Facility Agent considers that without the appointment the interests of the Lenders under the Finance Documents might be materially and adversely affected;
(ii)	for the purpose of complying with any law, regulation or other condition in any jurisdiction; or
(iii)	for the purpose of obtaining or enforcing a judgment or enforcing any Finance Document in any jurisdiction.

(b)	Any appointment under this Subclause will only be effective if the security agent or co-security agent confirms to the Facility Agent and the Company in form and substance satisfactory to the Facility Agent that it is bound by the terms of this Agreement as if it were the Facility Agent.
(c)	The Facility Agent may remove any security agent or co-security agent appointed by it and may appoint a new security agent or co-security agent in its place.
(d)	The Company must pay to the Facility Agent any reasonable remuneration paid by the Facility Agent to any security agent or co-security agent appointed by it, together with any related costs and expenses properly incurred by the security agent or co-security agent.
25.	THE ADMINISTRATIVE PARTIES
25.1	Appointment and duties of the Facility Agent
(a)	Each Finance Party (other than the Facility Agent) irrevocably appoints the Facility Agent to act as its agent under the Finance Documents.
(b)	Each Finance Party irrevocably authorises the Facility Agent to:

(i)	perform the duties and to exercise the rights, powers and discretions that are specifically given to it under the Finance Documents, together with any other incidental rights, powers and discretions; and
(ii)	execute each Finance Document expressed to be executed by the Facility Agent.

(c)	The Facility Agent has only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature.
25.2	Role of the Mandated Lead Arrangers
	Except as specifically provided in the Finance Documents, no Mandated Lead Arranger has any obligations of any kind to any other Party in connection with any Finance Document.

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25.3	No fiduciary duties
	Except as specifically provided in a Finance Document, nothing in the Finance Documents makes an Administrative Party a trustee or fiduciary for any other Party or any other person. No Administrative Party need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys.
25.4	Individual position of an Administrative Party
(a)	If it is also a Lender, each Administrative Party has the same rights and powers under the Finance Documents as any other Lender and may exercise those rights and powers as though it were not an Administrative Party.
(b)	Each Administrative Party may:

(i)	carry on any business with any Obligor or its related entities (including acting as an agent or a trustee for any other financing); and
(ii)	retain any profits or remuneration it receives under the Finance Documents or in relation to any other business it carries on with any Obligor or its related entities.

25.5	Reliance
	The Facility Agent may:

(a)	rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person;
(b)	rely on any statement made by any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify;
(c)	engage, pay for and rely on professional advisers selected by it (including those representing a Party other than the Facility Agent); and
(d)	act under the Finance Documents through its personnel and agents.

25.6	Majority Lenders’ instructions
(a)	The Facility Agent is fully protected if it acts on the instructions of the Majority Lenders in the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Lenders will be binding on all the Lenders. In the absence of instructions, the Facility Agent may act as it considers to be in the best interests of all the Lenders.
(b)	The Facility Agent may assume that unless it has received notice to the contrary, any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.
(c)	The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings in connection with any Finance Document.

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(d)	The Facility Agent may require the receipt of security satisfactory to it from the Lenders, whether by way of payment in advance or otherwise, against any liability or loss which it may incur in complying with the instructions of the Majority Lenders.
25.7	Responsibility
(a)	No Administrative Party is responsible to any other Finance Party for the adequacy, accuracy or completeness of:

(i)	any Finance Document or any other document; or
(ii)	any statement or information (whether written or oral) made in or supplied in connection with any Finance Document.

(b) Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms that it:

(i)	has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial condition and affairs of each Obligor and its related entities and the nature and extent of any recourse against any Party or its assets); and
(ii)	has not relied exclusively on any information provided to it by any Administrative Party in connection with any Finance Document.

25.8	Exclusion of liability
(a)	The Facility Agent is not liable or responsible to any other Finance Party for any action taken or not taken by it in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.
(b)	No Party (other than the Facility Agent) may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in connection with any Finance Document. Any officer, employee or agent of the Facility Agent may rely on this Subclause and enforce its terms under the Contracts (Rights of Third Parties) Act 1999.
25.9	Default
(a)	The Facility Agent is not obliged to monitor or enquire whether a Default has occurred. The Facility Agent is not deemed to have knowledge of the occurrence of a Default.
(b)	If the Facility Agent:

(i)	receives notice from a Party referring to this Agreement, describing a Default and stating that the event is a Default; or
(ii)	is aware of the non-payment of any principal or interest or any fee payable to a Lender under this Agreement,

it must promptly notify the Lenders.

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25.10	Information
(a)	The Facility Agent must promptly forward to the person concerned the original or a copy of any document which is delivered to the Facility Agent by a Party for that person.
(b)	Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(c)	Except as provided above, the Facility Agent has no duty:

(i)

either initially or on a continuing basis to provide any Lender with any credit or other information concerning the risks arising under or in connection with the Finance Documents (including any information relating to the financial condition or affairs of any Obligor or its related entities or the nature or extent of recourse against any Party or its assets) whether coming into its possession before, on or after the date of this Agreement; or

(ii)

unless specifically requested to do so by a Lender in accordance with a Finance Document, to request any certificate or other document from any Obligor.

(d)	In acting as the Facility Agent, the agency division of the Facility Agent is treated as a separate entity from its other divisions and departments. Any information acquired by the Facility Agent which, in its opinion, is acquired by it otherwise than in its capacity as the Facility Agent may be treated as confidential by the Facility Agent and will not be treated as information possessed by the Facility Agent in its capacity as such.
(e)	The Facility Agent is not obliged to disclose to any person any confidential information supplied to it by or on behalf of a member of the Group solely for the purpose of evaluating whether any waiver or amendment is required in respect of any term of the Finance Documents.
(f)	Each Obligor irrevocably authorises the Facility Agent to disclose to the other Finance Parties any information which, in its opinion, is received by it in its capacity as the Facility Agent.
25.11	Indemnities
(a)	Without limiting the liability of any Obligor under the Finance Documents, each Lender must indemnify the Facility Agent for that Lender’s Pro Rata Share of any loss or liability incurred by the Facility Agent in acting as the Facility Agent, except to the extent that the loss or liability is caused by the Facility Agent’s gross negligence or wilful misconduct.
(b)	The Facility Agent may deduct from any amount received by it for a Lender any amount due to the Facility Agent from that Lender under a Finance Document but unpaid.
25.12	Compliance
	Each Administrative Party may refrain from doing anything (including disclosing any information) which might, in its opinion (acting in good faith), constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation.

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25.13	Resignation of the Facility Agent
(a)	The Facility Agent may resign and appoint any of its Affiliates as successor Facility Agent by giving notice to the Lenders and the Company.
(b)	Alternatively, the Facility Agent may resign by giving not less than 90 days notice to the Lenders and the Company (or such shorter period as the Company may agree), in which case the Majority Lenders may appoint a successor Facility Agent.
(c)	If no successor Facility Agent has been appointed under paragraph (b) above within 30 days of the expiry of the notice period, the Facility Agent may appoint a successor Facility Agent.
(d)	The person(s) appointing a successor Facility Agent must, if practicable, consult with the Company prior to the appointment and any successor Facility Agent must have an office within the European Union.
(e)	The resignation of the Facility Agent and the appointment of any successor Facility Agent will both become effective only when the successor Facility Agent notifies all the Parties that it accepts its appointment. On giving the notification, the successor Facility Agent will succeed to the position of the Facility Agent and the term Facility Agent will mean the successor Facility Agent.
(f)	The retiring Facility Agent must, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as the Facility Agent under the Finance Documents.
(g)	Upon its resignation becoming effective, this Clause will continue to benefit the retiring Facility Agent in respect of any action taken or not taken by it in connection with the Finance Documents while it was the Facility Agent, and, subject to paragraph (f) above, it will have no further obligations under any Finance Document.
(h)	The Majority Lenders may, by notice to the Facility Agent, require it to resign under paragraph (b) above.
25.14	Relationship with Lenders
(a)	The Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days’ prior notice from that Lender to the contrary.
(b)	The Facility Agent may at any time, and must if requested to do so by the Majority Lenders, convene a meeting of the Lenders.
(c)	The Facility Agent must keep a register of all the Parties and supply any other Party with a copy of the register on request. The register will include each Lender’s Facility Office(s) and contact details for the purposes of this Agreement.
25.15	Facility Agent’s management time
	If the Facility Agent requires, any amount payable to the Facility Agent by any Party under any indemnity or in respect of any costs or expenses incurred by the Facility Agent under the Finance Documents after the date of this Agreement may include the cost of using its management time or other resources and will be calculated on the basis of such reasonable

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	daily or hourly rates as the Facility Agent may notify to the relevant Party. This is in addition to any amount in respect of fees or expenses paid or payable to the Facility Agent under any other term of the Finance Documents.
25.16	Notice period
	Where this Agreement specifies a minimum period of notice to be given to the Facility Agent, the Facility Agent may, at its discretion, accept a shorter notice period.
26.	EVIDENCE AND CALCULATIONS
26.1	Accounts
	Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings.
26.12	Certificates and determinations
	Any certification or determination by a Finance Party of a rate or amount under the Finance Documents will be, in the absence of manifest error, conclusive evidence of the matters to which it relates.
26.3	Calculations
	Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 or 365 days or otherwise, depending on what the Facility Agent determines is market practice.
27.	FEES
27.1	Facility Agent’s fee
	The Company must pay to the Facility Agent for its own account agency fees in the manner agreed in the Fee Letter between the Facility Agent and the Company.
27.2	Arrangement fee
	The Company must pay to the Mandated Lead Arrangers for their own account an arrangement fee in the manner agreed in the Fee Letter between the Mandated Lead Arrangers and the Company.
27.	Commitment fee
(a)	The Company must pay a commitment fee computed at the rate of 50 per cent. of the LC Commission per annum on the unutilised or undrawn, uncancelled amount of each Lender’s Commitment.
(b)	Accrued commitment fee is payable quarterly in arrear with respect to each period ending on 31st March, 30th June, 30th September and 31st December. Accrued commitment fee is also payable to the Facility Agent for a Lender on the date its Commitment is cancelled in full.

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28.	INDEMNITIES AND BREAK COSTS
28.1	Currency indemnity
(a)	Each Obligor must, as an independent obligation, indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of:

(i)	that Finance Party receiving an amount in respect of that Obligor’s liability under the Finance Documents; or
(ii)	that liability being converted into a claim, proof, judgment or order,

	in a currency other than the currency in which the amount is expressed to be payable under the relevant Finance Document.
(b)	Unless otherwise required by law, each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.
28.2	Other indemnities
(a)	Each Obligor must indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of:

(i)	the occurrence of any Event of Default with respect to it;
(ii)	any failure by that Obligor to pay any amount due from it under a Finance Document on its due date, including any resulting from any distribution or redistribution of any amount among the Lenders under this Agreement;
(iii)	(other than by reason of negligence or default by that Finance Party) a Credit for that Obligor not being made after a Request has been delivered for that Credit;
(iv)	a Credit (or part of a Credit) in respect of which that Obligor is Borrower not being prepaid in accordance with a notice of prepayment; or
(v)	an overdue amount from that Obligor being paid other than on the last day of the Term for that overdue amount.

	The Obligor’s liability in each case includes any loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Credit.
(b)	The Company must indemnify the Facility Agent against any loss or liability incurred by the Facility Agent as a result of:

(i)	investigating any event which the Facility Agent reasonably believes to be a Default; or
(ii)	acting or relying on any notice which the Facility Agent reasonably believes to be genuine, correct and appropriately authorised.

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28.3	Break Costs
(a)	Each Borrower must pay to each Lender its Break Costs.
(b)	Break Costs are the amount (if any) determined (in good faith) by the relevant Lender by which:

(i) the interest which that Lender would have received for the period from the date of receipt of any part of its share in a Loan or an overdue amount to the last day of the applicable Term for that Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term;

exceeds

(ii) the amount which that Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate interbank market for a period starting on the Business Day following receipt and ending on the last day of the applicable Term.

(c)	Each Lender must supply to the Facility Agent for the relevant Borrower details of the amount of any Break Costs claimed by it under this Subclause.
29.	EXPENSES
29.1	Initial costs
	The Company must (subject to the provisions of the mandate letter relating to this Agreement between the Company and the Mandated Lead Arrangers dated 7th April, 2003) pay to each Administrative Party the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with the negotiation, preparation, printing, execution and syndication of the Finance Documents.
29.2	Subsequent costs
	The Company must pay to the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with:

(a)	the negotiation, preparation, printing and execution of any Finance Document (other than a Transfer Certificate) executed after the date of this Agreement;
(b)	any amendment, waiver or consent requested by or on behalf of an Obligor; and
(c)	the delivery of, and creation of any Security Interest with respect to, Required Security.

29.3	Enforcement costs
	The Company must pay to each Finance Party the amount of all duly documented costs and expenses (including legal fees) incurred by it in connection with any Event of Default, the enforcement, perfection or preservation of any rights under, any Finance Document.

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30.	AMENDMENTS AND WAIVERS
30.1	Procedure
(a)	Except as provided in this Clause, any term of the Finance Documents may be amended or waived with the agreement of the Company and the Majority Lenders. The Facility Agent may effect, on behalf of any Finance Party, an amendment or waiver allowed under this Clause.
(b)	The Facility Agent must promptly notify the other Parties of any amendment or waiver effected by it under paragraph (a) above. Any such amendment or waiver is binding on all the Parties.
30.2	Exceptions
(a)	An amendment or waiver which relates to:

(i)	the definition of Majority Lenders in Clause 1.1 (Definitions);
(ii)	an extension of the date of payment of any amount to a Lender under the Finance Documents;
(iii)	a reduction in the Margin, LC Commission or a reduction in the amount of any payment of principal, interest, fee or other amount payable to a Lender under the Finance Documents;
(iv)	an increase in, or an extension of, a Commitment or the Total Commitments;
(v)	a release of an Obligor or any security constituted by a Security Document (other than as contemplated by this Agreement);
(vi)	a term of a Finance Document which expressly requires the consent of each Lender;
(vii)	the right of a Lender to assign or transfer its rights or obligations under the Finance Documents; or
(viii)	this Clause or Clause 10.2 (Mandatory prepayment - change of control),

	may only be made with the consent of all the Lenders.
(b)	An amendment or waiver which relates to the rights or obligations of an Administrative Party may only be made with the consent of that Administrative Party.
30.3	Change of currency
	If a change in any currency of a country occurs (including where there is more than one currency or currency unit recognised at the same time as the lawful currency of a country), the Finance Documents will be amended to the extent the Facility Agent (acting reasonably and after consultation with the Company) determines is necessary to reflect the change.
30.4	Waivers and remedies cumulative
	The rights of each Finance Party under the Finance Documents:

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(a)	may be exercised as often as necessary;
(b)	are cumulative and not exclusive of its rights under the general law; and
(c)	may be waived only in writing and specifically.

	Delay in exercising or non-exercise of any right is not a waiver of that right.
31.	CHANGES TO THE PARTIES
31.1	Assignments and transfers by Obligors
	No Obligor may assign or transfer any of its rights and obligations under the Finance Documents without the prior consent of all the Lenders.
31.2	Assignments and transfers by Lenders
(a)	A Lender (the Existing Lender) may, subject to paragraph (b) below, at any time assign or transfer (including by way of novation) any of its rights and obligations under this Agreement to a Bank (the New Lender), provided that a Lender may not transfer its Commitment if to do so would result in its Commitment being less than the aggregate of the US Dollar Amount (as defined in Clause 8 (Optional Currencies)) of its participations in all outstanding Letters of Credit.
(b)	At the date it becomes a Party, either:

(i)	the New Lender must be a Bank and an NAIC Approved Bank; or
(ii)	the New Lender’s obligations with respect to Letters of Credit must be confirmed by an NAIC Approved Bank under a Confirming Bank Agreement entered into by it with that New Lender.

(c) A transfer of obligations will be effective only if either:

(i)

the obligations are novated in accordance with the following provisions of this Clause; or

(ii)

the New Lender confirms to the Facility Agent and the Company in form and substance satisfactory to the Facility Agent that it is bound by the terms of this Agreement as a Lender. On the transfer becoming effective in this manner the Existing Lender will (without prejudice to its obligations under any outstanding Letter of Credit) be released from its obligations under this Agreement to the extent that they are transferred to the New Lender.

(d)	Unless the Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent for its own account, on or before the date any assignment or transfer occurs, a fee of US$2,500.
(e)	Any reference in this Agreement to a Lender includes a New Lender but excludes a Lender if no amount is or may be owed to or by it under this Agreement.
(f)	A Lender may not enter into a participation or subparticipation in connection with this Agreement with a person that is not a Bank.

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31.3	Procedure for transfer by way of novations
(a)	In this Subclause:
	Transfer Date means, for a Transfer Certificate, the later of:

(i)	the proposed Transfer Date specified in that Transfer Certificate; and
(ii)	the date on which the Facility Agent executes that Transfer Certificate.

(b) A novation is effected if:

(i)	the Existing Lender and the New Lender deliver to the Facility Agent a duly completed Transfer Certificate; and
(ii)	the Facility Agent executes it.

	The Facility Agent must execute as soon as reasonably practicable a Transfer Certificate delivered to it and which appears on its face to be in order.
(c)	Each Party (other than the Existing Lender and the New Lender) irrevocably authorises the Facility Agent to execute any duly completed Transfer Certificate on its behalf.
(d)	On the Transfer Date:

(i)	the New Lender will assume the rights and obligations of the Existing Lender expressed to be the subject of the novation in the Transfer Certificate in substitution for the Existing Lender; and
(ii)	the Existing Lender will be released from those obligations and cease to have those rights.

(e)	A Transfer Certificate may, in addition to a bank or financial institution which is the New Lender thereunder, designate an Affiliate of the New Lender for the purposes referred to in Clause 2.4 (Affiliate Facility Offices) and shall be effective to do so if that Affiliate also executes the Transfer Certificate (and relevant references in the Finance Documents shall be read accordingly).
31.4	Limitation of responsibility of Existing Lender
(a)	Unless expressly agreed to the contrary, an Existing Lender is not responsible to a New Lender for the legality, validity, adequacy, accuracy, completeness or performance of:

(i)	any Finance Document or any other document; or
(ii)	any statement or information (whether written or oral) made in or supplied in connection with any Finance Document,

	and any representations or warranties implied by law are excluded.
(b)	Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i) has made, and will continue to make, its own independent appraisal of all risks arising under or in connection with the Finance Documents (including the financial

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	condition and affairs of each Obligor and its related entities and the nature and extent of any recourse against any Party or its assets) in connection with its participation in this Agreement; and
(ii)	has not relied exclusively on any information supplied to it by the Existing Lender in connection with any Finance Document.

(c) Nothing in any Finance Document requires an Existing Lender to:

(i)	accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause; or
(ii)	support any losses incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under any Finance Document or otherwise.

31.5	Outstanding Letters of Credit
	Other than Clause 31.2(f), nothing in this Agreement shall restrict the right of any Lender to enter into any form of sub-participation arrangement or agreement in relation to its participation in this Agreement and any outstanding Letter of Credit (and any disposal by a Lender of its obligations under, or interest in, any outstanding Letter of Credit shall be by way of a participation arrangement or agreement).
31.6	Costs resulting from change of Lender or Facility Office
	If:

(a)	a Lender assigns or transfers any of its rights and obligations under the Finance Documents or changes its Facility Office; and
(b)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to pay a Tax Payment or an Increased Cost in an amount greater than the amount (if any) payable immediately prior to such assignment or transfer,

	then, unless the assignment, transfer or change is made by a Lender to mitigate any circumstances giving rise to the Tax Payment, Increased Cost or a right to be prepaid and/or cancelled by reason of illegality, the Obligor need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred.
31.7	Additional Borrower
(a)	If one of the wholly-owned Subsidiaries of the Company is to become an Additional Borrower, then the Company must (following consultation with the Facility Agent) deliver to the Facility Agent the relevant documents and evidence listed in Part II of Schedule 2 (Conditions precedent documents).
(b)	Except in the case of Converium Reinsurance (North America) Inc., the prior consent of all the Lenders is required before any wholly-owned Subsidiary of the Company may become an Additional Borrower.
(c)	The relevant Subsidiary will become an Additional Borrower when the Facility Agent notifies the other Finance Parties and the Company that it has received all of the documents and

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	evidence referred to in paragraph (a) above in form and substance satisfactory to it. The Facility Agent must give this notification as soon as reasonably practicable.
(d)	Delivery of an Accession Agreement, executed by the relevant Subsidiary and the Company, to the Facility Agent constitutes confirmation by that Subsidiary and the Company that the Repeating Representations are then correct in all material respects.
31.8	Resignation of a Borrower (other than the Company)
(a)	In this Subclause, Resignation Request means a letter in the form of Schedule 8 (Form of Resignation Request), with such amendments as the Facility Agent may approve or reasonably require.
(b)	The Company may request that a Borrower (other than the Company) ceases to be a Borrower by giving to the Facility Agent a duly completed Resignation Request.
(c)	The Facility Agent must accept a Resignation Request and notify the Company and the Lenders of its acceptance if:

(i)	it is not aware that a Default is outstanding or would result from the acceptance of the Resignation Request or, where a Default is outstanding, that Default would be cured by accepting that Resignation Request; and
(ii)	no amount owed by that Borrower under this Agreement and no Letter of Credit requested by that Borrower, is still outstanding.

(d)	The Borrower will cease to be a Borrower when the Facility Agent gives the notification referred to in paragraph (c) above.
(e)	A Borrower (other than the Company) may also cease to be a Borrower in any other manner approved by the Majority Lenders.
31.9	Changes to the Reference Banks
	If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent must (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.
31.10	Affiliates of Lenders
(a)	Each Lender may fulfil its obligations in respect of any Credit through an Affiliate if:

(i)	the relevant Affiliate is specified in this Agreement as a Lender or becomes a Lender by means of a Transfer Certificate in accordance with this Agreement; and
(ii)	the Credits in which that Affiliate will participate are specified in this Agreement or in a notice given by that Lender to the Facility Agent and the Company.

	In this event, the Lender and the Affiliate will participate in Credits in the manner provided for in sub-paragraph (ii) above.
(b)	If paragraph (a) above applies, the Lender and its Affiliate will be treated as having a single Commitment and a single vote, but, for all other purposes, will be treated as separate Lenders.

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32.	DISCLOSURE OF INFORMATION
(a)	Each Finance Party must keep confidential any information supplied to it by or on behalf of any member of the Converium Group in connection with the Finance Documents. However, a Finance Party is entitled to disclose information:

(i)	which is publicly available, other than as a result of a breach by that Finance Party of this Clause;
(ii)	with respect to the U.S. federal income tax treatment and U.S. federal income tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses in the possession of that Finance Party) which relate to such tax treatment and tax structure;
(iii)	in connection with any legal or arbitration proceedings;
(iv)	if required to do so under any law or regulation;
(v)	to a governmental, banking, taxation or other regulatory authority;
(vi)	to its professional advisers;
(vii)	to the extent allowed under paragraph (b) below;
(viii)	to another Obligor; or
(ix)	with the agreement of the relevant Obligor,

provided that in the case of paragraphs (ii) (other than where such proceedings relate to the enforcement of a Finance Party’s rights under the Finance Documents), (iii) or (iv) above, the Finance Party concerned shall notify the Company of the disclosure (if lawfully permissible, prior to it being made) unless it is prevented from doing so by any obligation of confidentiality or to do so might be prejudicial to that Finance Party.

(b)

A Finance Party may disclose to an Affiliate or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a participant):

(i)	a copy of any Finance Document; and
(ii)	any information which that Finance Party has acquired under or in connection with any Finance Document.

	However, before a participant may receive any confidential information, it must agree with the relevant Finance Party to keep that information confidential on the terms of paragraph (a) above.
(c)	This Clause supersedes any previous confidentiality undertaking given by a Finance Party in connection with this Agreement prior to it becoming a Party.
33.	SET-OFF
	A Finance Party may set off any matured obligation owed to it by an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any

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	obligation (whether or not matured) owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
34.	PRO RATA SHARING
34.1	Redistribution
	If any amount owing by an Obligor under this Agreement to a Lender (the recovering Lender) is discharged by payment, set-off or any other manner other than through the Facility Agent under this Agreement (a recovery), then:

(a)	the recovering Lender must, within three Business Days, supply details of the recovery to the Facility Agent;
(b)	the Facility Agent must calculate whether the recovery is in excess of the amount which the recovering Lender would have received if the recovery had been received by the Facility Agent under this Agreement; and
(c)	the recovering Lender must pay to the Facility Agent an amount equal to the excess (the redistribution).

34.2	Effect of redistribution
(a)	The Facility Agent must treat a redistribution as if it were a payment by the relevant Obligor under this Agreement and distribute it among the Lenders, other than the recovering Lender, accordingly.
(b)	When the Facility Agent makes a distribution under paragraph (a) above, the recovering Lender will be subrogated to the rights of the Finance Parties which have shared in that redistribution.
(c)	If and to the extent that the recovering Lender is not able to rely on any rights of subrogation under paragraph (b) above, the relevant Obligor will owe the recovering Lender a debt which is equal to the redistribution, immediately payable and of the type originally discharged.
(d)	If:

(i)	a recovering Lender must subsequently return a recovery, or an amount measured by reference to a recovery, to an Obligor; and
(ii)	the recovering Lender has paid a redistribution in relation to that recovery,

	each Finance Party must reimburse the recovering Lender all or the appropriate portion of the redistribution paid to that Finance Party, together with interest for the period while it held the re-distribution. In this event, the subrogation in paragraph (b) above will operate in reverse to the extent of the reimbursement.
34.3	Exceptions
	Notwithstanding any other term of this Clause, a recovering Lender need not pay a redistribution to the extent that:

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(a)	it would not, after the payment, have a valid claim against the relevant Obligor in the amount of the redistribution; or
(b)	it would be sharing with another Finance Party any amount which the recovering Lender has received or recovered as a result of legal or arbitration proceedings, where:

(i)	the recovering Lender notified the Facility Agent of those proceedings; and
(ii)	the other Finance Party had an opportunity to participate in those proceedings but did not do so or did not take separate legal or arbitration proceedings as soon as reasonably practicable after receiving notice of them.

34.4	Loss sharing
(a)	If with respect to:

(i)	any Single Lender Letter of Credit which is by its terms automatically renewed or extended on its expiry date unless cancelled; or
(ii)	any Loan made in connection with such a Single Lender Letter of Credit,

	an Event of Default occurs under Clause 23.2 (Non-payment), the Facility Agent shall as soon as practicable following its becoming aware of that Event of Default (and whilst the same is still outstanding) give a notice of cancellation and non renewal to the beneficiary of that Single Lender Letter of Credit and each other Single Lender Letters of Credit which are in the same LC Series as that Single Lender Letter of Credit.
(b)	In this Subclause, Discharge Date means, in relation to an LC Series, the date (as determined by the Facility Agent) on which no Lender has any further liability (actual or contingent) under any Single Lender Letter of Credit issued on its behalf which forms part of that LC Series.
(c)	Without prejudice to Clause 34.1 (Redistribution), if following a Discharge Date, it transpires that any amount outstanding under this Agreement with respect to the LC Series to which that Discharge Date relates remains undischarged and for any reason any resulting losses are not being borne by the Lenders participating in that LC Series pro rata to the amount their Commitments bears to the Total Commitments on that Discharge Date (or, if the Total Commitments have been cancelled, bore to the Total Commitments before such cancellation), those Lenders shall make such payments between themselves as the Facility Agent shall direct to ensure that after taking into account such payments such losses are borne by those Lenders pro rata. Where a Lender makes a payment to another Lender under this Subclause, it will be subrogated to the rights of the Lender to which that payment is made with respect to the liability of the Obligors to which the payment relates. If and to the extent that the Lender making the payment is not able to rely on such rights of subrogation, the relevant Obligor will owe that Lender a debt which is equal to the amount of the payment, immediately payable and of the type in respect of which the payment was made.
35.	SEVERABILITY
	If a term of a Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that will not affect:

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(a)	the legality, validity or enforceability in that jurisdiction of any other term of the Finance Documents; or
(b)	the legality, validity or enforceability in other jurisdictions of that or any other term of the Finance Documents.

36.	COUNTERPARTS
	Each Finance Document may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
37.	NOTICES
37.1	In writing
(a)	Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given:

(i)	in person, by post, fax, e-mail or any other electronic communication approved by the Facility Agent; or
(ii)	if between the Facility Agent and a Lender and the Facility Agent and the Lender agree, by e-mail or other electronic communication.

(b)	For the purpose of the Finance Documents, an electronic communication will be treated as being in writing.
(c)	Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing.
37.2	Contact details
(a)	Except as provided below, the contact details of each Party for all communications in connection with the Finance Documents are those notified by that Party for this purpose to the Facility Agent on or before the date it becomes a Party.
(b)	The contact details of the Company for this purpose are:

Address:	General Guisan-Quai 26
	8002 Zurich
	Switzerland
Fax number:	+411 639 90 66
E-mail:	christian.felderer@converium.com
Attention:	Christian Felderer

(c) The contact details of the Facility Agent for this purpose are:

Address:	250 Bishopsgate London
Fax number:	+44 207 678 6021
E-mail:	lisa.lee@uk.abnamro.com / vikki.mayell@uk.abnamro.com
Attention:	Lisa Lee / Vikki Mayell.

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(d)	Any Party may change its contact details by giving five Business Days’ notice to the Facility Agent or (in the case of the Facility Agent) to the other Parties.
(e)	Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer.
37.3	Effectiveness
(a)	Except as provided below, any communication in connection with a Finance Document will be deemed to be given as follows:

(i)	if delivered in person, at the time of delivery;
(ii)	if posted, five days after being deposited in the post, postage prepaid, in a correctly addressed envelope;
(iii)	if by fax, when received in legible form; and
(iv)	if by e-mail or any other electronic communication, when received in legible form.

(b)	A communication given under paragraph (a) above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.
(c)	A communication to the Facility Agent will only be effective on actual receipt by it.
37.4	Obligors
(a)	All communications under the Finance Documents to or from an Obligor must be sent through the Facility Agent.
(b)	All communications under the Finance Documents to or from an Obligor (other than the Company) must be sent through the Company.
(c)	Each Obligor (other than the Company) irrevocably appoints the Company to act as its agent:

(i)	to give and receive all communications under the Finance Documents; and
(ii)	to supply all information concerning itself to any Finance Party.

(d)	Any communication given to the Company in connection with a Finance Document will be deemed to have been given also to the other Obligors.
(e)	The Facility Agent may assume that any communication made by the Company is made with the consent of each other Obligor.
38.	LANGUAGE
(a)	Any notice given in connection with a Finance Document must be in English.
(b)	Any other document provided in connection with a Finance Document must be:

(i) in English; or

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(ii) (unless the Facility Agent otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document.

39.	GOVERNING LAW
	This Agreement is governed by English law.
40.	ENFORCEMENT
40.1	Jurisdiction
(a)	The English courts have exclusive jurisdiction to settle any dispute in connection with any Finance Document.
(b)	The English courts are the most appropriate and convenient courts to settle any such dispute and each Obligor waives objection to those courts on the grounds of inconvenient forum or otherwise in relation to proceedings in connection with any Finance Document.
(c)	This Clause is for the benefit of the Finance Parties only. To the extent allowed by law, a Finance Party may take:

(i)	proceedings in any other court; and
(ii)	concurrent proceedings in any number of jurisdictions.

40.2	Service of process
(a)	Each Obligor not incorporated in England and Wales irrevocably appoints Law Debenture Corporate Services Ltd., presently at 100 Wood Street, London EC2V 7EX as its agent under the Finance Documents for service of process in any proceedings before the English courts.
(b)	If any person appointed as process agent is unable for any reason to act as agent for service of process, the Company (on behalf of all the Obligors) must immediately appoint another agent on terms acceptable to the Facility Agent (acting reasonably). Failing this, the Facility Agent may appoint another agent for this purpose.
(c)	Each Obligor agrees that failure by a process agent to notify it of any process will not invalidate the relevant proceedings.
(d)	This Clause does not affect any other method of service allowed by law.
40.3	Waiver of immunity
	Each Obligor irrevocably and unconditionally:

(a)	agrees not to claim any immunity from proceedings brought by a Finance Party against it in relation to a Finance Document and to ensure that no such claim is made on its behalf;
(b)	consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and
(c)	waives all rights of immunity in respect of it or its assets.

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This Agreement has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 1

ORIGINAL PARTIES

	Registration number
Name of Original Borrower	(or equivalent, if any)
Converium Rückversicherung (Deutschland) AG
Converium Insurance (UK) Ltd.		4580111

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	Commitments
Name of Original Lender	US$
ABN AMRO Bank N.V		60,000,000
Barclays Bank PLC		60,000,000
Commerzbank Aktiengesellschaft		60,000,000
Crédit Lyonnais, Frankfurt am Main		55,000,000
Dresdner Bank AG, Niederlassung Luxemburg		55,000,000
HSBC Bank USA		55,000,000
Bayerische Hypo- und Vereinsbank AG		55,000,000
ING Bank N.V., London Branch		55,000,000
JPMorgan Chase Bank		55,000,000
Landesbank Baden-Württemberg, London Branch		55,000,000
Lloyds TSB Bank plc		55,000,000
National Australia Bank Limited (A.B.N. 12 004 044 937)		55,000,000
HSH Nordbank AG		47,500,000
Landesbank Sachsen Girozentrale		47,500,000
Credit Suisse		40,000,000
The Bank of New York		25,000,000
Bank One, NA		25,000,000
WestLB AG, New York Branch		25,000,000
Caixa Geral de Depositos		15,000,000
Total Commitments	US$	900,000,000

80

SCHEDULE 2

CONDITIONS PRECEDENT DOCUMENTS

PART 1

TO BE DELIVERED BEFORE THE FIRST REQUEST

Original Obligors

1.	A copy of the constitutional documents of each Original Obligor.
2.	A copy of a resolution of the board of directors of each Original Obligor (or, in the case of the Company, of Holding) approving the terms of, and the transactions contemplated by, this Agreement.
3.	A specimen of the signature of each person authorised on behalf of an Original Obligor to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document.
4.	A certificate of an authorised signatory of the Company:

(a)	confirming that utilising the Total Commitments in full would not breach any limit binding on any Original Obligor; and
(b)	certifying that each copy document specified in Part I of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

5.	Evidence that each agent of the Original Obligors under the Finance Documents for service of process in England and Wales has accepted its appointment.
6.	A copy of the most recent audited, consolidated financial statements of Holding.
7.	A copy of the most recent audited, financial statements of each Original Obligor.

Legal opinions

1.	A legal opinion of Allen & Overy, London, legal advisers to the Mandated Lead Arrangers and the Facility Agent as to English law, addressed to the Finance Parties.
2.	If an Original Obligor is incorporated in a jurisdiction other than England, a legal opinion from legal advisers in that jurisdiction to the Mandated Lead Arrangers, addressed to the Finance Parties.

Other documents and evidence

1.	Evidence that all fees and expenses then due and payable from the Company under this Agreement have been or will be paid by the first Utilisation Date.
2.	Evidence that arrangements satisfactory to each Original Lender that has issued an Existing Letter of Credit and the Company for the return and cancellation of the Existing Letters of Credit have been agreed.

81

3.	A copy of any regulatory or governmental consent, licence or registration that is required for any Original Obligor to enter into the transactions contemplated by this Agreement.
4.	A copy of any other authorisation or other document, opinion or assurance which the Facility Agent (acting reasonably) has notified the Company is necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, any Finance Document or for the validity and enforceability of any Finance Document.

82

PART 2

FOR AN ADDITIONAL BORROWER

Additional Borrowers

1.	An Accession Agreement, duly executed by the Company and the Additional Borrower.
2.	A copy of the constitutional documents of the Additional Borrower.
3.	A copy of a resolution of the board of directors of the Additional Borrower approving the terms of, and the transactions contemplated by, the Accession Agreement.
4.	A specimen of the signature of each person authorised on behalf of the Additional Borrower to execute or witness the execution of any Finance Document or to sign or send any document or notice in connection with any Finance Document.
5.	If applicable, a copy of a resolution, signed by all (or any lower percentage agreed by the Facility Agent) of the holders of its issued or allotted shares, approving the terms of, and the transactions contemplated by, the Accession Agreement.
6.	If applicable, a copy of a resolution of the board of directors of each corporate shareholder in the Additional Borrower approving the resolution referred to in paragraph 5 above.
7.	A certificate of an authorised signatory of the Additional Borrower:

(a)	confirming that utilising the Total Commitments in full would not breach any limit binding on it; and
(b)	certifying that each copy document specified in Part 2 of this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Agreement.

8.	If available, a copy of the latest audited accounts of the Additional Borrower.
9.	Evidence that each agent of the Additional Borrower under the Finance Documents for service of process in England and Wales has accepted its appointment.

Legal opinions

A legal opinion from legal advisers in the jurisdiction of incorporation of the Additional Borrower , addressed to the Finance Parties.

Other documents and evidence

1.	Evidence that all expenses due and payable from the Company under this Agreement in respect of the Accession Agreement have been paid.
2.	A copy of any other authorisation or other document, opinion or assurance which the Facility Agent (acting reasonably) has notified the Company is necessary or desirable in connection with the entry into and performance of, and the transactions contemplated by, the Accession Agreement or for the validity and enforceability of any Finance Document.

83

SCHEDULE 3

FORM OF REQUEST

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: [          ]

Date: [          ]

CONVERIUM AG, ZURICH-US$900,000,000 Credit Agreement
dated [          ], 2003 (the Agreement)

1.	We refer to the Agreement. This is a Request.
2.	We wish to [borrow a Loan/arrange for a Letter of Credit to be issued]+ on the following terms:

(a)	Utilisation Date: [          ]
(b)	Amount/currency: [          ]
(c)	Term: [          ]
(d)	[Multiple Lender Letter of Credit / Single Lender Letters of Credit]+
(e)	Expiry date: [          ]
(f)	[Beneficiary name and address]+.

3.	Our [payment/delivery]+ instructions are: [          ].
4.	We confirm that each condition precedent under the Agreement which must be satisfied on the date of this Request is so satisfied.
5.	This Request is irrevocable.
6.	[NAIC approval is relevant to the purposes for which the Letter of Credit is requested]+.

[We attach a copy of the proposed Letter of Credit.]

By:

[           ]

⁺Delete as applicable

84

SCHEDULE 4

CALCULATION OF THE MANDATORY COST

1.	General
	The Mandatory Cost is the weighted average of the rates for each Lender calculated below by the Facility Agent on the first day of a Term. The Facility Agent must distribute each amount of Mandatory Cost among the Lenders on the basis of the rate for each Lender.
2.	For a Lender lending from a Facility Office in the U.K.
(a)	The relevant rate for a Lender lending from a Facility Office in the U.K. is calculated in accordance with the following formulae:
	for a Loan in sterling:

AB+C(B–D)+Ex0.01
	per cent per annum
100–(A+C)

for any other Loan:

Ex0.01
	per cent. per annum
300

where on the day of application of the formula:

A	is the percentage of that Lender’s eligible liabilities (in excess of any stated minimum) which the Bank of England requires it to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements;
B	is LIBOR for that Term;
C	is the percentage of that Lender’s eligible liabilities which the Bank of England requires it to place as a special deposit;
D	is the interest rate per annum allowed by the Bank of England on a special deposit; and
E	is calculated by the Facility Agent as being the average of the rates of charge supplied by the Reference Banks to the Facility Agent under paragraph (d) below and expressed in pounds per £1 million.

(b) For the purposes of this paragraph 2:

(i)	eligible liabilities and special deposit have the meanings given to them at the time of application of the formula by the Bank of England;
(ii)	fees rules means the then current rules on periodic fees in the Supervision Manual of the FSA Handbook; and
(iii)	tariff base has the meaning given to it in the fees rules.

85

(c)	(i)	In the application of the formulae, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero.
	(ii)	Each rate calculated in accordance with a formula is, if necessary, rounded upward to four decimal places.
(d)	(i)	Each Reference Bank must supply to the Facility Agent the rate of charge payable by that Reference Bank to the Financial Services Authority under the fees rules (calculated by that Reference Bank as being the average of the rates of charge within fee-block Category A1 (Deposit acceptors) applicable to that Reference Bank but, for this purpose, applying any applicable discount and ignoring any minimum fee required under the fees rules) and expressed in pounds per £1 million of the tariff base of that Reference Bank.
	(ii)	Each Reference Bank must promptly notify the Facility Agent of any change to the rate of charge.
(e)	(i)	Each Lender and each Reference Bank must supply to the Facility Agent the information required by it to make a calculation of the rate for that Lender or Reference Bank. The Facility Agent may assume that this information is correct in all respects.
	(ii)	If a Lender or a Reference Bank fails to do so, the Facility Agent may assume that the Lender’s or that Reference Bank’s obligations in respect of cash ratio deposits, special deposits and the fees rules are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the U.K.
	(iii)	The Facility Agent has no liability to any Party if its calculation over or under compensates any Lender.

3.	For a Lender lending from a Facility Office in a Participating Member State
(a)	The relevant rate for a Lender lending from a Facility Office in a Participating Member State is the percentage rate per annum notified by that Lender to the Facility Agent as its cost of complying with the minimum reserve requirements of the European Central Bank.
(b)	If a Lender fails to specify a rate under paragraph (a) above, the Facility Agent will assume that the Lender has not incurred any such cost.
4.	Changes
	The Facility Agent may, after consultation with the Company and the Lenders, notify all the Parties of any amendment to this Schedule which is required to reflect:

(a)	any change in law or regulation; or
(b)	any requirement imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any successor authority).

Any notification will be, in the absence of manifest error, conclusive and binding on all the Parties.

86

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the New Lender)

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement
dated [          ], 2003 (the Agreement)

	We refer to the Agreement. This is a Transfer Certificate.
1.	The Existing Lender transfers by novation to the New Lender the Existing Lender’s rights and obligations referred to in the Schedule below in accordance with the terms of the Agreement.
2.	The proposed Transfer Date is [          ].
3.	The administrative details of the New Lender for the purposes of the Agreement are set out in the Schedule.
4.	This Transfer Certificate is governed by English law.

THE SCHEDULE

Rights and obligations to be transferred by novation
[insert relevant details, including applicable Commitment (or part)]

Administrative details of the New Lender
[insert details of Facility Office, address for notices and payment details etc.]

[EXISTING LENDER]	[NEW LENDER]
By:	By:

The Transfer Date is confirmed by the Facility Agent as [          ].

ABN AMRO BANK N.V., LONDON BRANCH

By:

87

SCHEDULE 6

FORM OF COMPLIANCE CERTIFICATE

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement
dated [          ], 2003 (the Agreement)

1.	We refer to the Agreement. This is a Compliance Certificate.
2.	We confirm that as at [date]:

(a)	Consolidated Tangible Net Worth was [          ];
(b)	Consolidated Total Borrowings were [     ]; therefore, Consolidated Total Borrowings were [     ] per cent. ([          ]%) of Consolidated Tangible Net Worth

3.	We set out below calculations establishing the figures in paragraph 2 above:
	[          ].
4.	As at the date of this certificate, the Rating is [          ].
5.	We confirm that we have sufficient unencumbered cash and Eligible Investments available to us to meet our obligations under the Agreement with respect to the provision of Required Security.
6.	We confirm that no Default is outstanding.

CONVERIUM AG, ZURICH

By:

88

SCHEDULE 7

FORM OF ACCESSION AGREEMENT

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH and [Proposed Borrower]

Date: [          ]

CONVERIUM AG, ZURICH – US$900,000,000 Credit Agreement
dated [          ], 2003 (the Agreement)

We refer to the Agreement. This is an Accession Agreement.

[Name of company] of [address/registered office] agrees to become an Additional Borrower and to be bound by the terms of the Agreement as an Additional Borrower.

This Accession Agreement is governed by English law.

CONVERIUM AG, ZURICH

By:

[PROPOSED BORROWER

By:

89

SCHEDULE 8

FORM OF RESIGNATION REQUEST

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH and [relevant Borrower]

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement
dated [          ], 2003 (the Agreement)

1.	We refer to the Agreement. This is a Resignation Request.
2.	We request that [resigning Borrower] be released from its obligations as a Borrower under the Agreement.
3.	We confirm that no Default is outstanding or would result from the acceptance of this Resignation Request.
4.	We confirm that as at the date of this Resignation Request no amount owed by [resigning Borrower] under the Agreement and no Letter of Credit requested by [resigning Borrower] is outstanding.
5.	This Resignation Request is governed by English law.

CONVERIUM AG, ZURICH	[Relevant Borrower]
By:	By:

The Facility Agent confirms that this resignation takes effect on [          ].

ABN AMRO BANK N.V., LONDON BRANCH

By:

90

SCHEDULE 9

FORMS OF LETTER OF CREDIT

Part 1 - Form of Multiple Lender Letter of Credit

IN FAVOUR OF:

[               ]

The banks and financial institutions listed in the Part A of the schedule to this letter of credit (the Issuing Banks) have established this clean, irrevocable and unconditional letter of credit in your favor as beneficiary for drawings up to USD [     ] in aggregate.

[[This letter of credit is effective immediately].

[This letter of credit is issued in substitution and replacement for the following outstanding letter(s) of credit issued in your favour: [insert details of relevant Existing Letters of Credit] (the Existing Letter(s) of Credit). This letter of credit shall be effective on the date on which we receive confirmation from each bank that issued the Existing Letter(s) of Credit that you have returned to such bank each of the Existing Letter(s) of Credit issued by it together with your confirmation to it in writing that those Existing Letter(s) of Credit are cancelled and that the bank has no further liability thereunder.]]⁺

This letter of credit is issued, presentable and payable at the offices of the Issuing Banks’ agent, ABN AMRO Bank N.V., Chicago (the Agent) at 200 West Monroe St, Suite 1100, Chicago, IL 60606 and expires with the Agent’s close of business on [          ]. Except when the amount of this letter of credit is increased, this credit cannot be modified or revoked without your consent.

The term ‘beneficiary’ includes any successor by operation of law of the named beneficiary including without limitation any liquidator, rehabilitator, receiver or conservator. Drawings by any liquidator, rehabilitator, receiver or conservator shall be for the benefit of all of the beneficiary’s policyholders. Where a claim is made by a successor, additional documents evidencing the succession must also be presented.

Subject to the matters set out below, each Issuing Bank hereby severally undertakes to promptly honor your claim (in the amount for that Issuing Bank determined in accordance with the succeeding paragraphs) against sight draft(s) drawn on the Issuing Banks or us as agent for the Issuing Banks, indicating credit no.        , for all or any part of this credit, presented on or before the expiration date hereof or any automatically extended expiry date.

The amount of this letter of credit will automatically reduce by the amount of any drawing under it and the obligations of the Issuing Banks under this letter of credit shall be reduced pro rata.

The liability of each Issuing Bank under this letter of credit is several and not joint. No Issuing Bank is responsible for the obligations of any other Issuing Bank under this letter of credit. Failure by an Issuing Bank to perform its obligations under this letter of credit does not affect the obligations of any other Issuing Bank under this letter of credit. The liability of each Issuing Bank with respect to any amount demanded by you under this letter of credit (other than a demand that relates to a failure by an

⁺Delete as applicable

91

Issuing Bank to pay an amount due from it under this letter of credit) shall be the percentage of the amount demanded which is set out next to its name in Part A of the schedule. Payment of amounts due from an Issuing Bank under this letter of credit shall be effected through the Agent (provided that an Issuing Bank’s liability to make a payment under this letter of credit shall be discharged only upon receipt by you of that amount). The Agent will promptly remit to you an amount equal to each amount received for you under this letter of credit from an Issuing Bank.

Except as expressly stated herein, this undertaking is not subject to any agreement, requirement or qualification. The obligation of each Issuing Bank under this credit is the individual obligation of that Issuing Bank and is in no way contingent upon reimbursement with respect thereto, or upon its ability to perfect any lien, security interest or any other reimbursement.

This letter of credit is deemed to be automatically renewed without amendment for one year from the expiration date or any future expiration date, unless at least thirty days prior to such expiration date, the Agent sends you notification by registered or certified mail that this letter of credit will not be renewed for any such additional period.

Save as expressly stated in this letter of credit, the Agent has no obligation of any kind to you under, or in respect of, this letter of credit. Without prejudice to the generality of the foregoing sentence, the Agent’s role in connection with this letter of credit is purely administrative and the Agent shall have no obligation to meet any drawing or demand for payment by you under this letter of credit and shall have no liability or responsibility to you for any failure by any Issuing Bank to perform any of its obligations under this letter of credit.

[Where an Issuing Bank’s name appears in Part B of the Schedule, this letter of credit, insofar as it is issued on behalf of that Issuing Bank, is confirmed by the bank or financial institution whose name appears opposite that Issuing Bank’s name in Part B of the Schedule (each a Confirming Bank). Each Confirming Bank shall be liable (as if it were itself an Issuing Bank) for the obligations of the Issuing Bank opposite whose name its own name appears in Part B of the Schedule. Any payment under this letter of credit by:

(a)	a Confirming Bank shall reduce the liability of the relevant Issuing Bank pro tanto; or
(b)	an Issuing Bank in respect of which there is a Confirming Bank shall reduce the liability of the relevant Confirming Bank pro tanto.]++

The Agent has the authority of each Issuing Bank [and the Confirming Bank]⁺⁺ to deliver this letter of credit to you in its name and on its behalf.

This letter of credit is subject to and governed by the laws of [      ] and the provisions of the 1993 Revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication no. 500) and in the event of any conflict, the laws of [      ] will control. If this credit expires during an interruption of business as described in Article 17 of said Publication 500, the bank hereby specifically agrees to effect payment if this credit is drawn against otherwise in accordance with its term within 30 days after the resumption of business*.

Schedule

Part A

++	Delete as applicable
*	Letters of Credit may alternatively, at the Borrower’s request, be issued under the International Standard & Practices ISP98 of the International Chamber of Commerce (Publication no.590)

92

Issuing Bank		Percentage Share
Total		100%
	Part B
Issuing Bank		Confirming Bank

93

Part 2 - Form of Single Lender Letter of Credit

IN FAVOUR OF:

[               ]

[     ] (the Issuing Bank) has established this clean, irrevocable and unconditional letter of credit in your favor as beneficiary for drawings up to USD [          ] in aggregate.

[[This letter of credit is effective immediately].

[This letter of credit is issued in [partial] substitution and replacement for the following outstanding letter(s) of credit issued in your favour: [insert details of relevant Existing Letters of Credit] (the Existing Letter(s) of Credit). This letter of credit shall be effective on the date on which we receive confirmation from each bank that issued the Existing Letter(s) of Credit that you have returned to such bank each of the Existing Letter(s) of Credit issued by it together with your confirmation to it in writing that those Existing Letter(s) of Credit are cancelled and that the bank has no further liability thereunder.]]⁺

This letter of credit is issued, presentable and payable at the offices of the Issuing Bank’s agent, ABN AMRO Bank N.V., Chicago (the Agent) at 200 West Monroe St, Suite 1100, Chicago, IL 60606 and expires with the Agent’s close of business on [          ]. Except when the amount of this letter of credit is increased, this credit cannot be modified or revoked without your consent.

The term ‘beneficiary’ includes any successor by operation of law of the named beneficiary including without limitation any liquidator, rehabilitator, receiver or conservator. Drawings by any liquidator, rehabilitator, receiver or conservator shall be for the benefit of all of the beneficiary’s policyholders. Where a claim is made by a successor, additional documents evidencing the succession must also be presented.

The Issuing Bank hereby undertakes to promptly honor your claim against sight draft(s) drawn on the Issuing Bank or us as agent for the Issuing Bank, indicating credit no.         , for all or any part of this credit, presented on or before the expiration date hereof or any automatically extended expiry date.

The amount of this letter of credit will automatically reduce by the amount of any drawing under it and the obligations of the Issuing Bank under this letter of credit shall be reduced pro tanto.

Payment of amounts due from the Issuing Bank under this letter of credit shall be effected through the Agent (provided that the Issuing Bank’s liability to make a payment under this letter of credit shall be discharged only upon receipt by you of that amount). The Agent will promptly remit to you an amount equal to each amount received for you under this letter of credit from the Issuing Bank.

Except as expressly stated herein, this undertaking is not subject to any agreement, requirement or qualification. The obligation of the Issuing Bank under this credit is the individual obligation of the Issuing Bank and is in no way contingent upon reimbursement with respect thereto, or upon its ability to perfect any lien, security interest or any other reimbursement.

⁺ Delete as applicable

94

This letter of credit is deemed to be automatically renewed without amendment for one year from the expiration date or any future expiration date, unless at least thirty days prior to such expiration date, the Agent sends you notification by registered or certified mail to the above address that this letter of credit will not be renewed for any such additional period.

Save as expressly stated in this letter of credit, the Agent has no obligation of any kind to you under, or in respect of, this letter of credit. Without prejudice to the generality of the foregoing sentence, the Agent’s role in connection with this letter of credit is purely administrative and the Agent shall have no obligation to meet any drawing or demand for payment by you under this letter of credit and shall have no liability or responsibility to you for any failure by the Issuing Bank to perform any of its obligations under this letter of credit.

[This letter of credit is confirmed by [       ] (the Confirming Bank). Accordingly, the Confirming Bank shall itself be liable as if it were itself the Issuing Bank for the obligations of the Issuing Bank under this Letter of Credit. Any payment under this letter of credit by:

(a)	the Confirming Bank shall reduce the liability of the Issuing Bank pro tanto; or
(b)	the Issuing Bank shall reduce the liability of the Confirming Bank pro tanto.]++

The Agent has the authority of the Issuing Bank [and the Confirming Bank] ⁺⁺ to deliver this letter of credit to you in its name and on its behalf.

This letter of credit is subject to and governed by the laws of [     ] and the provisions of the 1993 Revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication no. 500) and in the event of any conflict, the laws of [     ] will control. If this credit expires during an interruption of business as described in Article 17 of said Publication 500, the bank hereby specifically agrees to effect payment if this credit is drawn against otherwise in accordance with its term within 30 days after the resumption of business*.

++	Delete as applicable
*	Letters of Credit may alternatively, at the Borrower’s request, be issued under the International Standard & Practices ISP98 of the International Chamber of Commerce (Publication no.590)

95

SCHEDULE 10

MINIMUM CRITERIA FOR CONFIRMING BANK AGREEMENT

1.	The Confirming Bank must be an NAIC Approved Bank.
2.	The Confirming Bank must agree to confirm the obligations of the Affected Lender under any outstanding Letters of Credit and any further Letters of Credit that are subsequently to be issued.
3.	The Confirming Bank must agree to honour any demand under each Confirmed Letter of Credit as if it were the Affected Lender.
4.	The Confirming Bank must irrevocably appoint the Facility Agent to act as its attorney-in-fact, acting through any duly authorised officer, to execute and deliver under the Facility Agreement, in the Confirming Bank’s name and on its behalf, each Letter of Credit to be confirmed by it.
5.	The Affected Lender must promptly reimburse the Confirming Bank if it is required to make a payment consequent on a claim under a Letter of Credit.
6.	The Confirming Bank Agreement shall be terminable by the Affected Lender in whole or in respect of any particular Letter(s) of Credit in the event that the Confirming Bank ceases to be an NAIC Approved Bank.
7.	The duration of the Confirming Bank Agreement must be approved by the Company.

96

SCHEDULE 11

EXISTING LETTERS OF CREDIT

L/C Number	Issuing Bank	Amount	Issue Date	Beneficiary
99187	Barclays Bank Plc	US$2,326,277.32	27/09/99	ACE American Reinsurance Company
99188	Barclays Bank Plc	US$136,430.00	27/09/99	RLI Insurance Company
99192	Barclays Bank Plc	US$427,445.86	05/10/99	Employers Reinsurance Corp
99195	Barclays Bank Plc	US$95,236.91	13/10/99	Factory Mutual Insurance Company
99199	Barclays Bank Plc	US$172,771.00	18/10/99	St Paul Fire & Marine Insurance Company
99202	Barclays Bank Plc	US$141,576.68	26/10/99	Insurance Corporation of Hannover
99210	Barclays Bank Plc	US$1,234,754.55	26/10/99	Factory Mutual Insurance Company
99211	Barclays Bank Plc	US$9,356,838.42	26/10/99	Factory Mutual Insurance Company
99212	Barclays Bank Plc	US$195,946.07	26/10/99	Factory Mutual Insurance Company
99221	Barclays Bank Plc	US$50,000.00	03/11/99	Fremont Indemnity Company
99225	Barclays Bank Plc	US$93,624.00	05/11/99	Lexington Insurance Company
99246	Barclays Bank Plc	US$475,674.06	17/11/99	Westport Insurance Corporation
99247	Barclays Bank Plc	US$280,280.74	17/11/99	Continental Reinsurance Corporation
99248	Barclays Bank Plc	US$76,123.33	17/11/99	Westport Insurance Corporation
99249	Barclays Bank Plc	US$62,984.00	17/11/99	Bayside Reinsurance Company Ltd
99250	Barclays Bank Plc	US$738,350.04	17/11/99	Westport Insurance Corporation
99251	Barclays Bank Plc	US$15,028.00	17/11/99	Westchester Fire Insurance Company
99259	Barclays Bank Plc	US$23,582.53	24/11/99	ML Life Insurance Company of New York
99260	Barclays Bank Plc	US$165,212.32	24/11/99	Merrill Lynch Life Insurance Company
99261	Barclays Bank Plc	US$64,450.26	23/11/99	Monarch Life Insurance Company
99262	Barclays Bank Plc	US$1,011,940.00	23/11/99	Manjlife Insurance Corporation (USA)
99263	Barclays Bank Plc	US$431,479.90	24/11/99	Reliastar Life Insurance Company
99264	Barclays Bank Plc	US$1,641,421.11	23/11/99	Continental Assurance Company
99265	Barclays Bank Plc	US$489,087.00	23/11/99	NAC Reinsurance Corporation
99277	Barclays Bank Plc	US$23,691,118.00	02/12/99	Connecticut General Life Insurance Co
99281	Barclays Bank Plc	US$107,476.99	07/12/99	ERC Life Reinsurance Corporation

97

L/C Number	Issuing Bank	Amount	Issue Date	Beneficiary
99282	Barclays Bank Plc	US$31,457,764.00	07/12/99	ERC Life Reinsurance Corporation
99283	Barclays Bank Plc	US$957,935.00	07/12/99	Swiss Re Life & Health America Inc.
99284	Barclays Bank Plc	US$18,737.65	07/12/99	First Allmerica Financial Life Ins Co.
99285	Barclays Bank Plc	US$40,110.79	07/12/99	Reliance National Indemnity Company
99286	Barclays Bank Plc	US$5,383,969.00	07/12/99	Security Life of Denver Insurance Co
99287	Barclays Bank Plc	US$55,012.00	09/12/99	Associated Aviation Underwriters Inc
99288	Barclays Bank Plc	US$1,864,247.30	07/12/99	Phoenix Home Life Mutual Insurance Co
99303	Barclays Bank Plc	US$1,554,000.00	14/12/99	Swiss Re Life & Health Co. America Inc.
99304	Barclays Bank Plc	US$84,806.66	14/12/99	Swiss Re Life & Health America Inc.
99306	Barclays Bank Plc	US$115,000.00	14/12/99	The AIG Life Companies (U.S.)
99317	Barclays Bank Plc	US$295,000.00	15/12/99	Lamar Life Insurance Company
99337	Barclays Bank Plc	US$7,062.48	20/12/99	Scor Reinsurance Company
99338	Barclays Bank Plc	US$140,047.44	20/12/99	Allstate Insurance Company
99341	Barclays Bank Plc	US$103,750.00	20/12/99	United States Fire Insurance Co
99344	Barclays Bank Plc	US$99,929.74	20/12/99	The Manufacturers Life Insurance Co.
99345	Barclays Bank Plc	US$180,598.00	20/12/99	First Reliance Standard Life Ins. Co.
99346	Barclays Bank Plc	US$499,658.60	20/12/99	NAC Reinsurance Corporation
99347	Barclays Bank Plc	US$998,507.00	20/12/99	Pan American Life Insurance Co.
99348	Barclays Bank Plc	US$2,757,921.00	20/12/99	Reliance Standard Life Insurance Co.
99349	Barclays Bank Plc	US$4,153,209.00	21/12/99	National Western Life Insurance Co.
99350	Barclays Bank Plc	US$4,649,735.00	20/12/99	Swiss Re Life & Health America, Inc.
99351	Barclays Bank Plc	US$99,590.00	20/12/99	Valley Forge Life Insurance Co.
99354	Barclays Bank Plc	US$30,000.00	20/12/99	General & Cologne Life Re of America
99380	Barclays Bank Plc	US$258,206.00	30/12/99	Phoenix Home Life Mutual Ins Co.
99383	Barclays Bank Plc	US$2,305,035.00	30/12/99	Transamerica Occidental Life Ins Co
00007	Barclays Bank Plc	US$239,248.00	06/01/00	Pan American Life Insurance Co.
00034	Barclays Bank Plc	US$202,877.00	14/01/00	Lincoln Life and Annuity Co. of New York
00035	Barclays Bank Plc	US$1,817,787.00	14/01/00	Lincoln National Life Insurance. Co
00044	Barclays Bank Plc	US$7,400.00	19/01/00	Great Southwest Fire Insurance Company
00065	Barclays Bank Plc	US$47,489.22	28/01/00	Lincoln National Health & Casualty Company
00162	Barclays Bank Plc	US$233,759.02	14/03/00	Century Indemnity Company
01014	Barclays Bank Plc	US$1,835,293.00	10/01/00	The Canada Life Assurance Company

98

L/C Number	Issuing Bank	Amount	Issue Date	Beneficiary
01021	Barclays Bank Plc	US$1,050,000.00	22/01/01	Transamerica Occidental Life Ins Co
01022	Barclays Bank Plc	US$156,837.63	22/01/01	London Life Reinsurance Company
01034	Barclays Bank Plc	US$264,757.36	31/01/01	Sun Life Assurance Company of Canada
01065	Barclays Bank Plc	US$8,250,000.00	13/02/01	RGA Reinsurance Company
01112	Barclays Bank Plc	US$2,165,000.00	06/09/01	RGA Reinsurance Company
02033	Barclays Bank Plc	US$649,338.00	10/01/02	AUSA Life Insurance Company
03022	Barclays Bank Plc	US$64,153.98	13/01/03	Allianz Insurance Company
02145	Barclays Bank Plc	€70,314.25	16/07/02	MEIE Associates S.P.A
03077	Barclays Bank plc	US$147,617.00	09/06/03	Presidential Life Insurance Company
AV01-5807643	Commerzbank AG	US$7,650,000.00	11/12/01	RGA Reinsurance Company
AV02-5807705	Commerzbank AG	US$804,970.00	31/12/01	Swiss Re Life + Health America Inc.
AV02-5807706	Commerzbank AG	US$40,000,000.00	31/12/01	Connecticut General Life Insurance Co.
AV02-5807707	Commerzbank AG	US$ 3,400,000.00	31/12/01	RGA Reinsurance Company
AV02-5807708	Commerzbank AG	US$40,000,000.00	31/12/01	Transamerica Occidental Life Insurance
AV02-5807716	Commerzbank AG	US$51,750.00	31/12/01	Life Insurance Company of North America
AV02-5807730	Commerzbank AG	US$13,000,000.00	31/12/01	AUSA Life Insurance Company, Inc.
AV02-5807975	Commerzbank AG	US$5,555,755.52	16/04/02	The Canada Life Assurance Company
AV02-5808557	Commerzbank AG	US$30,118.00	13/11/02	Guarantee Reserve Life Ins. Co.
AV02-5808558	Commerzbank AG	US$204,250.00	17/12/02	Bankers Life and Casualty
AV02-5808712	Commerzbank AG	US$18,800,000.00	27/12/02	RGA Reinsurance Company
AV02-5808713	Commerzbank AG	US$17,810,681.00	27/12/02	Connecticut General Life Insurance Co.
AV02-5808714	Commerzbank AG	US$20,169,179.00	27/12/02	Transamerica Occidental Life Insurance
AV02-5808718	Commerzbank AG	US$68,171.00	30/12/02	American Heritage
AV02-5808719	Commerzbank AG	US$483,811.00	31/12/02	Optimum Reinsurance Company
AV02-5808723	Commerzbank AG	US$3,663,000.00	31/12/02	Swiss Re Life + Health America Inc.
AV02-5808734	Commerzbank AG	US$187,578.00	31/12/02	Zurich American Insurance Company
BAHA 131-041329	Credit Suisse First Boston	US$24,469,000.00		Atlantic Mutual Insurance Company
BAHA 131-041174	Credit Suisse First Boston	US$20,000,000.00		Eagle Star Insurance Company
BAHA 131-041660	Credit Suisse First Boston	€1,071,708.51		Fondiaria - SAI S.p.A.

99

SIGNATORIES

Company

CONVERIUM AG, ZURICH

By:

Original Borrowers

CONVERIUM RUCKVERSICHERUNG (DEUTSCHLAND) AG

By:

CONVERIUM INSURANCE (UK) LTD.

By:

Mandated Lead Arrangers

ABN AMRO BANK N.V.

By:

BARCLAYS CAPITAL

By:

COMMERZBANK AKTIENGESELLSCHAFT

By:

Original Lenders

ABN AMRO BANK N.V.

By:

BARCLAYS BANK PLC

100

By:

COMMERZBANK AKTIENGESELLSCHAFT

By:

CREDIT LYONNAIS, FRANKFURT AM MAIN

By:

DRESDNER BANK AG, NIEDERLASSUNG LUXEMBURG

By:

HSBC BANK USA

By:

BAYERISCHE HYPO- UND VEREINSBANK AG

By:

ING BANK N.V., LONDON BRANCH

By:

JPMORGAN CHASE BANK

By:

LANDESBANK BADEN-WÜRTTEMBERG, LONDON BRANCH

By:

LLOYDS TSB BANK PLC

By:

101

NATIONAL AUSTRALIA BANK LIMITED (A.B.N. 12 004 044 937)

By:

HSH NORDBANK AG

By:

LANDESBANK SACHSEN GIROZENTRALE

By:

CREDIT SUISSE

By:

THE BANK OF NEW YORK

By:

BANK ONE, NA

By:

WESTLB AG, NEW YORK BRANCH

By:

CAIXA GERAL DE DEPOSITOS

By:

Facility Agent

ABN AMRO BANK N.V.

By:

102 EX-7.1 5 u47204exv7w1.htm EXHIBIT 7.1

Exhibit 7.1

Ratio of earnings to fixed charges

	Year ended December 31,
($ millions, except ratio information)	2003		2002		2001			2000			1999
Income (loss) before taxes	$	224.4	$	57.4	$	(537.3	)	$	(48.8	)	$	98.4
Fixed charges:
Interest expense		31.0		16.4		24.2			17.1			17.5
Interest portion of rental expense		5.2		4.9		3.6			3.4			2.5
Income (loss) before taxes plus fixed charges	$	260.6	$	78.7	$	(509.5	)	$	(28.3	)	$	118.4
Fixed charges:
Interest expense	$	31.0	$	16.4	$	24.2		$	17.1		$	17.5
Interest portion of rental expense		5.2		4.9		3.6			3.4			2.5
	$	36.2	$	21.3	$	27.8		$	20.5		$	20.0
Ratio of earnings to fixed charges		7.2		3.7		(a	)		(b	)		5.9

The ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges. Fixed charges consist of interest expense and the interest portion of rental expense.

(a) Due to Converium’s loss in 2001 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $537.3 million to achieve coverage of 1:1.

(b) Due to Converium’s loss in 2000 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $48.8 million to achieve coverage of 1:1.

EX-4.39

exv4w39

EX-7.1

Exhibit 7.1

EX-8.1

Exhibit 8.1

Subsidiaries of the Registrant

Company Name	State or Jurisdiction of Incorporation
Converium Rückversicherung (Deutschland) AG	Germany
Converium Finance S.A.	Luxembourg
Converium Holding AG	Switzerland
Converium AG	Switzerland
Converium Holdings (North America) Inc.	Delaware
Converium Reinsurance (North America) Inc.	Connecticut
Converium Insurance (North America) Inc.	New Jersey
Converium Holding (UK) Ltd	UK
Converium Insurance (UK) Ltd	UK
Converium London Management Ltd.	UK
Converium Underwriting Ltd	UK

EX-12.1

Exhibit 12.1

Consent of PricewaterhouseCoopers Ltd, independent auditors

We hereby consent to the incorporation by reference in this Registration Statement on Form 20-F of Converium Holding AG of our report dated February 13, 2004 relating to the financial statements and financial statement schedules, which appears in the issuer’s Annual Report on Form 20-F for the year ended December 31, 2003. We also consent to the references to us under the heading “Selected Financial Data” in such Registration Statement.

PricewaterhouseCoopers Ltd

Andrew Hill Martin Frei

Zurich, April 5, 2004

EX-31.1

Exhibit 31.1

I, Dirk Lohmann, certify that:

1. I have reviewed this annual report on Form 20-F of Converium Holding AG.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) evaluated the effectiveness of the company’s disclosure controls and procedures in this report, our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

     c) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that materially affected, or is reasonably likely to materially effect, the company’s internal control over financial reporting.

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent function):

     a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which could adversely affect the company’s ability to record, process, summarize and report financial data; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controls over financial reporting.

Date: April 5, 2004

By:	/s/ Dirk Lohmann
Dirk Lohmann
Chief Executive Officer, Converium Holding AG

EX-31.2

Exhibit 31.2

I, Martin A. Kauer, certify that:

1. I have reviewed this annual report on Form 20-F of Converium Holding AG.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) evaluated the effectiveness of the company’s disclosure controls and procedures in this report, our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

     c) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that materially affected, or is reasonably likely to materially effect, the company’s internal control over financial reporting.

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent function):

     a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which could adversely affect the company’s ability to record, process, summarize and report financial data; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controls over financial reporting.

Date: April 5, 2004

By:	/s/ Martin A. Kauer
Martin A. Kauer
Chief Financial Officer, Converium Holding AG

EX-32.1

Exhibit 32.1

I, Dirk Lohmann, Chief Executive Officer of Converium Holding AG, (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 20-F of the Company for the fiscal year ended December 31, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 5, 2004

By:	/s/ Dirk Lohmann
Dirk Lohmann
Chief Executive Officer, Converium Holding AG

EX-32.2

Exhibit 32.2

I, Martin A. Kauer, Chief Financial Officer of Converium Holding AG, (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 20-F of the Company for the fiscal year ended December 31, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 5, 2004

By:	/s/ Martin A. Kauer
Martin A. Kauer
Chief Financial Officer, Converium Holding AG