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
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2004.
	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.

	Name of each Exchange
Title of each class	on which registered
American Depositary Shares (as evidenced by American Depositary Receipts), each representing one-half (1/2) of one registered share, nominal value CHF 5 per share	New York Stock Exchange
Registered shares, nominal value CHF 5 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, 2004, there were outstanding: 146,272,886 registered shares, nominal value CHF 5 per share, including 5,814,068 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 þ            No o

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

Item 17 o            Item 18 þ

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TABLE OF CONTENTS

PART I
	ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
	ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
	ITEM 3. KEY INFORMATION
	ITEM 4. INFORMATION ON THE COMPANY
	ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
	ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
	ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
	ITEM 8. FINANCIAL INFORMATION
	ITEM 9. THE OFFER AND LISTING
	ITEM 10. ADDITIONAL INFORMATION
	ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
	ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
	ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
	ITEM 15. CONTROLS AND PROCEDURES
	ITEM 16. [RESERVED]
	Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
	Item 16B. CODE OF ETHICS
	Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
	Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
	Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
PART III
	ITEM 17. FINANCIAL STATEMENTS
	ITEM 18. FINANCIAL STATEMENTS
	ITEM 19. EXHIBITS
SIGNATURES
INDEX TO EXHIBITS
EX-1.3
EX-1.4
EX-4.40
EX-4.41
EX-4.42
EX-4.43
EX-4.44
EX-4.45
EX-7.1
EX-8.1
EX-12.1
EX-12.2
EX-13.1
EX-13.2
EX-14.1

TABLE OF CONTENTS

(Please Note: Table of Contents not converted due to Hot Links in HTML.)

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 US dollars, and unless we note otherwise, all amounts in this annual report are expressed in US dollars. As used herein, references to “US dollars,” “dollars” or “$” and “cents” are to US 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:

• the impact of our ratings downgrades or a further lowering or loss of one of our financial strength ratings;

• uncertainties of assumptions used in our reserving process;

• risks associated with implementing our business strategies and our capital improvement measures and the run-off of our North American business;

• cyclicality of the reinsurance industry;

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

• acts of terrorism and acts of war;

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• 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;

• a loss of our key employees or executive officers without suitable replacements being recruited within a suitable period of time;

• our ability to address material weaknesses we have identified in our internal control environment;

• 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 or our clients operate or where our subsidiaries are organized;

• the effect on the insurance industry as a result of the investigations being carried out by the US Securities and Exchange Commission (“SEC”) and New York’s Attorney General;

• changes in our investment results due to the changed composition of our invested assets or changes in our investment policy;

• failure of our retrocessional reinsurers to honor their obligations or changes in the credit worthiness our of reinsurers;

• our failure to prevail in any current or future arbitration or litigation; and

• 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.

We have made it a policy not to provide any quarterly or annual earnings guidance and we will not update any past outlook for full year earnings. We will, however, provide investors with a perspective on our value drivers, our strategic initiatives and those factors critical to understanding our 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 AND OTHER DATA

We have prepared our financial statements included in this annual report in accordance with accounting principles generally accepted in the United States, or US GAAP. The following financial data highlights selected information that is derived from our financial statements as of and for the years ended December 31, 2004, 2003, 2002, 2001 and 2000.

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

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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.

	Year ended December 31
	2004			2003			2002			2001			2000
	($ millions, except per share information)
Income statement data:
Revenues:
Gross premiums written	$	3,840.9		$	4,223.9		$	3,535.8		$	2,881.2		$	2,565.8
Less ceded premiums written		(287.9	)		(396.9	)		(213.6	)		(398.6	)		(569.8	)
Net premiums written		3,553.0			3,827.0			3,322.2			2,482.6			1,996.0
Net change in unearned premiums		132.1			(150.5	)		(156.7	)		(187.4	)		(134.5	)
Net premiums earned		3,685.1			3,676.5			3,165.5			2,295.2			1,861.5
Net investment income		311.6			233.0			251.8			228.7			176.0
Net realized capital gains (losses)		46.5			18.4			(10.3	)		(18.4	)		83.7
Other (loss) income		-2.6			2.7			(1.2	)		(5.8	)		29.3
Total revenues		4,040.6			3,930.6			3,405.8			2,499.7			2,150.5
Benefits, losses and expenses:
Losses, loss adjustment expenses and life benefits		(3,263.1	)		(2,674.2	)		(2,492.0	)		(2,300.5	)		(1,604.5	)
Total costs and expenses		(1,093.5	)		(1,032.0	)		(856.4	)		(678.7	)		(587.5	)
Amortization of goodwill (1)		—			—			—			(7.8	)		(7.3	)
Impairment of goodwill (1)		(94.0	)		—			—			—			—
Amortization of intangible assets		(9.9	)		—			—			—			—
Restructuring costs		(2.7	)		—			—			(50.0	)		—
Total benefits, losses and expenses		(4,463.2	)		(3,706.2	)		(3,348.4	)		(3,037.0	)		(2,199.3	)
(Loss) income before taxes		(422.6	)		224.4			57.4			(537.3	)		(48.8	)
Income tax (expense) benefit		(338.2	)		(39.3	)		49.4			169.9			19.5
Net (loss) income	$	(760.8	)	$	185.1		$	106.8		$	(367.4	)	$	(29.3	)
(Loss) earnings per share:
Average number of shares (millions)		63.4			39.8			39.9			40.0			40.0
Basic (loss) earnings per share (2)	$	(12.00	)	$	2.33		$	1.34		$	(4.61	)	$	(0.73	)
Diluted (loss) earnings per share (2)		(12.00	)		2.32			1.33			(4.61	)		(0.73	)

	Year ended December 31
	2004		2003		2002		2001		2000
	($ millions, except per share information)
Balance sheet data:
Total invested assets	$	7,804.4	$	7,528.7	$	6,117.3	$	4,915.9	$	4,349.7
Total assets		14,942.6		14,354.6		12,051.0		9,706.5		8,321.3
Insurance liabilities		12,389.6		11,410.8		9,454.8		7,677.9		6,486.6
Debt		390.9		390.6		390.4		197.0		196.9
Total liabilities		13,222.4		12,271.3		10,313.0		8,135.7		7,232.9
Total equity		1,720.2		2,083.3		1,738.0		1,570.8		1,088.4
Book value per share (3)		11.76		52.38		43.55		39.27		27.21

	Year ended December 31
	2004			2003			2002			2001			2000
	($ millions, except ratios)
Other data:
Net premiums written by segment:
Standard Property & Casualty Reinsurance	$	1,455.0		$	1,645.6		$	1,452.2		$	1,280.0		$	993.4
Specialty Lines		1,658.1			1,811.9			1,555.3			968.4			818.2
Life & Health Reinsurance		439.9			369.5			314.7			234.2			184.4
Total net premiums written	$	3,553.0		$	3,827.0		$	3,322.2		$	2,482.6		$	1,996.0
Non-life combined ratio		118.2	%(4)		97.9	%		103.7	%		129.3	%(5)		116.5	%
Ratio of earnings to fixed charges (6)		(7	)		7.2			3.7			(8	)		(9	)

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(1)	For a discussion of goodwill and Converium’s compliance with SFAS 142, see Notes 2(k) and 8 to our 2004 consolidated financial statements.
(2)	For the periods 2001 through 2003, the earnings per share have been restated to reflect the rights offering (the “2004 rights offering”) that occurred in October 2004 (see Note 24 to our 2004 consolidated financial statements). For the year 2000, the information is based on the 40,000,000 registered shares sold in the global offering in December 2001, as no other information is available for this time period. These 40,000,000 shares are considered outstanding for all periods prior to December 11, 2001.
(3)	For the year 2000, the information is based on the 40,000,000 registered shares sold in the global offering in December 2001, as no other information is available for this time period. These 40,000,000 shares are considered outstanding for all periods prior to December 11, 2001.
(4)	The impact on the non-life combined ratio of the 2004 reserve development was 17.3%
(5)	The impact on the non-life combined ratio of the September 11th terrorist attacks was 13.3%.
(6)	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.
(7)	Due to Converium’s loss in 2004 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $422.6 million to achieve coverage of 1:1.
(8)	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.
(9)	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

Risks relating to Converium and the reinsurance industry

If we do not successfully implement our new strategy or if such strategy is not effective, it could have a material adverse effect on our business, financial condition, results of operations and cash flows

Early in 2004 Converium adopted a comprehensive corporate strategy intended to build on its accomplishments since the Company was formed in 2001. Later in the year the Global Executive Committee adjusted the business model in response to adverse developments with respect to our reserves, which led to the decision to cease underwriting in North America, and to the subsequent downgrading by Standard & Poor’s and A.M. Best Company of Converium AG’s insurer financial strength ratings to “BBB+” and “B++”, respectively, and the downgrading of certain of our subsidiaries. See “Item 4. Business Overview – Overview” and “– Our Strategy”

There can be no assurance, however, that we will be able to successfully implement our new strategy or that such strategy will be effective. The implementation and the effectiveness of this strategy are based on a certain number of assumptions (including continued client acceptance outside the United States) and factors that are not under our control. If economic conditions, our competitive position, our rating level or our financial condition are not consistent with these assumptions or our objectives, or if the measures envisaged by the new strategy are insufficient, it is possible that our strategy would fail and

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that we would not achieve our objectives. In this case, our business and financial condition could deteriorate and new measures would need to be devised.

The run-off of our North American business subjects us to particular risks

We have ceased the writing of substa;ntially all new business in North America and have decided to take the following additional steps with respect to our North American business:

• Converium Reinsurance (North America) Inc. (“CRNA”) has been placed into run-off and will seek to commute its liabilities wherever appropriate. In addition, CRNA has hired an experienced run-off professional as its new President and CEO and has restructured its senior level staffing to function as an entity in run-off;

• Converium Insurance (North America) Inc. (“CINA”) is now a limited writer, offering continuing coverage for only two discrete primary programs, one of which is mandated by state law. The plan is for CINA to maintain this status until such time as it becomes a more widely accepted carrier for its clients;

• Converium has implemented a fronting arrangement to enable it to continue to participate in the Global Aerospace Underwriting Managers Limited (“GAUM”) pool. The fronting arrangement currently extends until September 30, 2005 with no contractual guarantee that it will extend beyond that date; and

• We will offer reinsurance for US-originated business to select US based clients. This business will be underwritten and managed through Converium AG, Zurich.

By placing CRNA into run-off, it became subject to increased regulatory scrutiny and our plans are subject to the approval of state insurance regulators in the United States. Although we cannot predict the effect of any future regulatory orders or proceedings, state insurance regulatory agencies in the United States have broad power to institute proceedings and seek consensual orders to, among other things, take possession of the property of an insurer and to conduct the business of such insurer under rehabilitation and liquidation statutes. On September 7, 2004, we entered into a voluntary letter of understanding with the Connecticut Department of Insurance (the “Department”) pursuant to which CRNA is prevented from taking a number of actions, including the payment of any dividends, without the approval of the Department. The requirements stated in this letter will remain in effect until March 15, 2006, at which time the Department will reassess the financial condition of CRNA. Other insurance regulators may seek similar agreements or initiate other proceedings or actions. See Note 22 to our 2004 consolidated financial statements.

The ratings downgrades as well as our decision to place CRNA into runoff have triggered “special funding” clauses in CRNA’s and CINA’s reinsurance and insurance contracts. These clauses require CRNA and CINA to provide collateral for their payment obligations under those contracts. In addition, state insurance regulators may request that CRNA and CINA make special deposits in their states or provide collateral for contracts issued to residents of their states. The approval of the Department is required before we provide collateral that is not contractually required. If the Department withholds its approval, state insurance regulators that requested special deposits or collateral not contractually required, could seek to revoke CRNA’s or CINA’s licenses or initiate proceedings to take possession of the property, business and affairs of CRNA or CINA in the respective states.

Additionally, there can be no assurances that commutations may be available on terms that are appropriate to our decision to run-off our North American business or that are economically acceptable.

The run-off of our North American business could ultimately have a negative impact on the perception of our franchise in the reinsurance market. As a result, we may not be able to retain personnel with the appropriate skill sets for the tasks associated with our run-off.

There also can be no assurance that we will be able to successfully write the lines that we currently contemplate from our operation in Zurich using Converium AG. Although we believe that Converium AG holds the necessary licenses to write these lines of business as a non-admitted reinsurer, Converium AG may require increased capitalization to successfully do so and we may in the future be unable to provide the necessary capitalization.

Our ratings downgrades during 2004, and any further downgrades, of our ratings could have a material adverse effect on our business, financial condition, result of operations or cash flows

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Based on the developments of the latter part of 2004, both Standard & Poor’s Ratings Services and A.M. Best lowered their respective ratings of Converium, including its subsidiaries. Following Converium Holding AG’s successful 2004 rights offering, some of the ratings were subsequently raised, although not to the levels preceding the reserving action.

Currently, Standard & Poor’s long-term counterparty credit and insurer financial strength rating of Converium AG is “BBB+” (downgraded from a rating of “A”). For Converium Rückversicherung (Deutschland) AG and Converium Insurance (UK) Ltd., the insurer financial strength rating is currently “BBB+” (downgraded from a rating of “A”). Based on our announcement to place CRNA into run-off, the long-term counterparty credit and insurer financial strength ratings were downgraded to “R” (downgraded from a rating of “A”). In addition, Standard & Poor’s issued a long-term counterparty credit and senior unsecured debt ratings of “BB+” for Converium Holdings (North America) Inc. (downgraded from a rating of “BBB”). The current junior subordinated debt rating on Converium Finance S.A. is “BBB-” (downgraded from a rating of “BBB+”). All ratings have been assigned a stable outlook by Standard and Poor’s.

Currently, A.M. Best’s financial strength rating of Converium AG, Converium Rückversicherung (Deutschland) AG and Converium Insurance (UK) Ltd. is “B++” (downgraded from a rating of “A”) and its issuer credit rating for all three entities is “bbb+” (downgraded from a rating of “a”). CINA is currently assigned a financial strength rating of “B” (downgraded from a rating of “A”) and an issuer credit rating of “bb” (downgraded from a rating of “a” ). For Converium Finance S.A. the current issuer credit rating is “bb+” (downgraded from a rating of “bbb”) and the junior subordinated debt rating is “bbb-” (downgraded from a rating of “bbb+”). All ratings have been assigned a stable outlook by A.M. Best. Following our announcement of our intention to place CRNA into run-off, the financial strength rating was downgraded to “B-” from “A” and the issuer credit rating to “bb-” from “a”. For Converium Holdings (North America) Inc. the issuer credit as well as the senior unsecured debt ratings were lowered to “b-” from “bbb-”.

Claims-paying ability and financial strength ratings are a key factor in establishing the competitive position of reinsurers. Given that our main competitors hold higher ratings than us, our current ratings may significantly hinder our competitive position. Our ratings may not satisfy the criteria required by some of our clients and brokers or the requirements under our existing reinsurance contracts, which would negatively impact new business and adversely affect our ability to compete in our markets. The reduction in our ratings might result in a significant decline in our premium volume in 2005.

Additionally, contracts representing approximately one-third of our total ultimate premiums with our cedents contain termination provisions relating to a downgrade of our ratings. As a result of recent downgrades, the termination provisions of many of our contracts have been triggered giving rise to a right of termination in favor of the cedent that allows the cedent to terminate the contract on a prospective basis from the date of termination. Alternatively, the cedent and the reinsurer may renegotiate the terms of the contract. In renegotiating the contract terms, the cedent will usually require the reinsurer to post collateral to secure the obligations under the contract, which would have negative financial implications for us, as reinsurer. Moreover, limitations on our ability to post collateral could force us to renegotiate the contracts on significantly less favorable terms than if we were able to post collateral or lead to the termination of the contracts by cedents. Our recent ratings downgrades may make cedents less inclined to renegotiate the contracts at all, and has led to an increased rate of terminations.

The ratings downgrades in 2004 have also made it more difficult to renew our existing contracts, without regards to whether or not the existing contract contains a ratings trigger. We expect approximately one third of our existing Non-Life contracts not to be renewed in 2005 which is partially attributable to the ratings downgrade in 2004. This will, in turn, lead to a corresponding reduction our premiums written.

The pool members’ agreement with respect to GAUM provides that if a member of the pool has its financial strength rating downgraded below BBB+ by Standard & Poor’s Rating Service it may be served with a notice terminating its membership in the pool upon approval by the committee of representatives of the pool. Converium believes that no formal action was taken by the pool membership committee to serve a notice terminating Converium’s pool membership. However, the committee has discussed Converium’s downgrade and sought to take action to limit its rights to dispute the validity of any notice served on Converium. The continuation of Converium’s membership at its current rating was likely to be conditional upon its entering fronting arrangements acceptable to other pool members in a timely fashion and thereafter maintaining such arrangements. Converium entered into formal written fronting arrangements, preventing the termination of its membership in the pool. The fronting arrangements require Converium to post collateral to secure its reinsurance obligations under the fronting arrangements. If Converium’s membership were to be reduced to less than a 5% share, it would not be permitted to participate in future pool business and would have to collateralize by way of a letter of credit its obligations under the business written by the pool in its name prior to its termination. If Converium’s membership were terminated, it also may be required to sell its shares in GAUM at an amount less than its carrying value. In 2004, this business generated $289.0 million of gross premiums written. See Notes 3, 8 and 18 to our 2004 consolidated financial statements for additional information on GAUM.

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There can be no assurance that our responses to the adverse developments of 2004 will enable us to improve or maintain our ratings.

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.

As of December 31, 2004 we had $8,776.9 million of gross reserves and $7,641.5 million of net reserves for losses and loss adjustment expenses. If we underestimated these net reserves by 5%, this would have resulted in an additional $382.1 million of incurred losses and loss adjustment expenses, before income taxes, for the year ended December 31, 2004.

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, 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, or extraordinary events affecting our clients such as reorganizations and liquidations or changes in general economic conditions. We continue to conduct pricing, loss reserving, claims and underwriting studies for many casualty lines of business, including those in which preliminary loss trends are noted. Converium has experienced significant adverse development, predominantly in its US casualty reinsurance lines, for the last several years. Since 2000, Converium has recorded a total of $868.2 million of additional net provisions on prior years’ non-life business (2000: $65.4 million: 2001: $123.6 million; 2002: $148.5 million; 2003: $(31.3) million; and 2004: $562.0 million).

During early 2004, Converium announced that reported losses from prior year US casualty business had exceeded expected loss emergence and that the volatility of longer-tail risks was likely to persist for some time. This adverse loss-reporting trend continued and accelerated into mid-2004 and prompted Converium to initiate additional reviews of its US business from an integrated underwriting, claims and actuarial perspective in order to examine the adequacy of prior years’ provisions. In addition, in order to obtain an external review of our overall reserve position, we commissioned the actuarial consulting firm Tillinghast-Towers Perrin to perform an independent actuarial review of our non-life loss and allocated loss adjustment expense reserves as of June 30, 2004 in respect of the Zurich and New York originated businesses. The outcome of these in-depth internal and external reviews resulted in an aggregate strengthening of prior years’ non-life loss reserves by $562.0 million for the year ended December 31, 2004. This action was taken in response to the continued adverse loss emergence due to increased claims reporting activity from clients relating to US Casualty business written from 1997 to 2001 as well as deterioration from European non-proportional motor business written in recent years. While we believe that we have sought to fully address this issue through our reserving actions, volatility is nonetheless expected to persist for some time.

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 may be unable to meet the collateral requirements necessary for our business

As a result of the 2004 downgrades of our ratings, we have been and may continue to be required to post additional collateral in order to be accepted as sufficiently secure to write certain business. In addition, there has been a trend in our industry for a ceding company to require reinsurers to post collateral in excess of applicable regulatory collateral requirements in order to secure the reinsurers’ obligation to pay claims. We may have greater limitation on our ability to post collateral than some of our competitors. If we are unable to meet the collateral requirements of ceding companies, we would be limited in our business opportunities, which could have a material adverse effect on our financial condition, results of operations or cash flows.

In November 2004, Converium AG obtained a $1.6 billion, three-year syndicated letter of credit facility (the “Syndicated Letter of Credit Facility”) from various banks. The facility provides Converium’s non-US operating companies with a $1.5 billion capacity for issuing letters of credit and a $100.0 million liquidity reserve. It replaces the existing $900.0 million letter of credit facility that was signed in July 2003. As of December 31, 2004, Converium had outstanding letters of credit of

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$955.7 million under the facility. Investments of $1,060.8 million are pledged as collateral related to the Syndicated Letter of Credit Facility. However, Converium must comply with various financial covenants in order to avoid default under the agreement. In an event of default the majority lenders may cancel the total commitment and/or may declare that all amounts outstanding may be immediately due and payable and that full cash cover in respect of each letter of credit is immediately due and payable.

In addition to the Syndicated Letter of Credit Facility, other irrevocable letters of credit of $639.1 million were outstanding at December 31, 2004 to secure certain assumed reinsurance contracts. Investments of $704.7 million are pledged as collateral related to certain of these letters of credit.

See “Item 3. — Key information — D. Risk factors – Ratings changes” for information on collateral requirements related to GAUM and Notes 3, 8 and 18 to our 2004 consolidated financial statements. See “Item 3. — Key information — D. Risk factors – Run-off of our North American business” for information on collateral requirements related to our North American operations.

We are subject to the cyclicality of the reinsurance industry

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 and price setting mechanisms of clients;

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

• levels of capacity and demand;

• general economic conditions; and

• 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 cyclicality, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

As a result of ongoing investigations of the insurance and reinsurance industry and non-traditional insurance products, we are conducting an internal review and analysis of certain of our reinsurance transactions.

Ongoing investigations of the insurance and reinsurance industry and non-traditional insurance and reinsurance products are being conducted by U.S. regulators and governmental authorities, including the Securities and Exchange Commission and the New York Attorney General.

On March 8, 2005, MBIA Inc. (“MBIA”) issued a press release stating that MBIA’s audit committee undertook an investigation to determine whether there was an oral agreement with MBIA under which MBIA would replace Axa Re Finance as a reinsurer to CRNA by no later than October 2005. The press release stated that it appears likely that such an agreement or understanding with Axa Re Finance was made in 1998. Thereafter, on April 19, 2005, CRNA received subpoenas from the U.S. Securities and Exchange Commission and the Office of the New York Attorney General seeking documents related to certain transactions between CRNA and MBIA.

In view of the industry investigations and the events relating to MBIA described above, we have engaged counsel to assist us in a review and analysis of certain of our reinsurance transactions, including the MBIA transactions. We are fully cooperating with the governmental authorities in connection with their investigation. The impact of our ongoing review and analysis and the ongoing regulatory investigations on us is uncertain, and there can be no assurance as to whether or not the outcome of such investigations will have a material impact on Converium.

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

A catastrophic event or multiple catastrophic events may cause large losses and could have a material adverse effect on our business, financial condition, and 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 unusually strong and widespread windstorms and flooding in Europe. These events adversely affected our results. In 2004, the reinsurance industry suffered losses from hurricanes in the United States and the Caribbean, the Japanese typhoons and the tsunami in the Indian Ocean.

We are also exposed to man-made catastrophic events, which 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, results of operations or cash flows. 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, and the frequency and severity of the events. In addition, depending on the nature of the loss, the speed with which claims are made and settled, 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 by raising funds at unfavorable costs, both of which could adversely affect the results of our operations.

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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 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 US hurricane, California earthquake, European windstorm and Japanese earthquake events. Our estimated potential losses, on a probable maximum loss basis, before giving effect to our retrocessional protection, for 2004, were managed to a self- imposed maximum gross event limit of $500 million for a 250-year return period loss. See “Item 9. — The Offer and Listing — D. Material Contracts”.

Terrorist attacks, national security threats, military initiatives and political unrest could result in the payment of material insurance claims and may have a negative effect on our business

Threats of terrorist attacks, national security threats, military initiatives and political unrest 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. We cannot predict the long-term effects of terrorist attacks, threats to national security, military initiatives and political unrest on our businesses at this time.

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 a material adverse effect on our business, financial condition or results of operations. For a discussion of the impact of the September 11th terrorist attacks on our business, see Note 9 to our 2004 consolidated financial statements.

If we are unable to achieve our investment objectives, our investment results 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. For the years ended December 31, 2004 and 2003, net investment income and net realized capital gains accounted for 8.9% and 6.4% of our revenues, respectively. Our capital levels, ability to pay 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.

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.

In addition, as described under “Formation transactions and relationship with Zurich Financial Services,” 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.

Capital market fluctuations may adversely impact the value of our investments

We had a cash and investments portfolio of $8.5 billion as of December 31, 2004. As with any institutional investor with a similarly sized portfolio, Converium is exposed to the financial markets; in particular, an increase in interest rates, and a resulting decline in the market value of our fixed income securities, would adversely impact our shareholders’ equity.

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 political conditions and other factors beyond our control.

We have historically invested and may continue to 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

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conditions and many other factors beyond our control can adversely affect the equity markets and, consequently, the value of the equity securities we own.

Foreign exchange rate fluctuations may impact our financial condition, results of operation and cash flows

We publish our financial statements in US dollars. Therefore, fluctuations in exchange rates used to translate other currencies, particularly European currencies including the Euro, British pound and Swiss franc, into US 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 US dollar value of our investments and the return on our investments. For 2004, approximately:

• 57% of our net premiums written

• 43% of our net investment income

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

• 67% of our operating expenses

were denominated in currencies other than the US 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”.

As we will no longer be writing business from the United States, a smaller proportion of our business will be denominated in US dollars in the future. 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 face competitive disadvantages in the reinsurance industry

The reinsurance industry is highly competitive. 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 ability to compete is based on many factors, including our overall financial strength and rating, 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. As a result of the recent ratings downgrades we expect to be in a less competitive position than we have been historically. We compete for reinsurance business in international reinsurance markets with numerous reinsurance and insurance companies, some of which have greater financial or other resources and most of which have 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 majority-owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie;

• Lloyd’s syndicates active in the London market;

• companies active in the Bermuda market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.;

• Everest Reinsurance Company;

• Transatlantic Reinsurance Company; and

• SCOR.

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 also able to offer services similar to our

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own. We have also recently seen the creation of alternative products from capital market participants that are intended to compete with reinsurance products. 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.

The loss of key employees and executive officers without suitable replacements being recruited within a suitable period of time 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 key employees. Our senior 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. Certain of our key employees and executive officers have recently resigned. If additional executive officers or key employees 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. In addition, a strong financial position is important to us in order to retain and attract skilled personnel in the industry, especially underwriters with specific expertise in high-margin, non-commoditized specialty lines of business. If our current or future financial position does not allow us to do so, our operations could be adversely affected. See “Item 6. — Directors, Senior Management and Employees — A. Directors and Senior Management”.

In addition, one of the two material weaknesses identified within Converium’s internal control environment was the need to train or recruit suitably qualified individuals to fill the knowledge and experience gaps that have been identified within the financial accounting and reporting function. Although we are actively undertaking a recruitment search to identify and hire additional qualified staff and providing further training to existing staff to fill the knowledge and experience gaps within financial accounting and reporting, there can be no assurance that we will be able to do so. If we are unable to successfully recruit and train such staff we will be unable to remedy the material weakness.

We have identified two material weaknesses in our internal control environments; investor confidence and our share value may be adversely impacted if we are unable to remedy the material weaknesses.

As a foreign private issuer we are not currently subject to Section 404 of the Sarbanes-Oxley Act. However, in connection with our year-end audit and our Sarbanes-Oxley implementation project two ‘material weaknesses’ were identified within Converium’s internal control environment as at December 31, 2004. For purposes of Section 404 of the Sarbanes-Oxley Act, a ‘material weakness’ is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Two material weaknesses were identified within Converium’s financial accounting and reporting function. The first weakness identified was the need to train or recruit suitably qualified individuals to fill the knowledge and experience gaps caused by the departure of various key finance employees. The second weakness identified was the failure in the operation of key internal controls over the initiation of reinsurance and financial accounting data.

Converium is in the process of addressing these weaknesses by actively undertaking a recruitment search to identify and hire additional suitably qualified staff and by providing further training to existing staff in order to address the current knowledge and experience gaps within the financial accounting and reporting function. In addition, Converium is actively addressing the key internal control weaknesses identified over the initiation of reinsurance and financial accounting data by committing both internal and third-party consulting resources to address this issue and to further enhance our overall control environment. However, if our remedial measures are not successful in addressing these material weaknesses, our ability to report our future financial results on a timely and accurate basis may be adversely affected.

The SEC, as directed by Section 404 of the Sarbanes-Oxley Act, adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting in its Annual Report on Form 20-F that contains an assessment by management of the effectiveness of the company’s internal control over financial reporting. In addition, our principal independent auditor must attest to and report on management’s assessment of the effectiveness of the company’s internal control over financial reporting. As a foreign private issuer, these requirements will first apply to our Annual Report on Form 20-F for the fiscal year ending December 31, 2006. If we are unable to remedy the material weaknesses we have identified by that time, or if new material weaknesses come to our attention and remain unremedied at that time, management will not be permitted to conclude that our internal control over financial reporting is effective. Moreover, even if management does conclude that our internal control over financial reporting is effective, if our principal independent auditor is not satisfied with our internal control over financial reporting or the level at which controls are documented, designed, operated or reviewed, or if the independent registered public accounting firm interprets the requirements, rules or regulations differently from us, then they may decline to attest to management’s assessment or may issue a report that is qualified.

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Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively impact the market price of our securities.

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.

Regulatory or legal changes could adversely affect our business

Insurance laws, regulations and policies currently governing our clients and us 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, regulatory 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 business.

In addition the reinsurance industry may also be impacted by the New York Attorney General’s investigations of the insurance industry. See “Item 4. — B. Business Overview — Regulation”.

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

In order to limit the effect on our financial condition of large and multiple losses, we buy 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 our business, financial condition, results of operations or cash flows. 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. — B. Business Overview — Retrocessional reinsurance” and Note 27 to our 2004 consolidated financial statements.

Because we depend on a small number of reinsurance brokers for a large portion of our revenue, loss of business written through them could adversely affect our financial condition, results of operations or cash flows

We market our reinsurance products worldwide in substantial part through reinsurance brokers. In some markets we principally write through reinsurance brokers. In 2004, two reinsurance intermediaries produced approximately 12.0% and

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9.0% of our gross premiums written, respectively. Loss of all or a substantial portion of the business written through brokers could have a material adverse effect on our financial condition, results of operations or cash flows.

Our reliance on reinsurance brokers exposes us to their credit risk

In 2004, approximately 49.0% 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 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.

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 described under “Formation transactions and relationship with Zurich Financial Services,” 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. 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. See “Item 4. – Information on the Company – A. History and Development of the Company”.

We may be restricted from consummating a change of control transaction, disposing of assets or entering new lines of business

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. See “Formation transactions and relationship with Zurich Financial Services”.

We are also restricted from disposing of assets under the terms of our indenture relating to the $200 million principal amount of 7.125% Senior Notes due 2023.

Our inability to dispose of assets or enter new lines of business may render us less able to respond to changing market and competitive conditions, which could have a material adverse effect on our financial condition, results of operations or cash flows.

European Reinsurance Directive may disadvantage companies like us which are not established within the European Union

In June 2005, the European Parliament adopted a proposal for a directive (the “Directive”) on reinsurance for consideration. The Directive, when implemented, will establish the principles applicable to the operation of reinsurance business in a Member State and 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 European Union (the “EU”) for insurance companies. The Directive does not provide for any discrimination of non-EU based reinsurance companies. However, if the final implementation Directive should bring about 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 financial

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condition, results of operations or cash flows.

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 our initial public offering and the associated transactions described below in this offering memorandum 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 Formation Transactions consisted of the following principal steps:

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

o Our reinsurance of this business through quota share retrocession agreements with two units of Zurich Financial Services, (the “Quota Share Retrocession Agreement”);

o The establishment of “funds withheld” balances in our favor by the applicable units of Zurich Financial Services (the “Funds Withheld Asset”), on which we will be paid investment returns by the Zurich Financial Services units;

o 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 ZRK, which was renamed Converium 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 CHNA Inc., a wholly owned subsidiary of Converium AG. In conjunction with this transfer, CHNA assumed $200 million of public debt from a subsidiary of Zurich Financial Services, and Zurich Reinsurance (North America), Inc. was renamed CRNA;

• The sale of 35,000,000 of our registered shares to the public by Zurich Financial Services on December 11, 2001 in our initial public 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; and

• After our initial public offering, Converium AG used cash transferred to us by Zurich Financial Services to acquire from subsidiaries of Zurich Financial Services approximately $140 million of residential and commercial rental properties located in Switzerland.

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; and

• 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

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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”.

For description of our capital raising activities that occurred in October 2004, see “Item 10. — Additional Information — B. Memorandum and Articles of Incorporation”.

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.

Converium Insurance (UK) Ltd is an insurance company that incorporated for unlimited duration in the United Kingdom on November 11, 2002. It holds a license as an insurer from the United Kingdom Financial Services Authority dated May 27, 2003. Converium Insurance (UK) Ltd engages in issuing insurance policies in conjunction with selected cases, currently comprising of our business relating to GAUM, MDU and SATEC. It has authorized share capital of GBP 60,000,000 divided into 60,000,000 shares with a par value of GBP 1 per share, all of which are owned by Converium Holdings (UK) Ltd.

Converium PCC Ltd, Guernsey, is a company incorporated for an unlimited time in Guernsey/United Kingdom on October 31, 2000, which was set up in conjunction with the Formation Transactions of the IPO. The company holds a reinsurance license from the Guernsey Financial Services Commission dated October 12, 2001,and its purpose is to facilitate the intra-group reinsurance between certain branch offices of Converium AG and the parent.

In 2004 we formed Converium Finance (Bermuda) Ltd, as well as Converium IP Management Ltd, both of which were incorporated in Bermuda on December 17, 2004. As part of the formation process, Converium Holding AG has contributed the rights to commercially exploit the Converium brand to Converium Finance (Bermuda) Ltd, which in turn has entered into a license agreement with Converium IP Management Ltd allowing the latter to commercially exploit the Converium brand with respect to our operating insurance respectively, reinsurance branch offices and subsidiaries. We implemented this corporate change mainly to comply with relevant tax rules applicable to holding companies in the Canton of Zug, Switzerland in order to protect the current tax status of Converium Holding AG as a holding company.

B. BUSINESS OVERVIEW

Overview

We are an international reinsurer whose business operations are recognized for innovation, professionalism and service. We believe we are accepted as a professional reinsurer for all major lines of non-life and life reinsurance mainly in Europe, Asia-Pacific and Latin America. We actively seek to create innovative and efficient reinsurance solutions to complement our target clients’ business plans and needs. We focus on core underwriting skills and on developing close client relationships while honoring our and our clients’ relationships with intermediaries.

We offer a broad range of mostly traditional non-life and life reinsurance solutions to help our target clients to efficiently manage capital and risks. In non-life reinsurance, our lines of business are General Third Party Liability, Motor, Personal Accident (assumed from non-life insurers), Property, Agribusiness, Aviation & Space, Credit & Surety, Engineering, Marine & Energy, Professional Liability and other Special Liability and Workers’ Compensation. In Life & Health Reinsurance, our lines of business are 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 intermediaries, giving us the flexibility to pursue business in accordance with our ceding companies’ preferred reinsurance purchasing method. In 2004, 49% of our gross premiums written were written through intermediaries and 51% were written on a direct basis.

During 2004, our business was organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance; which are based principally on lines of business. The business segments are supported by global business support functions such as Actuarial & Risk Management and Underwriting Technical Services, and by global services such as Human Resources, Finance and IT. We believe that this structure provides a higher degree of transparency, accountability and management control. Unless otherwise stated, the information presented in this Annual Report on Form 20-F is presented on the basis of these business segments as organized during 2004.

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In the first quarter of 2005, Converium formally adopted a change to the reporting line of the management of its North American operations. This change was introduced to reflect the placement of CRNA into orderly run-off and management’s desire to monitor this business on a stand-alone basis. Therefore, Converium’s business will be organized around three ongoing operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance, which are based principally on global lines of business, in addition to a Run-Off segment. The Run-Off segment includes all business, both life and non-life, originating from CRNA and CINA, excluding the US originated aviation business. Unless otherwise stated, the information included in this Annual Report on Form 20-F is presented in on the basis of the three business segments organized during 2004 and the Run-Off segment is included within these three segments as appropriate. In addition to the four segments’ financial results, the Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other corporate functions.

There are types of business which we historically participated in that we will no longer be able to write or will write at a significantly reduced level due to the placement of our US operations into run-off. We have discontinued the writing of reinsurance from offices located in North America. However, we will offer reinsurance for attractive US originated business to a limited number of select accounts. This business will be underwritten and managed through Converium AG, Zurich.

Our Strategy

Early in 2004 Converium adopted a comprehensive corporate strategy intended to build on its accomplishments since the Company was formed in 2001. Later in the year the Global Executive Committee adjusted the business model in response to developments which led to the decision to cease underwriting in North America, and in response to the subsequent downgrading by Standard & Poor’s and A.M. Best Company of Converium AG’s insurer financial strength rating to “BBB+” and “B++”, respectively.

Certain key elements of Converium’s post-IPO strategy have remained both profitable and tactically sound. Business underwritten outside the United States, since the IPO, has met or exceeded financial targets based on current estimates. Converium continued to attract business in targeted lines and regions during the January 1, 2005 renewal period. This success underlines market appetite for a mid-sized, independent reinsurer, and justifies shareholders’ decision at the Extraordinary General Meeting in late September 2004 to support Converium as a stand-alone entity delivering consistency and continuity under its existing business model. Current strengths arising from recent strategic positioning and development include the decision to continue to build direct client relationships in Continental Europe and elsewhere. In general, such relationships have proven more enduring than broker channels in the current business environment. In the specific case of Converium’s contract renewals for January 1, 2005, the greatest business continuity achievements were made among clients with whom Converium has direct personal relationships at all levels, with or without the involvement of intermediaries. In addition, the strategic diversification of Converium’s income streams has created a more robust organization by gaining access to business at its source. These steps include the development of strategic partnerships such as that with the Medical Defence Union (“MDU”) in the United Kingdom, participation in GAUM, and the formation of Converium’s corporate name at Lloyd’s to support clients operating in that market by providing capital to them directly. Other successful strategic initiatives include expansion in the Asia-Pacific region, and refocusing and expanding of Converium’s Life & Health Reinsurance segment in Europe. Strategic decisions to increase activity supported by knowledge-based underwriting in certain specialty lines markets and to maintain a thoroughly technical and profitability focused approach to all aspects of Converium’s business have also contributed to the Company’s resilience.

Looking ahead

Despite the strength of Converium’s strategic business model, changes lie ahead. The Company will continue to adjust its client base to concentrate on partnership-focused professional reinsurance buyers within client segments dependent on reinsurance. This move is supported by Converium’s value proposition, built around comprehensive client services such as underwriting support and financial and natural-hazard modeling. Geographically, Converium now focuses its local presence and underwriting on clients located in Europe, Asia-Pacific, and Latin America. The Company will continue to serve North American customers selectively from Zurich, following the decision to place CRNA into an orderly run-off, which will be accompanied by an active commutation strategy. A restructuring process is now underway to ensure that Converium’s physical presence matches its strategic outlook. Converium will continue to serve and develop clients that will benefit from its strong capitalization following the 2004 rights offering. Converium’s existing targeting of strategic partnerships will continue, especially for rating-sensitive specialty lines underwriting. Although 2004 was a challenging year for Converium, the validity of its incumbent strategic path outside the United States has been clearly endorsed. Converium’s business model will be further enhanced in 2005, with a clear line-of-business and geographical focus, an emphasis on expertise and service, and a rigorous technical approach.

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Our vision

We aim to be a core competitor in the international reinsurance industry, contributing to the evolution of the sector with forward-thinking and innovative solutions that enable our clients to efficiently manage their risk. We aspire to be recognized as an agile, credible and interactive organization that provides a model to a new generation of reinsurers.

Our mission

We are an international multi-line reinsurer that satisfies our clients’ business needs by excelling at analyzing, assuming and managing risks. In an ethical and responsible manner we aspire to provide:

• sustainable value growth for our shareholders;

• excellent service for our customers and intermediaries;

• a fulfilling work environment for our employees; and

• a spirit of shared responsibility within our community.

Our core business

Our core business is to analyze, assume and manage portfolios of insurance risks, and to invest our assets so that they support the insurance risks we assume. Our strategy for each of our business segments is as follows:

Standard Property & Casualty Reinsurance

The Standard Property & Casualty Reinsurance segment is comprised of the General Third Party Liability, Motor, Personal Accident (assumed from non-life insurers) and Property lines of business. The Standard Property & Casualty Reinsurance segment’s strategy is to continue as a stand-alone, multi-line competitor in the international reinsurance marketplace. The strategy was redefined following the latest rating agencies’ downgrading in the second half of 2004 and now focuses on partnership-oriented professional reinsurance buyers in the markets Europe, Latin America, Asia and Australia. Our long-term client relationships are based on our capabilities, e.g. natural hazard expertise, financial modeling capabilities, structuring advice and claims and underwriting audits, contributing to earnings and cash flows. We remain committed to underwriting discipline to achieve the best possible shareholder return, which is only possible through cycle management.

Specialty Lines

The Specialty Lines segment includes the Agribusiness, Aviation & Space, Credit & Surety, Engineering, Marine & Energy, Professional Liability and other Specialty Liability and Workers’ Compensation lines of business. The Specialty Lines segment’s strategy is to develop specialty businesses in which Converium can position itself as a market leader and effectively leverage its intellectual assets in risk analysis, structuring, product design and risk modeling. We focus on specialty businesses because we believe that Converium possesses superior underwriting and structuring capabilities in certain areas, which is both a key driver of profitability as well as an effective barrier to entry in certain business lines.

Wherever possible, Converium seeks to develop preferred access to specialty lines through strong relationships, strategic partnerships or participations in entities that enjoy a unique position, such as strong control over the origination of their business, which prevent them from having to compete in annual insurance or reinsurance auctions. Examples of the approach by which we seek to develop preferred access to these businesses are our strategic partnership with MDU in the U.K., our participation in GAUM and our shares in its pools and our participation in SATEC and our share in its pool, as well as many strong relationships with specialized mono-line insurers.

Also, Converium Underwriting Ltd, a Lloyd’s Corporate Member, has successfully provided third-party capacity to certain specialist Lloyd’s syndicates.

Some specialty lines are subject to cyclical pricing fluctuations. Converium remains committed to underwriting discipline to achieve the best possible shareholder return, which is only possible through cycle management.

Life & Health Reinsurance

The Life & Health Reinsurance segment comprises the Life and Disability and Accident and Health lines of business. The Life & Health Reinsurance segment’s strategy is to increase the stability of Converium’s income. Traditional life reinsurance

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has a low correlation to property and casualty risks and can therefore improve our risk diversification. Our Life & Health Reinsurance segment will continue to grow its activities in its existing key markets, which are Germany, Italy and France; markets with significant potential for future opportunities for us include Switzerland, Austria, Denmark, Poland and the Czech Republic.

The business segments are supported by global business support functions such as Actuarial & Risk Management and Underwriting Technical Services, and by global services such as Human Resources, Finance and IT.

Guiding principles for our business

We have established the following guiding principles for the development of our business:

• Our lead objective is to maximize economic value. The metrics we use to measure this are net after-tax operating income and “performance excess”. “Performance excess” is the measure we use to implement economic value-based management at Converium and is the key metric for measuring expected and actual underwriting performance. “Performance excess” represents the economic value added attached to all reinsurance contracts in our portfolio and 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 taxes and the costs of the allocated risk-based capital. Hence, “performance excess” equals the expected net present value created for shareholders, in excess of the cost of capital;

• To optimize our overall risk profile, we balance and diversify our by line of business, by region and by duration;

• All contracts we underwrite should be profitable in expectation; that is, a “performance excess” target of at least equal to zero. For every individual client relationship, the “performance excess” must be greater than or equal to zero in expectation, at every renewal;

• We seek to grow our relationships with our target clients, but sustainable profitability is a prerequisite; and

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

In addition, we have established the following guiding principles to manage our business:

Cycle management. We have a systematic approach to the allocation of capital and resources to those lines of business and markets that meet our profitability standards, and to withdraw from businesses that do not meet our performance thresholds. Historically, the reinsurance cycles in different lines of business and markets have not moved simultaneously. Our strong international franchise and our distribution and servicing platform provide broad access to an international reinsurance market, and enable the flexible allocation of resources to those lines of business or markets in which profitability prospects are most favorable at any point in time. Our well established relationships with clients and intermediaries, as well as our transparent pricing approach, allow us to manage the cycle by moving in and out of lines of business or markets without putting long-term business relationships at risk.

Risk management. We continue to maintain, develop and implement an enterprise risk management culture, including underwriting, pricing, reserving, asset & liability management and operational risk management, by balancing upside potential and downside risk, based on appropriate capital allocation and relevant risk migration measures.

Operational efficiency. We manage our expense base effectively through continuous analysis of business processes and operational structures, with a view to enhancing business integration and achieving synergies and efficiencies.

Retention management. We manage our gross and net risk positions on a legal entity basis and on a group-wide basis, through global risk pooling and the limited use of retrocession.

Investment policy. We allocate capital primarily to support underwriting risks with the aim of optimizing the after-tax risk-return characteristics of our investment portfolio. Our asset allocation focuses on core portfolios of high-quality bonds and equities, generally managed passively. Further diversification is achieved through complementary portfolios in other asset classes, such as real estate, credit portfolios and non-traditional or alternative investments; these portfolios are generally actively managed. The acquisition of minority stakes in insurance or reinsurance companies remains outside of our strategic scope.

Capital management. We are committed to strengthening our capitalization in order to ensure that clients, intermediaries and

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rating agencies regard us as a credible reinsurer for short-, medium- 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 and it does not jeopardize the perception of our financial strength.

Our business

We are an international professional reinsurer, which offers a broad range of non-life and life reinsurance to help our clients manage capital and risk. Our principal lines of non-life reinsurance include General Third Party Liability, Motor, Personal Accident (assumed from non-life insurers), Property, Agribusiness, Aviation & Space, Credit & Surety, Engineering, Marine & Energy, Professional Liability and other Special Liability and Workers’ Compensation. The principal life reinsurance products are 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 Buenos Aires, Kuala Lumpur, London, Mexico City (to be closed in 2006), Sao Paulo and Tokyo. In addition, we have administrative offices in Stamford, Connecticut. We have a sub-holding company in London and finance subsidiaries in Luxembourg and Bermuda, an IP company in Bermuda (to be transferred to Zug, Switzerland in 2005) and a licensed reinsurance company, Guernsey, facilitating intra-group reinsurance within Converium.

During 2004 our business was organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance; which are based principally on lines of business. The business segments are supported by global business support functions such as Actuarial & Risk Management and Underwriting Technical Services, and by global services such as Human Resources, Finance and IT. We believe that this structure provides a higher degree of transparency, accountability and management control. See “Item 4. — Information on the Company — B. Business Overview” for discussion regarding the reorganization of our segment structure in the first quarter of 2005.

The table below presents, by segment, the distribution of our premiums written and (loss) income for the year ended December 31, 2004. 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. As a result of the ratings downgrades and the run-off of our North American business, we expect a significant decline in the amount of premiums as well as significant shifts in the geographic and line of business distributions of premiums that we write going forward as compared to our historical performance.

	Year Ended December 31, 2004
											Segment
											(loss)
	Gross premiums written					Net premiums written					income
	$ millions		% of total			$ millions		% of total			$ millions
Business Segment:
Standard Property & Casualty Reinsurance	$	1,617.6		42.1	%	$	1,455.0		40.9	%	$	(12.5	)
Specialty Lines		1,777.3		46.3			1,658.1		46.7			(245.2	)
Life & Health Reinsurance		446.0		11.6			439.9		12.4			15.4
Corporate Center		—		—			—		—			(38.0	)
Total	$	3,840.9		100.0	%	$	3,553.0		100.0	%		(280.3	)
Other loss												(2.6	)
Interest expense												(33.1	)
Impairment of goodwill												(94.0	)
Amortization of goodwill												(9.9	)
Restructuring costs												(2.7	)
Income tax expense												(338.2	)
Net loss											$	(760.8	)

The table below presents the geographic distribution of our gross premiums written for the years ended December 31, 2004, 2003 and 2002, based on the location of the ceding companies.

	Year Ended December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
United Kingdom*	$	1,005.9		26.2	%	$	1,083.0		25.6	%	$	910.4		25.8	%
Germany		389.6		10.1			286.9		6.8			176.1		5.0
France		158.2		4.1			160.5		3.8			106.9		3.0

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	Year Ended December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Italy		162.2		4.2			131.2		3.1			84.0		2.4
Rest of Europe		379.9		9.9			338.8		8.0			224.0		6.3
Far East		238.5		6.2			266.4		6.3			191.9		5.4
Near and Middle East		124.3		3.2			134.3		3.2			124.3		3.5
North America		1,252.3		32.7			1,671.1		39.6			1,553.2		43.9
Latin America		130.0		3.4			151.7		3.6			165.0		4.7
Total	$	3,840.9		100.0	%	$	4,223.9		100.0	%	$	3,535.8		100.0	%

* 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

The table below presents the distribution of our net premiums written by line of business for the years ended December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Standard Property & Casualty Reinsurance
General Third Party Liability	$	361.4		10.2	%	$	335.0		8.8	%	$	337.7		10.2	%
Motor		484.8		13.6			488.5		12.8			453.5		13.7
Personal Accident (assumed from non-life insurers)		27.1		0.8			35.1		0.9			35.0		1.1
Property		581.7		16.4			787.0		20.5			626.0		18.7
Total Standard Property & Casualty Reinsurance		1,455.0		41.0			1,645.6		43.0			1,452.2		43.7
Specialty Lines
Agribusiness		126.9		3.5			90.0		2.4			22.0		0.7
Aviation & Space		404.5		11.4			341.8		8.9			365.3		11.0
Credit & Surety		171.1		4.8			236.0		6.2			200.1		6.0
Engineering		111.9		3.1			139.9		3.7			116.1		3.5
Marine & Energy		86.2		2.4			95.3		2.5			94.3		2.8
Professional Liability and other Special Liability		531.7		15.0			598.0		15.5			536.9		16.2
Workers’ Compensation		225.8		6.4			310.9		8.1			220.6		6.6
Total Specialty Lines		1,658.1		46.6			1,811.9		47.3			1,555.3		46.8
Total non-life reinsurance		3,113.1		87.6			3,457.5		90.3			3,007.5		90.5
Life & Health Reinsurance
Life and Disability		243.4		6.9			162.1		4.2			154.7		4.7
Accident and Health		196.5		5.5			207.4		5.5			160.0		4.8
Total Life & Health Reinsurance		439.9		12.4			369.5		9.7			314.7		9.5
Total	$	3,553.0		100.0	%	$	3,827.0		100.0	%	$	3,322.2		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, 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 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

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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.

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.

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. 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. 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 2004, $2.9 billion or approximately 75.2% of our gross premiums written were written on a proportional treaty basis, $0.6 billion or approximately 15.5% of our gross premiums written were written on a non-proportional basis, and $0.4 million or approximately 9.3% of our net premiums written were written on a structured/finite basis.

The table below presents the distribution of our gross premiums written by type of reinsurance for the years ended December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Proportional	$	2,888.7		75.2	%	$	2,609.6		61.8	%	$	2,107.2		59.6	%
Non-proportional		596.9		15.5			1,155.5		27.3			925.2		26.2
Structured/finite		355.3		9.3			458.8		10.9			503.4		14.2
Total	$	3,840.9		100.0	%	$	4,223.9		100.0	%	$	3,535.8		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 & Space and Professional Liability and other Special Liability 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 & Space and Motor as well as opportunities in proportional Agribusiness. In 2004, we saw increased premium writings from proportional business, especially in General Third Party Liability and Professional Liability and other Special Liability.

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

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strength. We have developed integrated teams of professionals with significant treaty and individual risk, or facultative, expertise which support the professionals we have in our branch network. We offer facultative products to a limited extent and only to a selected number of clients on a proportional and non-proportional basis. We deploy our international specialty lines experts and local specialists to design solutions to address our clients’ risk management needs.

Structured/finite

Structured/finite reinsurance solutions are marketed by our Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance segments. 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, we deploy teams that include underwriting, tax, accounting, actuarial and banking experts who can effectively address all aspects of the solution composed of internal and external resources. We believe this multi-disciplinary approach provides an efficient way to address the respective issues.

Some structured/finite reinsurance markets are rating-sensitive, and due to our recent downgrades we expect written premium volume in this area to reduce significantly.

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 $3,394.9 million for the year ended December 31, 2004, representing 88.4% 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, 2004, 2003 and 2002:

	Year Ended December 31,
	2004						2003						2002
	$			% of			$			% of			$		% of
	millions			total			millions			total			millions		total
Proportional
General Third Party Liability	$	341.5			13.8	%	$	217.9			9.7	%	$	194.5		11.0	%
Motor		390.0			15.8			373.6			16.6			251.2		14.2
Personal Accident (assumed from non-life insurers)		21.4			0.9			27.3			1.2			31.9		1.8
Property		473.2			19.2			503.0			22.4			423.5		24.0
Agribusiness		113.1			4.6			83.6			3.7			3.5		0.2
Aviation & Space		446.4			18.1			417.7			18.6			310.8		17.6
Credit & Surety		203.8			8.3			181.8			8.1			133.7		7.6
Engineering		114.2			4.6			141.5			6.3			118.8		6.7
Marine & Energy		72.6			2.9			78.5			3.5			81.5		4.6
Professional Liability and other Special Liability		270.2			10.9			193.6			8.6			194.7		11.0
Workers’ Compensation		22.6			0.9			29.3			1.3			22.6		1.3
Total Proportional	$	2,469.0			100.0	%	$	2,247.8			100.0	%	$	1,766.7		100.0	%
Non-Proportional
General Third Party Liability	$	5.4			0.9	%	$	137.9			12.6	%	$	136.0		15.0	%
Motor		129.8			22.7			138.5			12.7			123.3		13.6
Personal Accident (assumed from non-life insurers)		5.7			1.0			7.7			0.7			3.1		0.3
Property		214.5			37.6			354.6			32.4			248.2		27.6
Agribusiness		6.8			1.2			14.9			1.4			18.5		2.0
Aviation & Space		30.0			5.3			67.8			6.2			97.4		10.7
Credit & Surety		17.4			3.0			39.9			3.7			35.6		3.9
Engineering		4.3			0.8			3.4			0.3			2.1		0.2
Marine & Energy		16.9			3.0			22.4			2.1			18.8		2.1
Professional Liability and other Special Liability		128.3			22.5			278.9			25.5			213.5		23.5
Workers’ Compensation		11.6			2.0			25.9			2.4			10.1		1.1
Total Non-Proportional	$	570.7			100.0	%	$	1,091.9			100.0	%	$	906.6		100.0	%
Structured/Finite
General Third Party Liability	$	24.8			7.0	%	$	33.2			6.9	%	$	28.0		5.4	%
Motor		—			—			—			—			100.2		19.3
Personal Accident (assumed from non-life insurers)		—			—			—			—			—		—
Property		11.1			3.1			1.6			0.3			2.5		0.5
Agribusiness		—			—			—			—			—		—
Aviation & Space		—			—			(0.2	)		—			—		—
Credit & Surety		(33.7	)		(9.5	)		39.6			8.3			46.8		9.0
Engineering		—			—			—			—			—		—
Marine & Energy		—			—			—			—			—		—

23

	Year Ended December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		total			millions		total			millions		total
Professional Liability and other Special Liability		164.1		46.2			149.7		31.3			160.0		30.8
Workers’ Compensation		188.9		53.2			253.8		53.2			181.8		35.0
Total Structured/Finite	$	355.2		100.0	%	$	477.7		100.0	%	$	519.3		100.0	%
Total
General Third Party Liability	$	371.7		10.9	%	$	389.0		10.2	%	$	358.5		11.2	%
Motor		519.8		15.3			512.1		13.4			474.7		14.9
Personal Accident (assumed from non-life insurers)		27.1		0.8			35.0		1.0			35.0		1.1
Property		698.8		20.6			859.2		22.5			674.2		21.1
Agribusiness		119.9		3.5			98.5		2.6			22.0		0.7
Aviation & Space		476.4		14.0			485.3		12.7			408.2		12.8
Credit & Surety		187.5		5.6			261.3		6.8			216.1		6.8
Engineering		118.5		3.5			144.9		3.8			120.9		3.8
Marine & Energy		89.5		2.6			100.9		2.6			100.3		3.1
Professional Liability and other Special Liability		562.6		16.6			622.2		16.3			568.2		17.8
Workers’ Compensation		223.1		6.6			309.0		8.1			214.5		6.7
Total	$	3,394.9		100.0	%	$	3,817.4		100.0	%	$	3,192.6		100.0	%

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, 2004, 2003 and 2002. 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,

	2004									2003									2002
				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		99.2	%		26.8	%		126.0	%		92.1	%		22.1	%		114.2	%		109.4	%		19.0	%		128.4	%
Motor		99.5			18.3			117.8			86.3			18.4			104.7			84.8			22.8			107.6
Personal Accident (assumed from non-life insurers)		64.9			25.2			90.1			68.9			23.1			92.0			69.4			18.1			87.5
Property		55.6			27.9			83.5			46.2			24.8			71.0			52.3			23.8			76.1
Agribusiness		79.6			9.4			89.0			87.0			8.6			95.6			100.9			4.8			105.7
Aviation & Space		53.7			23.9			77.6			44.3			15.4			59.7			69.9			13.0			82.9
Credit & Surety		64.6			27.7			92.3			59.8			30.2			90.0			64.8			28.8			93.6
Engineering		76.9			25.6			102.5			64.7			29.7			94.4			81.7			21.9			103.6
Marine & Energy		87.5			21.3			108.8			73.5			18.6			92.1			86.3			23.3			109.6
Professional Liability and other Special Liability		151.4			19.2			170.6			79.2			26.5			105.7			101.0			19.5			120.5
Workers’ Compensation		96.5			23.8			120.3			114.3			13.0			127.3			61.1			24.3			85.4
Proportional		78.0			26.1			104.1			65.0			25.1			90.1			75.7			24.3			100.0
Non-Proportional		141.5			13.8			155.3			84.3			13.1			97.4			80.8			15.6			96.4
Structured/Finite		97.6			15.7			113.3			74.4			27.4			101.8			82.5			19.2			101.7
Total		90.3			22.9			113.2			71.5			22.0			93.5			78.2			21.1			99.3

(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 our 2004 consolidated 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 strategy is to continue as a stand-alone, multi-line competitor in the international reinsurance marketplace. The strategy was redefined following the latest rating agencies’ downgrading in the second half of 2004 and now focuses on partnership-oriented professional reinsurance buyers in the markets Europe, Latin America, Asia and Australia. Our long-term client relationships are based on our capabilities, e.g. natural hazard expertise, financial modeling capabilities, structuring advice and claims and underwriting audits, contributing to earnings and cash flows. We remain committed to underwriting discipline to achieve the best possible shareholder return, which is only possible through cycle management.

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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

Motor insurance can include coverage in three major areas — liability, physical damage and accident benefits, for all of which we provide reinsurance coverage. 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.

Property

We reinsure liability for physical damage caused by fire and allied perils such as explosion, lightning, storm, flood, earthquake and for 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, 2004, 2003 and 2002.

	Year ended December 31,
	2004					2003					2002
	$					$					$
	millions		% of total			millions		% of total			millions		% of total
Standard Property & Casualty Reinsurance:
General Third Party Liability	$	361.4		24.9	%	$	335.0		20.4	%	$	337.7		23.2	%
Motor		484.8		33.3			488.5		29.7			453.5		31.2
Personal Accident (assumed from non-life insurers)		27.1		1.8			35.1		2.1			35.0		2.4
Property		581.7		40.0			787.0		47.8			626.0		43.2
Total Standard Property & Casualty Reinsurance	$	1,455.0		100.0	%	$	1,645.6		100.0	%	$	1,452.2		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, 2004, 2003 and 2002.

Loss, Expense and Combined Ratios
Year Ended December 31,

	2004									2003									2002
				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		99.2	%		26.8	%		126.0	%		92.1	%		22.1	%		114.2	%		109.4	%		19.0	%		128.4	%
Motor		99.5			18.3			117.8			86.3			18.4			104.7			84.8			22.8			107.6
Personal Accident (assumed from non-life insurers)		64.9			25.2			90.1			68.9			23.1			92.0			69.4			18.1			87.5
Property		55.6			27.9			83.5			46.2			24.8			71.0			52.3			23.8			76.1
Proportional		74.2			26.8			101.0			55.7			26.0			81.7			77.9			27.7			105.6
Non-Proportional		97.8			11.8			109.6			85.8			13.7			99.5			76.8			10.6			87.4
Structured/Finite		162.7			30.1			192.8			188.2			40.2			228.4			64.0			29.9			93.9
Total Standard Property & Casualty Reinsurance		80.3			24.3			104.6			68.3			22.3			90.6			76.3			22.2			98.5

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(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 our 2004 consolidated financial statements.

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

Specialty Lines

The Specialty Lines segment’s strategy is to develop specialty businesses in which Converium can position itself as a market leader and effectively leverage its intellectual assets in risk analysis, structuring, product design and risk modeling. We focus on specialty businesses because we believe that Converium possesses superior underwriting and structuring capabilities in certain areas, which is both a key driver of profitability as well as an effective barrier to entry in certain business lines. Wherever possible, Converium seeks to develop preferred access to specialty lines through strong relationships, strategic partnerships or participations in entities that enjoy a unique position, such as strong control over the origination of their business, which prevents them for having to compete in annual insurance or reinsurance auctions.

Wherever possible, Converium seeks to develop preferred access to specialty lines through strong relationships, strategic partnerships or participations in entities that enjoy a unique position, such as strong control over the origination of their business, which prevent them from having to compete in annual insurance or reinsurance auctions. Examples of the approach by which we seek to develop preferred access to these businesses are our strategic partnership with MDU in the U.K., our participation in GAUM and our shares in its pools and our participation in SATEC and our share in its pool, as well as many strong relationships with specialized mono-line insurers.

Also, Converium Underwriting Ltd, a Lloyd’s Corporate Member, has successfully provided third-party capacity to certain specialist Lloyd’s syndicates.

Some specialty lines are subject to cyclical pricing fluctuations. Converium remains committed to underwriting discipline to achieve the best possible shareholder return, which is only possible through cycle management.

Due to the long-tail nature of many of the specialty lines of business, the emergence of accounting profit (on the basis of US GAAP) occurs after a time lag. The high levels of carried reserves necessary for the specialty lines of business underwritten by the segment can be capital consumptive during periods of strong growth in premiums written and may pose a constraint on the amount of growth and the business mix of the segment.

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 provide reinsurance of personal accident and liability risks and hull damage in connection with the operation of aircraft and 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 fulfillment 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

26

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 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.

Workers’ Compensation

Our products include reinsurance for statutory workers’ compensation programs, as well as individual risk excess workers’ compensation.

The following table presents the distribution of net premiums written by our Specialty Lines segment for the years ended December 31, 2004, 2003 and 2002.

	Year ended December 31,
	2004					2003					2002
	$					$					$
	millions		% of total			millions		% of total			millions		% of total
Specialty Lines:
Agribusiness	$	126.9		7.7	%	$	90.0		5.0	%	$	22.0		1.4	%
Aviation & Space		404.5		24.4			341.8		18.8			365.3		23.4
Credit & Surety		171.1		10.3			236.0		13.0			200.1		12.9
Engineering		111.9		6.7			139.9		7.7			116.1		7.5
Marine & Energy		86.2		5.2			95.3		5.3			94.3		6.1
Professional Liability and other Special Liability		531.7		32.1			598.0		33.0			536.9		34.5
Workers’ Compensation		225.8		13.6			310.9		17.2			220.6		14.2
Total Specialty Lines	$	1,658.1		100.0	%	$	1,811.9		100.0	%	$	1,555.3		100.0	%

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, 2004, 2003 and 2002.

Loss, Expense and Combined Ratios
Year Ended December 31,

	2004									2003									2002
				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		79.6	%		9.4	%		89.0	%		87.0	%		8.6	%		95.6	%		100.9	%		4.8	%		105.7	%
Aviation & Space		53.7			23.9			77.6			44.3			15.4			59.7			69.9			13.0			82.9
Credit & Surety		64.6			27.7			92.3			59.8			30.2			90.0			64.8			28.8			93.6
Engineering		76.9			25.6			102.5			64.7			29.7			94.4			81.7			21.9			103.6
Marine & Energy		87.5			21.3			108.9			73.5			18.6			92.1			86.3			23.3			109.6
Professional Liability and other Special Liability		151.4			19.2			170.6			79.2			26.5			105.7			101.0			19.5			120.5
Workers’ Compensation		96.5			23.8			120.3			114.3			13.0			127.3			61.1			24.3			85.4
Proportional		82.5			25.3			107.8			75.6			24.1			99.7			73.5			20.9			94.4
Non-Proportional		192.0			16.2			208.2			82.3			12.4			94.7			86.7			22.9			109.6
Structured/Finite		91.4			14.3			105.7			62.5			26.0			88.5			89.4			15.2			104.6
Total Specialty Lines		99.4			21.7			121.1			74.6			21.6			96.2			80.0			20.0			100.0

(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 our 2004 consolidated financial statements.

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

27

Results”.

Life & Health Reinsurance

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

• Life and Disability; and

• Accident and Health.

We offer these lines of business on an international scale. We primarily conduct our Life and Disability reinsurance business from Cologne, Germany. We have implemented a strategy to substantially grow our life reinsurance business. In addition, we have established branch offices in Milan and Paris. We also utilize our non-life offices in many parts of the world to facilitate direct contacts with our Life & Health Reinsurance clients.

As a result of these initiatives, our Life and Disability and Accident and Health lines of business written from our European offices have grown significantly in recent years, with our net premiums written increasing from $196.0 million in 2001 to $321.8 million at the end of 2004.

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, Italy, France and the Middle East;

• maintaining a low expense ratio;

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

• providing structured/finite solutions; and

• 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 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; and

28

• 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.

We also believe that our health business will positively contribute to the overall profitability of this segment. We intend to carefully apply our cycle management approach and monitor the market development in this area to be able to recognize early indications of turning market conditions.

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:

• financial strength;

• expertise, reputation, experience and qualifications of employees;

• local presence;

• client relationships;

• products and services offered;

• premium levels; and

• 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 majority-owned by the mutual insurance group HDI Haftpflichtverband der Deutschen Industrie;

• Lloyd’s syndicates active in the London market;

• companies active in the Bermuda Market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.;

• Everest Reinsurance Company;

• Transatlantic Reinsurance Company; and

• SCOR.

Non-life underwriting, pricing/structuring and accumulation control

We regard underwriting and pricing as core skills. 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

29

appropriate to the nature of the risk.

Our underwriters coordinate 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 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 to significant internal actuarial expertise, which we deploy to assess pricing 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 capitalization under normal circumstances and an adequate capitalization after 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 these rules is regularly reviewed by our senior management, who 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 & 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.

We are committed to underwriting for profit. In pricing, we are committed to price to an after-tax target return of 950 basis points above the local risk-free rate over the cycle. Meeting this target requires a constant management of the underwriting cycle including the avoidance of under-priced business.

We allocate capital to transactions based on how they contribute to our portfolio’s 1-in-100 year or worse losses. Business aggregating with existing treaties (that is, treaties that do not diversify well within our existing portfolio) are allocated a disproportionately larger amount of capital than treaties that diversify well. Similarly, larger treaties are allocated a disproportionately larger amount of capital than smaller treaties. This capital approach helps the portfolio become more diverse and optimizes the treaty mix.

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, expected future loss costs, historical and projected premium rate changes, financial stability and history, classes and nature of underlying business and policy forms, changes in the underlying risk exposure over time, 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, adjusted for trends, 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 that reflects risk-free investment income generated by the cash flows, commissions, brokerage, internal expenses and taxes. We estimate the risk capital by analyzing the treaty’s dependency on the current and future planned portfolio. Key factors that we utilize in the calculation of risk capital are the loss profile of the contract, the duration of the liabilities and the correlation of the risk factors with the remainder of our book of business. From this, the performance of the deal, or Performance Excess, is then computed as the profitability of the deal less the cost of capital.

We also consider other items in our pricing analysis such as client and line of business desirability and associated business opportunities. Whenever necessary, we develop or enhance additional tools to assess non-traditional or unusual structures. For

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specialized lines, such as Aviation, Agribusiness and Credit & Surety, we have developed and continue to enhance pricing models based on risk factors specific to those lines of business. 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 the flexibility 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. Our modeling expertise and development of very efficient computational algorithms and simulations enable us to price different structures promptly. We are able to access our pricing system and databases online and from anywhere around the world.

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 and use this information to populate our databases. We utilize this information to 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 department 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 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 department, 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 department provides feedback to the ceding company, including an assessment of the claims operation and, if appropriate, recommendations regarding procedures, processing and personnel.

Our non-life operating units work together to coordinate issues in a cooperative effort involving claims services, actuarial, risk modeling and underwriting functions. For example, our Claims Services personnel help coordinate the reserving and risk assessment functions across our 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.

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.

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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. To 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 life portfolio.

Catastrophe risk management and protection

Natural peril and man-made catastrophe risk management is an essential part of our overall corporate risk management plan. To help us 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 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 is responsible for modeling our global catastrophe exposure, and provides support to 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 international 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 (the Global Cat Data Platform), which helps us to manage our worldwide accumulations of catastrophe risk by peril and region. In our analyses we focus on key zones where we face a geographic concentration or peak exposures, such as European windstorm risk. This centralized analysis is essential for an international 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. By 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 balance sheet supports, 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 probability-based monitoring tools to enhance the utility of our models.

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	Our central monitoring system models loss potentials for storm and earthquake scenarios to help us measure our accumulation of risk by type of peril and geographic region. We continuously perform accumulation analyses during renewal season. We believe that this centralized review helps us monitor and manage our natural catastrophe loss potential and to take remedial action if there is a risk that our accumulations will reach levels that are not acceptable under our guidelines. 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 made a significant contribution to the enhancement of the market standard for the exchange of exposure data between primary and reinsurance companies, thereby assisting market participants to adopt common reporting and better understand their natural catastrophe exposures. We believe that the use of data standards will improve data quality, enable more accurate risk assessment 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.

Historically, a majority of the natural catastrophe reinsurance we have written relates to exposures within the United States, Europe and Japan. Accordingly, we are exposed to natural catastrophic events which affect these regions, such as US hurricane, US earthquake, European windstorm and Japanese earthquake events. Our estimated potential losses, on a probable maximum loss 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. 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, US hurricanes and European windstorms;

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

• to obtain better post-event liquidity relief compared to traditional retrocessionaires’ practices and the respective counterparty credit risks on recoveries; and

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

In 2004, we had the benefit of reinsurance protections on a worldwide basis in excess of $100 million and up to $250 million for any natural catastrophe affecting our property portfolio. These protections included both traditional reinsurance as well as the catastrophe protection described more fully below. In addition, we purchased cover for natural catastrophes affecting our non-US property portfolio in excess of $25 million, once an annual aggregate deductible of $50 million has been exhausted, with cover up to $100 million. The majority of this coverage was placed with companies with AAA financial strength ratings.

In addition, in June 2004, we entered into a transaction with Helix 04 Ltd (“Helix 04”), a dedicated Bermuda special purpose exempted company that ultimately provides us with specific high limit catastrophe protection. Helix 04’s business consists solely of issuing five-year catastrophe securities; Helix 04 entered into a counterparty contract with us whereby Helix 04 will make payments to us from its funds to cover defined catastrophic losses. The owners of the securities are entitled to receive their original investment, plus interest on the notes, paid quarterly, less any loss payments made to us. The Helix 04 transaction replaced the Trinom transaction that we had in place since 2001. See Note 11 to our 2004 consolidated financial

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statements for additional information on Helix.

The coverage we have obtained from the Helix 04 transaction is expected to reduce our net retained loss for large catastrophe events. Payments from Helix 04 to us are based on modeled losses on a notional portfolio. Perils covered by the Helix 04 transaction and the Catastrophe agreement include only US and Japanese earthquake, North Atlantic hurricane and European windstorm losses that occur before June 23, 2009. Helix 04 provides a second event protection. The first event is defined as any event in one of the four defined peril regions whose modeled loss for the notional portfolio exceeds $150 million. After this first event, we are covered for any event in the four above mentioned peril regions whose modeled loss for the notional portfolio exceeds $175 million. The amount of coverage is $100 million.

We estimate our gross loss for each of the 2004 hurricanes to be less than the Helix 04 activation threshold of $150 million for each such event and therefore we will not file a trigger event request in respect of these losses.

Unlike traditional reinsurance, the Helix 04 transaction is fully collateralized to eliminate any counterparty credit risk on recoveries. Helix 04 provides a second event protection over a five-year horizon, securing a fixed-price capacity, which cannot be impaired by a severe first industry event. Due to the nature of the transaction, we are exposed to modeling uncertainty, meaning that the modeled loss might deviate somewhat from the actual indemnity loss of the notional portfolio (basis risk).

The following table illustrates our catastrophe protections in place in 2004:

			Traditional Reinsurance		Helix
Catastrophic Event(1)		Gross Loss	Recovery(2)		Recovery(4)		Status
1st Catastrophic Event	$	150 million to	$	50 million to		N/A	Cover triggered
	$	250 million	$	150 million
2nd Catastrophic Event	$	175 million to	$	75 million to	$	0 to	Cover in effect
	$	275 million	$	150 million(3)	$	100 million(4)

(1)	A catastrophic event in a defined peril region.
(2)	On a worldwide basis in excess of $100 million.
(3)	Subject to a total recovery of $225 million over the term of the policy.
(4)	Recovery is based on modeled losses on a notional portfolio, not on actual losses.

Lastly, with respect to man-made catastrophes such as acts of terrorism, we have introduced an appropriate 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 appropriate 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; and

• aggregate stop-loss protections.

We have established a control procedure whereby our Chief Executive Officer and Chief Risk Officer, along with the other members of our senior executive team, review the business purpose for all reinsurance purchases. One or more members of our senior executive team, generally our Chief Risk Officer, approve all purchases before they are bound.

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Prior to entering into a retrocessional agreement, we analyze the financial strength and rating of each retrocessionaire and the financial performance and rating status of all material retrocessionaires is thereafter monitored. In addition, as part of our evaluation before purchasing reinsurance we also consider the accounting implications of the particular transaction.

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, 2004 and 2003, Converium held $559.4 million and $635.3 million, respectively, in collateral as security under related retrocessional agreements in the form of deposits, securities and/or letters of credit.

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 $40.6 million and $35.4 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2004 and 2003, respectively.

The following table sets forth Converium’s ten largest retrocessionaires as of December 31, 2004, based on 2004 ceded premiums written, and their respective Standard & Poor’s or A.M. Best financial strength ability rating.

	Retrocessionaire	Premium ceded					S&P/A.M. Best
Retrocessionaire	Group	in $ millions		% of total			Rating
National Indemnity Company (1)	Berkshire Hathaway Insurance Group	$	41.1		14.3	%	AAA/A++
Helvetia Patria Versicherungen (2)	Helvetia		27.2		9.5		BBBpi/NR
QBE Insurance & Reinsurance (Europe)	QBE Insurance Group		21.2		7.4		A+/A
Augsburger Ruck	Augsburger Ruck		17.0		5.9		NR
Interpolis Reinsurance Services Ltd.	Rabobank		16.1		5.6		NR
Manulife Europe	Manulife Europe		14.8		5.1		NR
PartnerRe U.S. Group	PartnerRe Group		11.0		3.8		AA-/A+
ICM Re S.A.	ICM Re		10.8		3.8		NR
Manufactuerers P&C Ltd.	Manufacturers		10.7		3.7		NR
GE Frankona Reinsurance Ltd.	GE Frankona		7.4		2.6		A/A
Total provided by top ten retrocessionaires, and percentage of total retrocessional reinsurance		$	181.8		63.2	%
Total retrocessional reinsurance		$	287.9		100.0	%

(1)	National Indemnity Cover: In order to provide additional comfort as regards to our reserve position, we acquired a retroactive stop-loss retrocession cover from National Indemnity Company, a Standard & Poor’s AAA-rated member of the Berkshire Hathaway group of insurance companies. The stop-loss provides an additional $150.0 million of cover against potential adverse reserve development on the underwriting years 1987 through 2003 for Converium AG, CRNA and CINA. The cover of $150.0 million attaches at $100.0 million in excess of the ultimate third-party net non-life reserves; which are defined as non-life carried losses and allocated loss adjustment expense reserves as of June 30, 2004 plus the expected losses and allocated loss adjustment expenses emanating out of the unearned premium reserves as of June 30, 2004 of the portfolio subject to cover, carried by these legal entities for these underwriting years as of June 30, 2004 and therefore excludes inter-group reinsurance arrangements. The reinsurance charge for this retrocession is $20.0 million and has been recorded in the income statement under the caption “Other (loss) income”. There are additional consideration features associated with this layer of coverage, which may result in additional consideration of up to $60.0 million being paid in the event that the cover is fully utilized. No losses have been ceded as of December 31, 2004.
	In addition, this contract has another layer of coverage of $235.0 million for which a consideration of $135.0 million has been paid. This layer attaches at $235.0 million below the ultimate third-party net non-life reserves on the same underwriting years. The economics of this layer of coverage are such that the reinsurance risk transfer requirements of US GAAP are not met. Accordingly, this protection is accounted for under deposit accounting rules. As a result, there is no material income statement impact for 2004 in respect of this layer of coverage.
	We have retained the right to commute the whole transaction on July 1, 2009, or thereafter at mutually agreeable terms.
(2)	In late 2004, we entered into an agreement to terminate our $75.0 million GMDB reinsurance protection purchased in the fourth quarter of 2003, for an amount of $9.7 million giving rise to a net cost of the cover for 2004 of $0.1 million. The primary purpose of this cover was to address the volatility in the United States equity markets. The cover was also intended to address potential adverse deviations to other key assumptions such as mortality risk, lapse rate risks and surrenders. We feel that the current carried reserves for its GMDB exposure are adequate, however, we continue to monitor

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and review other reinsurance and financial product solutions to address the risks associated with this business.

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 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 our sole discretion.

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 CRNA, 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.

In order to provide additional comfort as regards our reserve position, in August 2004 we acquired a retrospective stop-loss retrocession cover from National Indemnity Company, a Standard & Poor’s AAA-rated member of the Berkshire Hathaway group of insurance companies. See Note 11 to our 2004 consolidated financial statements.

See Note 27 to our 2004 consolidated financial statements for further information on retrocesional risk management.

Loss and loss adjustment expense reserves

Establishment of loss and loss adjustment expense reserves

We are required by applicable insurance laws and regulations and US 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 and its reporting by the insured to the primary insurance company and subsequently by the insurance company to its reinsurance company. Loss reserves fall into two categories: reserves for reported losses and loss adjustment expenses, and reserves for 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.

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 data and pricing information and statistical models as well as our pricing analyses. We revise reserves 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 periodically. Adjustments resulting from this process are reflected in current income. Our 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, among other things, the time lag inherent in reporting

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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 terms and conditions. After an initial analysis by reserving actuaries, preliminary results are shared with appropriate underwriters, pricing actuaries, claims and finance professionals and senior management. Final actuarial recommendations incorporate feedback from these professionals.

During 2004, we updated FRAME, our reserving tool, with a new proprietary global loss reserve estimation system, which we refer to as CORE. 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. We aggregate the reserves indicated for each transaction to arrive at the total reserve requirement (“bottom-up approach”).

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. These top-down analyses provide an alternative view that is less dependent on pricing information and is independent of our bottom-up approach. The comparison of these different approaches, namely bottom-up and top-down, provide additional insights into the reserve position and can lead to reserve adjustments in either bottom-up or top-down approaches or both.

In accordance with US 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 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 protection” 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 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.

Development of prior years’ reserves: Converium has experienced significant adverse development, predominantly in its US casualty reinsurance lines, for the last several years. Since 2000, Converium has recorded a total of $868.2 million of additional net provisions on prior years’ non-life business (2000: $65.4 million: 2001: $123.6 million; 2002: $148.5 million; 2003: $(31.3) million; and 2004: $562.0 million).

During early 2004, Converium announced that reported losses from prior year US casualty business had exceeded expected loss emergence and that the volatility of longer-tail risks was likely to persist for some time. This adverse loss-reporting trend continued and accelerated into mid-2004 and prompted Converium to initiate additional reviews of its US business from an integrated underwriting, claims and actuarial perspective in order to examine the adequacy of prior years’ provisions. In addition, in order to obtain an external review of our overall reserve position, we commissioned the actuarial consulting firm Tillinghast-Towers Perrin to perform an independent actuarial review of our non-life loss and allocated loss adjustment expense reserves as of June 30, 2004 in respect of the Zurich and New York originated businesses. The outcome of these in-depth internal and external reviews resulted in an aggregate strengthening of prior years’ non-life loss reserves by $562.0 million for the year ended December 31, 2004. This action was taken in response to the continued adverse loss emergence due to increased claims reporting activity from clients relating to US casualty business written from 1997 to 2001 as well as deterioration from European non-proportional motor business written in recent years. While we believe that we have fully addressed this issue through our reserving actions, volatility is expected to persist for some time.

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In the Standard Property & Casualty Reinsurance segment, the development of prior years’ reserves of $73.5 million primarily related to adverse developments of General Third Party Liability ($116.3 million), motor liability outside the United States ($91.7 million) and Personal Accident (non-life) ($8.1 million), which was partially offset by positive developments related to Property ($82.1 million) and miscellaneous liability ($60.5 million) that also included the impact of whole account retrocessions. In the Specialty Lines segment, the development of prior years’ reserves of $488.5 million primarily related to adverse developments of the Professional Liability and other Special Liability lines ($449.3 million), particularly excess & surplus lines and umbrella, Workers’ Compensation ($55.3 million), and Engineering ($12.9 million). These adverse developments in the Specialty Lines were partially offset by positive developments related to Aviation & Space ($24.5 million), Agribusiness ($0.7 million), and Credit & Surety ($3.8 million).

Commutations: Based on the developments of 2004, we placed our US reinsurance operations into run-off and started to implement and execute a commutation strategy. Commutations can accelerate the realization of profit inherent in long-tail reserves by crystallizing outstanding claims reserves into payments, which are discounted to reflect the time value of money. Since commutation payments essentially reflect a discounted present value of estimated future cash flows, future investment income earned is expected to decline as the assets backing those reserves are liquidated to make payments. As of December 31, 2004, we agreed upon commutations with primarily North American cedents regarding gross loss reserves of $545.8 million that resulted in a cash outflow of $526.8 million.

The reserve strengthenings as described herein in “— Loss Reserve Development” have been determined in accordance with our loss reserving policies as described in “— Loss and Loss Adjustment Expense Reserves — Establishment of Loss and Loss Adjustment Expense Reserves”, and was recorded in accordance with our established accounting policies as described in Note 2(c) to our 2004 consolidated 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 US dollars. As of December 31, 2004, approximately 43% of our non-life reinsurance reserves are for liabilities that will be paid in a currency other than the US dollar. We establish these reserves in original currency, and then, during our consolidation process, translate them to US 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 US dollar are translated at consolidation into US 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, 2004.

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 (“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 offering memorandum. 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

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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 US 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, 2004, net reserves for losses and loss adjustment expenses included approximately $180.0 million of reserves related to losses from accident years 1994 and prior, or 2.4% of net reserves as of December 31, 2004.

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			2004
	($ millions, except percentages)
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		$	8,776.9
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			1,135.4
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		$	7,641.5
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			1,766.4
Two years later		611.1			669.4			721.2			843.0			968.8			1,339.2			1,501.0			2,010.2			2,548.6
Three years later		736.2			803.1			921.7			1,064.4			1,250.7			1,670.1			2,066.2			2,745.5
Four years later		815.4			927.0			1,062.2			1,261.7			1,438.6			2,023.5			2,548.3
Five years later		896.9			1,007.7			1,178.3			1,336.5			1,622.3			2,309.0
Six years later		949.9			1,093.8			1,197.5			1,436.7			1,772.9
Seven years later		1,006.5			1,087.1			1,249.3			1,545.8
Eight years later		986.5			1,115.7			1,319.4
Nine years later		1,004.1			1,157.8
Ten years later		1,025.8
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			7,057.0
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			6,080.2
Three years later		1,364.6			1,617.7			1,736.4			1,970.4			2,300.8			3,027.2			3,802.1			5,030.2
Four years later		1,396.2			1,541.1			1,677.3			1,989.1			2,333.7			3,171.9			4,178.5
Five years later		1,339.0			1,468.9			1,661.2			1,990.7			2,410.7			3,385.2
Six years later		1,284.5			1,452.9			1,645.9			2,013.0			2,500.2
Seven years later		1,260.1			1,446.1			1,649.3			2,069.5
Eight years later		1,263.3			1,448.7			1,684.6
Nine years later		1,272.4			1,476.8
Ten years later		1,293.6
Reinsurance recoverable re-estimated as of December 31, 2004		130.6			246.3			336.3			422.8			684.8			1,292.0			1,658.5			1,613.9			1,435.6			1,202.2
Gross reserves re-estimated as of December 31, 2004		1,424.1			1,723.2			2,020.9			2,492.3			3,185.0			4,677.2			5,837.1			6,644.1			7,515.8			8,259.2
Cumulative net redundancy/(deficiency)		115.8			311.7			453.8			276.8			30.6			(544.3	)		(844.7	)		(864.7	)		(718.7	)		(599.5	)
Cumulative redundancy/(deficiency) as a percentage of initial net reserves		8.2	%		17.4	%		21.2	%		11.8	%		1.2	%		(19.2	)%		(25.3	)%		(20.8	)%		(13.4	)%		(9.3	)%
Cumulative gross redundancy/(deficiency)		44.8			168.2			224.4			144.2			(196.9	)		(1,131.5	)		(1,291.1	)		(933.7	)		(694.5	)		(416.3	)
Cumulative redundancy/(deficiency) as a percentage of initial gross reserves		3.0	%		8.9	%		10.0	%		5.5	%		(6.6	)%		(31.9	)%		(28.4	)%		(16.4	)%		(10.2	)%		(5.3	)%

As a significant portion of our reserves relate to liabilities payable in currencies other than US dollars, any fluctuations of the US dollar to those currencies will have an impact on the reserve redundancy/(deficiency). As shown on the table above, the net reserve position for 1998 developed favorably from $2,530.8 million as of December 31, 1998 to $2,500.2 million as of December 31, 2004, reflecting a redundancy of $30.6 million. However, shown on the table below, applying the exchange rate as of December 31, 1998 to the 1998 reserves re-estimated as of December 31, 2004 would result in re-estimated reserves of $2,584.9 million, or a deficiency of $54.1 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, 2004 than if the reserves were shown on a constant exchange rate basis for all years presented. Due to the 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, 2004, we recorded $1,135.4 million of reinsurance recoverables on loss and loss adjustment expense reserves. Approximately 24.7% of this amount relates to Workers’ Compensation business and 25.9% 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			2004
	($ millions, except percentages)
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		$	7,641.5
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			6,810.5
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			5,693.0
Three years later		1,387.9			1,707.3			1,865.4			2,016.6			2,463.0			3,118.1			3,734.8			4,800.6
Four years later		1,405.6			1,674.5			1,819.3			2,035.0			2,469.9			3,213.4			4,044.6
Five years later		1,382.7			1,612.4			1,799.4			2,023.7			2,507.7			3,399.5
Six years later		1,338.7			1,589.9			1,775.9			2,017.9			2,584.9
Seven years later		1,306.6			1,588.4			1,755.5			2,065.5
Eight years later		1,316.7			1,574.4			1,782.5
Nine years later		1,313.6			1,595.9
Ten years later		1,329.7
Cumulative redundancy/(deficiency)		79.6			192.6			355.9			280.8			(54.1	)		(558.7	)		(710.9	)		(635.1	)		(331.5	)		(353.1	)
Cumulative redundancy/(deficiency) as a percentage of initial net reserves		5.7	%		10.8	%		16.6	%		12.0	%		(2.1	)%		(19.7	)%		(21.3	)%		(15.2	)%		(6.2	)%		(5.5	)%

As described below, the loss development triangles show net cumulative redundancies for 1995 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, 2004, was 4.1 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, 2004, 2003 and 2002.

($ millions)	2004		2003			2002
As of January 1,
Gross reserves for losses and loss adjustment expenses	$	7,842.8	$	6,821.3		$	5,710.5
Less reinsurance recoverable		1,385.4		1,459.8			1,545.0
Net reserves for losses and loss adjustment expenses		6,457.4		5,361.5			4,165.5
Losses and loss adjustment expenses incurred (1)
Current year		2,865.4		2,527.9			2,186.8
Prior years		342.5		(31.3	)		148.5
Total		3,207.9		2,496.6			2,335.3
Losses and loss adjustment expenses paid
Current year		498.1		324.7			299.4
Prior years		1,766.4		1,464.7			1,095.5
Total		2,265.4		1,789.4			1,394.9
Foreign currency translation effects		240.7		388.7			255.6
As of December 31,
Net reserves for losses and loss adjustment expenses		7,641.5		6,457.4			5,361.5
Reinsurance recoverable		1,135.4		1,385.4			1,459.8
Gross reserves for losses and loss adjustment expenses	$	8,776.9	$	7,842.8		$	6,821.3

(1) The loss and loss adjustment expenses incurred includes $272.2 million, $142.0 million and $103.4 million of loss and loss adjustment expenses incurred related to Accident and Health business included in the Life & Health Reinsurance segment for the years ended December 31, 2004, 2003 and 2002, respectively.

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In 2004, Converium recorded $(342.5) million at the 2004 average exchange rate and $(353.1) million at the 2003 average exchange rate of adverse development. See “ — Adequacy of Reserves”.

Prior years’ loss and loss adjustment expenses incurred in 2004 of $(342.5) million net were primarily driven by reserve strengthening of ($562.0 million) (See “— Adequacy of reserves”), and the impacts on losses and loss adjustment expenses incurred of (i) adjustments of ultimate premium estimates ($206.4 million), (ii) the commutation of the stop-loss protection regarding underwriting year 2001 of the professional liability business generated through our strategic partnership with MDU ($(10.5) million), and (iii) the reduction of reinsurance recoverables of ($(12.0) million), which is offset by the effect of commutations.

In 2003, the positive development of $31.3 million consisted of positive development on Property lines ($113.5 million) and Aviation & Space ($102.2 million), offset by adverse development on Workers’ Compensation and Professional Liability and other Special Liability lines ($120.3 million) and the Motor and General Third Party Liability lines ($64.1 million). The reserve releases in 2003 were primarily from the 2002 underwriting year, while the US business written in 1997 to 2001 mostly saw continued strengthening.

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 Professional Liability and other Special Liability Lines of business.

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 Rückversicherung (Köln) AG (“ZRK”). Our asbestos and environmental exposure primarily originates from US 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 US 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 CRNA’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 “Formation Transactions and Relationship with Zurich Financial Services”. 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, 2004 and 2003, our total loss and adjustment expense reserves, including additional reserves and IBNR reserves, for US-originated asbestos and environmental losses were approximately $49.2 million or 0.6% and $45.8 million or 0.7% 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 as of December 31, 2004 and 2003. 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.

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.

These uncertainties and 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

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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 8.9%, 6.4% and 7.1% of our revenues for the years ended December 31, 2004, 2003 and 2002, 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.

As of December 31, 2004, total invested assets (excluding cash and cash equivalents) were $7.8 billion compared to $7.5 billion as of December 31, 2003, an increase of $275.7 million, or 3.7%. This increase is mainly due to the investment of the net proceeds from the 2004 rights offering, positive operating cash flow and the weakening of the US dollar against European currencies. The increase was offset by commutations of certain of our North American treaties as well as amounts paid related to the retroactive stop-loss retrocession cover from National Indemnity Company.

The table below presents the carrying value of our consolidated investment portfolios as of December 31, 2004, 2003 and 2002.

	As of December 31,
	2004					2003					2002
	$		% of			$		% of			$		% of
	millions		Total			millions		Total			millions		Total
Fixed maturities securities	$	5,685.2		72.8	%	$	4,928.6		65.5	%	$	3,443.1		56.3	%
Equity securities		408.5		5.2			840.2		11.2			530.8		8.7
Funds Withheld Asset		1,305.1		16.7			1,530.6		20.3			1,648.1		27.0
Short-term investments		133.3		1.7			55.8		0.7			318.0		5.2
Other investments		272.3		3.5			173.5		2.3			177.3		2.8
Total investments	$	7,804.4		100.0	%	$	7,528.7		100.0	%	$	6,117.3		100.0	%

Fixed Maturities

As of December 31, 2004, our fixed maturities portfolio, excluding the Funds Withheld Asset (described more fully below), had a carrying value of $5.7 billion and represented 67.1% of our total investment portfolio including cash and cash equivalents (82.5% including the Funds Withheld Asset). This represents an increase in carrying value of $756.6 million, or 15.3%, from December 31, 2003. This increase is mainly due to the sale of approximately $500.0 million in equity securities, which were subsequently reinvested into fixed maturities, in order to reduce our exposure to equity securities, as well as the continued weakening of the US dollar against European currencies. In addition, the increase was due to the deployment of operating cash flow into fixed maturity securities during 2004. The $400.0 million proceeds of the 2004 rights offering and related capital increase were mainly invested in treasury securities or remained in cash at the end of 2004.

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 securities portfolio, excluding short-term investments, based on carrying value by scheduled maturity.

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($ millions, except percentages)	Estimated fair value		% of total			Carrying value		% of total
As of December 31, 2004	Available-for-sale (AFS)		AFS			Held-to-maturity (HTM)		HTM
Less than one year	$	182.5		3.8	%	$	15.9		1.9	%
One year through five years		2,871.8		59.4			450.8		53.0
Five years through ten years		923.2		19.1			353.5		41.6
Over ten years		91.8		1.9			30.2		3.5
Subtotal		4,069.3		84.2			850.4		100.0
Mortgage and asset-backed securities		616.6		12.7			—		—
Unit trust bonds		148.9		3.1			—		—
Total as of December 31, 2003	$	4,834.8		100.0	%	$	850.4		100.0	%

Most of our fixed income securities are rated by Standard & Poor’s, Moody’s or similar rating agencies. As of December 31, 2004, approximately 97.7% of our fixed maturities securities portfolio was invested in securities rated A or better by these agencies and approximately 85.2% 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.

($ millions, except percentages)	Estimated fair value		% of total			Carrying value		% of total
As of December 31, 2004	Available-for-sale (AFS)		AFS			Held-to-maturity (HTM)		HTM
AAA/Aaa	$	4,022.5		83.2	%	$	822.1		96.7	%
AA/Aa2		452.0		9.4			16.2		1.9
A/A2		229.6		4.7			12.1		1.4
BBB/Baa2		11.1		0.2			—		—
BB		3.0		0.1			—		—
Not rated1		116.6		2.4			—		—
Total as of December 31, 2003	$	4,834.8		100.0	%	$	850.4		100.0	%

¹ Includes $89.3 million private collateralized loans issued by German banks with a credit rating equivalent to S&P AAA, purchased during 2004.

Our guidelines also restrict our maximum investment in bonds issued by any group or industry sector by reference to local benchmarks and applicable insurance regulations. As of December 31, 2004 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, 2004, our equity securities portfolio had a carrying value of $408.5 million (including our participation in PSP Swiss Property AG). This represents a decrease in carrying value of $431.7 million, or 51.4%, from December 31, 2003. The decrease was primarily the result of the sale of a substantial portion of our equity securities portfolio in order to lower our equity exposure and related capital charges. Equity securities were approximately 3.7% and 9.7% of our total investment portfolio as of December 31, 2004 and 2003, respectively, including cash and cash equivalents and excluding our participation in PSP Swiss Property AG.

Substantially our entire equity portfolio consists of listed securities held directly or through funds. All the equity portfolios are in developed markets. As experienced in recent years, the equity markets around the world can produce highly volatile and significantly varied results due to local and worldwide economic and political conditions.

Our exposure to private equity fund investments as of December 31, 2004 was approximately $61.5 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 $15.7 million as of December 31, 2004.

At December 31, 2004 and 2003, gross unrealized gains on our equity portfolio were $73.0 million and $96.2 million and gross unrealized losses were $2.5 million and $1.7 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, that exceed 50% regardless of the period of decline or 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

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benchmarks and applicable insurance regulations. As of December 31, 2004, excluding our investments in funds and our participation in 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 affected as of July 1, 2001 by means of the Quota Share Retrocession Agreement with Zurich Financial Services. 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, 2004, the Funds Withheld Asset was $1,305.1 million. The decrease of $225.5 million over December 31, 2003 was primarily due to paid claims.

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 Zurich Insurance Company (“ZIC”) and Zurich International Bermuda Ltd (“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.

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, 2004, we had short-term investments with a carrying value of $133.3 million, representing 1.6% of our total investment portfolio, including cash and cash equivalents. Short-term investments at December 31, 2003 were $55.8 million or 0.7% of our total investment portfolio, including cash and cash equivalents.

Real Estate

At December 31, 2004, we had real estate held for investment of $138.8 million, consisting primarily of investments in residential and commercial rental properties located in Switzerland. Our direct real estate portfolio represented 1.6% of our total investment portfolio, including cash and cash equivalents.

In addition to these properties, Converium owns a 4.9% participation in PSP Swiss Property AG (an indirect real estate investment, included in equity securities) with a market value of $98.9 million as of December 31, 2004. The ownership in PSP Swiss Property AG decreased from 7.4% as of December 31, 2003, due to the merger of PSP Swiss Property AG with REG Real Estate Group, another Swiss real estate company, during 2004.

During 2004, we invested approximately $100.0 million in funds of hedge funds. At December 31, 2004, these funds had a carrying value of $102.5 million. This investment is included under the caption “Other investments” in the balance sheet.

Premiums Receivable

We had premiums receivable of $2.2 billion at December 31, 2004 compared to $2.0 billion at December 31, 2003, an increase of $169.7 million, or 8.4%. This increase is due to premiums written in 2004 and the weakening of the US dollar against European currencies. 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 some time in the future. See Reinsurance results section for additional information regarding adjustments of ultimate premium estimates. Current premiums receivable represented 14.6% and 9.1% of total premiums receivable at December 31, 2004 and 2003, respectively, and accrued premiums receivable represented 85.4% and 90.9%, 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, 2004, Converium held $559.4 million in collateral as security under related retrocessional agreements in the form of deposits, securities and/or letters of credit.

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As of December 31, 2004, we had reinsurance recoverables from retrocessionaires of approximately $1.3 billion on paid and unpaid losses and loss adjustment expenses, unearned premium reserves and future life benefits balances, compared to $1.7 billion at December 31, 2003. Allowances of $40.6 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2004, compared to $35.4 million at December 31, 2003 .

Capital Expenditures

For the three years ended December 31, 2004, 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

Based on the developments of the latter part of 2004, both Standard & Poor’s Ratings Services and A.M. Best initially lowered our ratings, but following our successful 2004 rights offering, some of the ratings were subsequently raised. Such ratings are as follows.

Currently, Standard & Poor’s long-term counterparty credit and insurer financial strength rating of Converium AG is “BBB+” (downgraded from a rating of “A”). For Converium Rückversicherung (Deutschland) AG and Converium Insurance (UK) Ltd., the insurer financial strength rating is currently “BBB+” (downgraded from a rating of “A”). Based on our announcement to place CRNA into run-off, the long-term counterparty credit and insurer financial strength ratings were downgraded to “R” (downgraded from a rating of “A”). In addition, Standard & Poor’s issued a long-term counterparty credit and senior unsecured debt ratings of “BB+” for Converium Holdings (North America) Inc. (downgraded from a rating of “BBB”). The current junior subordinated debt rating on Converium Finance S.A. is “BBB-” (downgraded from a rating of “BBB+”). All ratings have been assigned a stable outlook by Standard and Poor’s.

Currently, A.M. Best’s financial strength rating of Converium AG, Converium Rückversicherung (Deutschland) AG and Converium Insurance (UK) Ltd. is “B++” (downgraded from a rating of “A”) and its issuer credit rating for all three entities is “bbb+” (downgraded from a rating of “a”). CINA is currently assigned a financial strength rating of “B” (downgraded from a rating of “A”) and an issuer credit rating of “bb” (downgraded from a rating of “a” ). For Converium Finance S.A. the current issuer credit rating is “bb+” (downgraded from a rating of “bbb”) and the junior subordinated debt rating is “bbb-” (downgraded from a rating of “bbb+”). All ratings have been assigned a stable outlook by A.M. Best. Following our announcement of our intention to place CRNA into run-off, the financial strength rating was downgraded to “B-” from “A” and the issuer credit rating to “bb-” from “a”. For Converium Holdings (North America) Inc. the issuer credit as well as the senior unsecured debt ratings were lowered to “b-” from “bbb-”.

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 US 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. US regulations accordingly have in the past materially affected our US 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

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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 Federal Office of Private Insurance (Bundesamt für Privatversicherungen) (the “FOPI”), an administrative unit of the Swiss Ministry of Finance (Eidgenössisches Finanzdepartment) and is subject to the continued supervision by the FOPI 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 Finance 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 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 first part of the report was released in July 2003 by the commission. The proposal includes the formation of a uniform financial services authority, which will become the supervisory authority for banks (currently supervised by the Federal Banking Commission) and insurance (currently supervised 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 are granted 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.

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 Finance. 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 Swiss Insurance Supervisory Act (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, at the earliest, as of July 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 the EU Solvency II Directive.

By letter dated September 27, 2004, the FOPI has requested that Converium AG provide notice on certain intra-group transactions between Converium AG and its subsidiaries including loans, guarantees, cost sharing agreements, capital injections, and investments in subsidiaries. Furthermore the FOPI requested by letter dated October 14, 2004 certain additional information including Converium’s business strategy, planning, reserves, solvency and collateral issues. Converium is cooperating with the FOPI and is providing all required information and documentation.

In December 2004, per the FOPI’s request, Converium AG agreed to submit for approval the following intra-group transactions: intra-group loans and capital increases to subsidiaries exceeding $100.0 million; guarantees exceeding $10.0 million; transfer of portfolios or novations involving changes in reserves exceeding $25.0 million, dividends to Converium Holding AG and all intra-group reinsurance transactions that are not at arm’s length. Absent consent of the FOPI, the intra-group transactions exceeding the thresholds cannot be executed, which may in turn have an impact on the funding in conjunction with intra-group transactions.

United States

Agreement with Connecticut Department of Insurance

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As a result of the reserve strengthening Converium recorded in 2004 and the subsequent placement of its North American business into run-off, the Connecticut Insurance Department (the “Department”) has implemented additional financial monitoring of CRNA. CRNA has entered into a voluntary letter of understanding with the Department pursuant to which CRNA is prevented from taking a number of actions without first obtaining the Department’s approval, including:

• making any material change in its management or operations;

• making any withdrawal of monies from its bank accounts, disbursements or payments outside the ordinary course of the business run-off;

• incurring any debt, obligation or liability for borrowed money not related directly to the ordinary course of the business run-off;

• writing, assuming or issuing any new insurance policies;

• making any dividend payment or other payment or distribution to or engaging in any transaction, or entering into any agreement directly or indirectly with its parent company, or any affiliated company;

• entering into any new material reinsurance agreement; and

• entering into any sales, purchases, exchanges, loans, extensions of credit or investments not in the ordinary course of its run-off business.

In addition, CRNA is required to provide to the Department written reports on a monthly basis containing detailed information on all commutations of reinsurance treaties and related activities, including specific impact on CRNA’s statutory financial statements, as well as any additional reports that the Department reasonably determines are necessary to ascertain the financial condition of the Company. The voluntary letter of understanding does not preclude the Department from initiating any further actions that it deems in its discretion to be necessary for the protection of CRNA’s policyholders, reinsureds and the public.

The foregoing requirements will continue until March 15, 2006, at which time the Department will reassess the financial condition of CRNA.

The recent ratings downgrades as well as our decision to place CRNA into run-off have triggered “special funding” clauses in CRNA’s and CINA’s reinsurance and insurance contracts. These clauses require CRNA and CINA to provide collateral for their payment obligations under those contracts. In addition, state insurance regulators may request that CRNA and CINA make special deposits in their states or provide collateral for contracts issued to residents of their states. The approval of the Department is required before we provide collateral that is not contractually required. If the Department withholds its approval, state insurance regulators that requested special deposits or collateral not contractually required, could seek to revoke CRNA’s or CINA’s licenses or initiate proceedings to take possession of the property, business and affairs of CRNA or CINA in the respective states.

General US 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. CRNA is a Connecticut-domiciled reinsurer which is licensed, accredited or approved in all 50 states, is an accredited reinsurer in the District of Columbia, is an admitted reinsurer for the United States Treasury and has a license to transact certain lines of business in Canada. Pursuant to its voluntary letter of understanding with the Department, CRNA currently must seek prior approval from the Department to write, assume or issue any new policies in the United States. In addition, CRNA is amending its Canadian license to restrict its activities to servicing existing policies. CINA 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. CRNA is not currently “commercially domiciled” in any state. CINA is currently “commercially domiciled” in California and Florida.

Insurance holding company regulation

We and our US 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

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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 CRNA and CINA 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, CRNA 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. Further, pursuant to its voluntary letter of understanding with the Department, CRNA may not make any dividend payment without prior approval from the Department.

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 CHNA or either of its US insurance subsidiaries may require prior notification in the states that have adopted pre-acquisition notification laws.

Insurance regulation

As a licensed primary insurer, CINA 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 US insurance and reinsurance subsidiaries to file financial statements with insurance departments everywhere they do business, and the operations of our US insurance and reinsurance subsidiaries and accounts are subject to the examination by those departments at any time. Our US 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 “NAIC”). The Connecticut Insurance Department last completed a financial examination of CRNA for the five-year period ending December 31, 2002. The New Jersey Department of Banking and Insurance last completed a financial examination of CINA for the five-year period ending December 31, 2000.

Reinsurance regulation

CRNA 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.

CRNA is accredited or approved to write reinsurance in certain states. The ability of any primary insurer, as reinsured, to take

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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.

US reinsurance regulation of our non-US reinsurance subsidiaries

Converium AG and Converium Rückversicherung (Deutschland) AG, our non-US reinsurance subsidiaries, also assume reinsurance from primary US insurers. In order for primary US insurers to obtain financial statement credit for the reinsurance obligations of our non-US reinsurers, our non-US reinsurers must satisfy reinsurance requirements. Non-US 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 US trust fund for the payment of valid reinsurance claims in an amount equal to the reinsurer’s US reinsurance liabilities covered by the trust plus an additional $20 million. In addition, unlicensed and unaccredited reinsurers may secure the US 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 three IRIS loss reserve tests fall outside of the specified parameters as of December 31, 2001 and December 31, 2002, CRNA 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. For 2004, the same independent loss reserve specialist was used, although only one IRIS loss reserve ratio was out of the specified range as of December 31, 2003.

Risk-based capital

The Risk-Based Capital for Insurers Model Act (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. US 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, 2004, the Total Adjusted Capital of our US reinsurance subsidiary was less than the Company Action Level. As a result, CRNA filed an RBC plan with the state of domicile, Connecticut, on March 28, 2005. The Connecticut Insurance Department approved the RBC plan for implementation on May 9, 2005. Our US insurance subsidiary, CINA, 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 (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

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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.

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.

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. Extraordinary loss experience, loss reserve deficiencies, or prior investment results may result in the insolvency of certain US insurance companies, increasing the possibility that our US insurance subsidiaries 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 co-insurance 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 cap of $100 billion on covered losses. Participation in the program for insurers providing commercial property and casualty insurance is mandatory. While in effect, the TRIA appears to provide the property and casualty sector with an increased ability to withstand the effect of potential terrorist events, 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. In June of 2004, the US Treasury Department extended the “make available” provisions of TRIA until December 31, 2005. These provisions, originally scheduled to expire on December 31, 2004, require insurers to offer terrorism insurance coverage in all commercial property and casualty insurance policies. While the US Congress is considering legislation to extend TRIA beyond its scheduled expiration on December 31, 2005, the success of such efforts to extend the program is uncertain.

Proposed US legislation regarding US asbestos liability

Both the US Senate and the US House of Representatives are considering a bill called the Fairness in Asbestos Injury Resolution Act of 2005. The proposed bill would establish a privately financed trust fund to provide payments to individuals with asbestos-related illnesses and would stay asbestos claims in the tort litigation system. The trust would be financed by primary insurers, reinsurers and industrial enterprises and the insurance industry would be responsible for funding a certain share of the total costs. Under the proposed bill an Office of Asbestos Disease Compensation within the Department of Labor

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will manage the trust fund and oversee the settlement of all asbestos claims with awards from the fund. Medical criteria would be established to ensure that only people who showed signs of asbestos-related illnesses would be entitled to payments from the trust. An Asbestos Insurers Commission will determine the trust fund payment obligations of insurers. Judicial review will be possible, under expedited consideration, for final determinations regarding trust fund obligations in the US Court of Appeals for the District of Columbia and for award decisions in the US Court of Appeals for the circuit in which the claimant resides.

We are unable to predict whether the proposed bill will be enacted, and if so, what proportion of trust fund monies the insurance industry will be responsible to provide. Additionally, we are unable to predict how the insurance industry’s obligations to provide the trust fund monies would be allocated among industry participants.

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 (BaFin) located in Bonn, Germany.

Until the end of 2004, and in contrast to insurance enterprises, companies that had been engaged exclusively in reinsurance activities were subject to a less extensive scope of governmental supervision. The supervisory authority’s monitoring of reinsurers was limited to ensuring their compliance with the specific accounting regulations applicable to insurance enterprises. For this purpose, reinsurance enterprises were required to submit quarterly and annual financial statements to the supervisory authority.

In addition, reinsurers were 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.

Under the old regime, German reinsurers used to only be supervised indirectly, principally through the supervision of primary insurance companies. In particular, the Federal Insurance Supervisory Office requires German insurance companies to monitor their reinsurance agreements, which has led to the creation of internal rating systems for reinsurers by German insurance companies.

The German legislative has passed an enhanced supervisory act that now fully integrates the reinsurance industry into the regulatory scheme applicable to the insurance industry under the EU Directive on reinsurance. See “— European Union directives”. The new law became effective by January 1, 2005. The new regulation has an impact on various aspects of reinsurers, including legal form of the company, location of the headquarters, qualification of the executive management, control procedures towards shareholders, investment principles, solvency requirements and special intervention rights for the supervising bodies.

In late 2004, in order to meet newly established solvency requirements for reinsurance companies in Germany, Converium Rückversicherung (Deutschland) AG increased its capital on a local statutory basis by €100.0 million ($135.9 million). This was accomplished by means of a capital contribution from Converium AG in the amount of €80.0 million ($108.7 million). In addition, Converium AG granted Converium Rückversicherung (Deutschland) AG a subordinated loan in the amount of €20.0 million ($27.2 million) for a term of twenty years.

In December 2004, Converium AG established a branch office in Cologne, Germany. This move was made in response to the favorable legal regulatory environment in Germany as the rules regarding establishment of branch offices were slated to change as of January 1, 2005 . We do not currently transact any business in this branch.

United Kingdom

Converium Insurance (UK) Ltd (“CIL”) is subject to U.K. insurance regulation and the supervision by the UK Financial Services Authority (FSA). It is anticipated that the U.K. 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

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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 capital requirements for general insurers, which take effect from January 1, 2005.

European Union directives

Our businesses in the United Kingdom and Germany, as well as in the other member states of the EU and the European Economic Area, (the “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 April 2004, the EC presented a proposal for the EU Directive on reinsurance, which will now be considered under the procedure known as co-decision for adoption by the European Parliament and Council. The proposed EU Directive, if and when adopted, will essentially establish the principles applicable to the operation of reinsurance business in a Member State and rules regarding technical provisions and the solvency requirements applicable to reinsurance companies. The EU Directive is based largely on solvency related concepts stipulated in the prior directive adopted by the EU for insurance companies. The proposed EU Directive does not currently provide for any discrimination of non-EU based reinsurance companies. However, if the final adopted EU 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 financial condition, result of operations or cash flows.

Asia

Restrictions imposed by the Monetary Authority of Singapore

Citing recent developments affecting the Converium Group, the Monetary Authority of Singapore has imposed certain restrictions on the conduct of our business originating from our Singapore branch. Our Singapore branch must, among other things:

• cease issuing any new loans out of insurance funds;

• cease acting as a guarantor/surety;

• cease investing in the equities of related companies; and

• refrain from appointing foreign custodians for any of the assets of the branch.

Canada

Amended approval by the Office of Superintendent of Financial Institutions

Effective September 14, 2004, the Office of the Superintendent of Financial Institutions amended its order approving CRNA’s insuring of risks in Canada. The amended order limits such activity to the business of reinsurance and to the servicing of existing policies.

C. ORGANIZATIONAL STRUCTURE

Converium Holding AG has substantially no net assets other than its ownership of 100% of the shares of Converium AG. As of December 31, 2004, Converium AG held approximately 50% of our net assets itself, and an additional 48% through its direct and indirect ownership of each of our subsidiaries.

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 CHNA, which holds our subsidiaries CRNA and CINA. Converium AG owns directly or indirectly, 100% of all of our operating companies. Additionally, Converium Holding AG holds 100% of the shares in each of Converium Finance Ltd., Bermuda and Converium IP Management, Ltd.

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The following chart summarizes our corporate structure.

Converium Holding Ltd, Zug / Switzerland Converium Reinsurance (North America) Inc., Connecticut / USA Converium Insurance (North America) Inc, New Jersey / USA 100% Converium Holdings (North America) Inc, Delaware / USA Canadian Branch / Toronto, Canada 100% 100% Converium Finance (Bermuda) Ltd, Hamilton / Bermuda Converium IP Management Ltd, Hamilton / Bermuda ¹⁾ 100%
100% Converium Rückversicherung (Deutschland) AG , Cologne / Germany Succursale pour la France (Vie) – Branch Office 100% With reinsurance licenses in the following countries: Argentina, Mexico, Guatemala, Columbia, El Salvador, Ecuador SATEC S.R.L., Venice / Italy 48% Rappresentanza Generale per l‘Italia – Branch Office Converium Finance S.A. / Luxembourg 100% Converium Representaciones S.A., Buenos Aires / Argentina 100% MDU Services Ltd, London / U.K. 49.9% RISC Ventures LLC, Delaware / USA 17.5% Inter-Ocean Holdings Ltd, Hamilton / Bermuda 9.9% Converium PCC Ltd, Guernsey / UK Converium Serviços Técnicos Ltda, Sao Paulo / Brazil 100% Global Aerospace Underwriting Managers Ltd, London / UK 30.1%
100% Nordic Aviation Insurance Group, Copenhagen / Denmark 25% Converium Insurance (UK) Ltd, London / UK Converium Underwriting Ltd, London / UK (corporate member at Lloyd‘s) Converium London Management Ltd, London / UK 100% 100% 100% Converium Holding (UK) Ltd, London / UK 100% Converium Ltd, Zurich / Switzerland With reinsurance licenses in the following countries: Dominican Republic, Peru, Uruguay, Chile, Bolivia, Puerto Rico, Guatemala, Columbia, Paraguay, Venezuela, El Salvador, Ecuador, Nicaragua 100% Australian            Branch, Sydney / Australia Reinsurance Representative Office, Tokyo / Japan Bermuda Branch , Hamilton / Bermuda Regional Reinsurance Branch Office, Management Office Labuan / Malaysia Regional Reinsurance Branch Office, Singapore / Singapore Marketing Office Kuala Lumpur / Malaysia (for regional reinsurance Branch Office / Labuan) Oficina de Representación en México / Mexico German Branch, Cologne / Germany

     (1) Currently in the process of transferring to Zug, Switzerland.

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 US 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.

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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 also hold other properties for investment purposes.

As a result of the transition to a run-off entity in North America, a decision was made in January 2005 to vacate the primary office space in New York, New York and consolidate in the Stamford, Connecticut office space. Converium expects the effective date of the transfer to be July 1, 2005.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

The following discussion and analysis should be read in conjunction with our financial statements, including the related notes to those financial statements. 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. See “Cautionary note regarding forward-looking statements”.

To the extent that the description of our business presents historical financial data, such financial data may not reflect our future operating performance. As a result of the ratings downgrades and the run-off of our North American business, we expect a significant decline in the amount of premiums as well as significant shifts in the geographic and line of business distributions of premiums that we write going forward as compared to our historical performance.

Overview

Converium Holding AG and subsidiaries (“Converium”) is an international reinsurer whose business operations are recognized for innovation, professionalism and service. We believe we are accepted as a professional reinsurer for all major lines of non-life and life reinsurance in Europe, Asia-Pacific and Latin America. We actively seek to create innovative and efficient reinsurance solutions to complement our target clients’ business plans and needs. We focus on core underwriting skills and on developing close client relationships while honoring our and our clients’ relationships with intermediaries.

We offer a broad range of traditional non-life and life reinsurance products as well as “non-traditional” solutions to help our target clients efficiently manage capital and risks. In non-life reinsurance, our lines of business are General Third Party Liability, Motor, Personal Accident (assumed from non-life insurers), Property, Agribusiness, Aviation & Space, Credit & Surety, Engineering, Marine & Energy, Professional Liability and other Special Liability and Workers’ Compensation. In Life & Health Reinsurance, our lines of business are 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 (the “Transactions”). On December 1, 2001, Converium entered into a Master Agreement with Zurich Financial Services, 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.

Due to the reserving actions and subsequent lowering of Converium’s ratings during 2004, we placed our US operations into run-off, which resulted in the discontinuation of writing reinsurance from offices located in North America. See “Item 4. — Information on the Company — B. Business Overview — Ratings”. We will, however, offer reinsurance for attractive US-originated business to a limited number of select accounts. This business will be underwritten and managed through Converium AG, Zurich. Converium Reinsurance (North America) Inc. (“CRNA”) was placed into orderly run-off and we are seeking to commute CRNA’s liabilities wherever appropriate (see Note 3 to our 2004 consolidated financial statements).

As a result of ratings downgrades, it was necessary to re-evaluate our global strategy to optimize shareholder value. See “Item 4. — Information on the Company — B. Business Overview — Our Strategy”. The decision to place CRNA into run-off and to transfer the underwriting of North American non-life business to Zurich will result in a reduction of gross premiums written of North American originated business of approximately $1.0 billion for underwriting year 2005, predominantly in Standard Property & Casualty Reinsurance and Specialty Lines. We also expect additional reductions in other parts of our business. Based on the January 1 renewal period, Converium’s renewable non-life premium income was reduced by approximately $727.4 million, or 37% as compared to 2004. Based on this development, Converium’s gross premiums written in 2005 are expected to reach approximately $2.0 billion

During 2004 our business was organized around three operating segments: Standard Property & Casualty Reinsurance, Specialty Lines and Life & Health Reinsurance; which are based principally on lines of business. The business segments are

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supported by global business support functions such as Actuarial & Risk Management and Underwriting Technical Services, and by global services such as Human Resources, Finance and IT. We believe that this structure provides a higher degree of transparency, accountability and management control. See “Item 4. — Information on the Company — B. Business Overview” for discussion regarding the reorganization of our segment structure in the first quarter of 2005.

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; and

• 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;

• 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; and

• 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; and

• 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.

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 (“US GAAP”). The preparation of these financial statements in accordance with US 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

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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 US 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. If a contract is commuted, we reduce loss and loss adjustment expense carried on our balance sheet and record a gain or loss for the difference between loss and loss adjustment expense carried on our balance sheet and the commutation payment. We estimate our loss and loss adjustment reserves on the basis of facts reported to us by ceding companies, and in conjunction with actuarial estimates and methodologies 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. During the course of 2004 Converium implemented enhanced procedures for establishing written premium estimates. The new process mechanically derives the accrued written and earned premium from our ultimate premium estimates for a period of two years after the expiration of the underlying direct policy. Following this, the cedent’s actual reported premiums are used.

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 US 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 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. See Note 27 to our 2004 consolidated financial statements for additional information regarding retrocessional risk management.

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Foreign currency translation

In view of our global scale and the fact that more of our business is transacted in US dollars than in any other currency, we report our financial information in US 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, that exceed 50% regardless of the period of decline or 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 the entire 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.

Goodwill and Other Intangible Assets

SFAS No. 142, “Goodwill and Other Intangible Assets” 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 and other intangible assets 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 and other intangible assets 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.

Upon application of SFAS No. 142, Converium ceased amortizing goodwill on January 1, 2002.

Investment Results

Investment results are an important part of our overall profitability. Our net investment income increased $78.6 million, or 33.7% for the year ended December 31, 2004 as compared to the same period in 2003. The increase largely resulted from growth; in invested assets during 2004, particularly in our fixed maturities portfolio, as well as income received from the transition of a fixed income bond fund to a direct fixed income investment portfolio. The decline in income from the Funds

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Withheld Asset is due to the declining asset balance. See “Item 4. Information on the Company – B. Business Overview – Investments – Funds Withheld Asset”. Our net investment income decreased $18.8 million, or 7.5%; for 2003 as compared to 2002. The decrease reflects lower investment income yields offset by an increase in invested assets from operating cash flows. Our average annualized net investment income yield (pre-tax) was 3.8% for the year ended December 31, 2004 as compared to 3.3% and 4.3% for the same periods in 2003 and 2002, respectively.

We recorded net realized capital gains of $46.5 million and $18.4 million for the years ended December 31, 2004 and 2003, respectively. The 2004 amount includes pre-tax net realized capital gains associated with the sale of equity securities to adjust our asset allocation. Impairment charges of $6.2 million are included in the pre-tax net realized capital gains in 2004 as compared to $27.4 million in 2003. Included in the impairment charges for 2004 were $2.5 million related to our equity securities portfolio, $3.0 million related to our real estate portfolio and $0.7 million related to other investments. In 2002, we recorded pre-tax net realized capital losses of $10.3 million. Included in this amount are 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, losses realized on the sale of WorldCom fixed income investments of $15.8 million and impairment charges of $48.3 million.

We recorded $6.2 million, $27.4 million and $48.3 million of impairment charges during 2004, 2003 and 2002, respectively. See “Item 4. Information on the Company – B. Business Overview – Critical accounting policies” for details on our fixed maturities and equity securities impairment policy.

The following table shows the average pre-tax yields and investment results on our investment portfolio for the years ended December 31, 2004, 2003 and 2002.

	Net Investment Income and Net Realized and Unrealized Capital Gains (Losses)
	Year Ended December 31,
	2004									2003									2002
	Net						Realized			Net						Realized			Net						Realized
	Investment			Pre-tax			gains			Investment			Pre-tax			gains			Investment			Pre-tax			gains
	Income			yield			(losses)			Income			yield			(losses)			Income			yield			(losses)
										($ millions, except percentages)
Fixed maturity securities	$	201.3			2.5	%	$	5.7		$	121.0			3.0	%	$	34.5		$	132.7			4.6	%	$	88.0
Equity securities		11.5			0.1			48.0			11.4			1.7			(16.1	)		14.5			2.4			(101.2	)
Funds Withheld Asset / Zurich Financing Agreement		75.1			0.9			—			85.6			5.4			—			81.1			5.3			—
Short-term and other		37.0			0.5			(7.2	)		26.0			3.8			—			35.4			4.5			2.9
Less investment expenses		(13.3	)		—						(11.0	)		—						(11.9	)		—
Total		311.6			3.8						233.0			3.3						251.8			4.3
Net realized capital gains (losses)		46.5									18.4									(10.3	)
Net investment income and net realized capital gains (losses)		358.1			4.4						251.4			3.5						241.5			4.1
Change in net unrealized gains (losses)		(25.1	)								154.2									(109.0	)
Total investment return	$	333.0			4.1	%				$	405.6			5.7	%				$	132.5			2.2	%

Our average net investment income yield was 3.8% for the year ended December 31, 2004, as compared to 3.3% and 4.3% for the same periods in 2003 and 2002, respectively.

Our average annualized total investment income yield (pre-tax) was 4.4% for the year ended December 31, 2004 as compared to 3.5% and 4.1% for the same periods in 2003 and 2002, respectively. Yields are calculated based on the average of beginning and ending total invested assets balances (including cash and cash equivalents). The total investment income yields were positively impacted by the increase in realized gains in 2004 resulting from the sale of equity securities to adjust our asset allocation in order to reduce investment portfolio risks as well as the decline in impairment charges compared to 2003. We paid fees in the amount of $11.6 million, $8.0 million and $6.1 million to our asset managers and custodians in 2004, 2003 and 2002, respectively, including other investment-related costs.

Our average annualized total investment return (pre-tax) was 4.1% for the year ended December 31, 2004 as compared to 5.7%, and 2.2% for the same periods in 2003 and 2002, respectively. The total investment return includes the effect of pre-tax net unrealized gains and losses. The return was driven by a reduction in net unrealized capital gains due to the realization of gains triggered by the sale of equity securities, partially offset by the continued positive development of the stock markets in 2004. In 2003, we had an increase in net unrealized capital gains of $94.5 million as a result of the strong recovery of the stock markets. The average total investment return in 2002 included the effect of foreign currency on the change in net unrealized capital gains and losses of $(50.3) million, lowering the return by 0.8%. As of 2003 and forward, the currency effect on the change in net unrealized capital gains and losses was directly booked to cumulative currency translation adjustments, and therefore no longer affects the investment return.

Restructuring Costs

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The placement of CRNA into orderly run-off and the ratings downgrades resulted in a reduction of premium volume and subsequently the need to reduce the global cost base going forward. As a result, Converium notified certain of its employees that their employment would be terminated. For the year ended December 31, 2004, $2.7 million in restructuring costs has been expensed primarily due to the costs associated with these severance plans. As a result of the transition to a run-off entity in North America, a decision was made in January 2005 to vacate our primary office space in New York, New York and consolidate in our Stamford, Connecticut office space. We expect the effective date of the transfer to be July 1, 2005. Office space in Zurich is also under review. Associated costs will be recorded as restructuring costs.

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 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 and changes in our valuation allowance, the relationship between our reported income before tax and our income tax expense may change significantly from one period to the next.

As a result of the developments of 2004, we established a full valuation allowance against the net deferred tax balances previously recorded at CRNA of $269.8 million and a valuation allowance on the net operating losses carried forward at Converium AG of $19.9 million. For further information about our income tax expenses, see Note 13 to our 2004 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”.

Review of Certain of our Reinsurance Transactions

Ongoing investigations of the insurance and reinsurance industry and certain insurance and reinsurance products are being conducted by U.S. regulators and governmental authorities, including the Securities and Exchange Commission and the New York Attorney General.

On March 8, 2005, MBIA Inc. (“MBIA”) issued a press release stating that MBIA’s audit committee undertook an investigation to determine whether there was an oral agreement with MBIA under which MBIA would replace Axa Re Finance as a reinsurer to CRNA by no later than October 2005. The press release stated that it appears likely that such an agreement or understanding with Axa Re Finance was made in 1998. Thereafter, on April 19, 2005, CRNA received subpoenas from the U.S. Securities a nd Exchange Commission and the Office of the New York Attorney General seeking documents related to certain transactions between CRNA and MBIA.

In view of the industry investigations and the events relating to MBIA described above, we have engaged counsel to assist us in a review and analysis of certain of our reinsurance transactions, including the MBIA transactions. We are fully cooperating with the governmental authorities in connection with their investigation. The impact of our ongoing review and analysis and the ongoing regulatory investigations on us is uncertain, and there can be no assurance as to whether or not the outcome of such investigations will have a material impact on Converium.

Results of Operations

The table below presents summary income statement data for the years ended December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2004			2003			2002
				($ millions)
Revenues:
Gross premiums written	$	3,840.9		$	4,223.9		$	3,535.8
Net premiums written	$	3,553.0		$	3,827.0		$	3,322.2
Net premiums earned	$	3,685.1		$	3,676.5		$	3,165.5
Net investment income and net realized capital gains (losses)		358.1			251.4			241.5
Other (loss) income		(2.6	)		2.7			(1.2	)
Total revenues		4,040.6			3,930.6			3,405.8
Benefits, losses and expenses:
Losses, loss adjustment expenses and life benefits		(3,263.1	)		(2,674.2	)		(2,492.0	)
Underwriting acquisition costs		(842.5	)		(803.2	)		(666.7	)
Other operating and administration expenses		(217.9	)		(197.8	)		(173.3	)
Interest expense		(33.1	)		(31.0	)		(16.4	)
Impairment of goodwill		(94.0	)		—			—
Amortization of intangible assets		(9.9	)		—			—
Restructuring costs		(2.7	)		—			—
Total benefits, losses and expenses		(4,463.2	)		(3,706.2	)		(3,348.4	)
(Loss) income before taxes		(422.6	)		224.4			57.4
Income tax (expense) benefit		(338.2	)		(39.3	)		49.4
Net (loss) income	$	(760.8	)	$	185.1		$	106.8

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During 2004, there were several items that resulted in measurable effects on our financial results. These items include (i) the strengthening of prior years’ reserves, (ii) adjustments of premium accruals and associated loss and underwriting expenses, (iii) adjustment of retrocessional recoveries to reflect gross loss developments, and (iv) commutations, which collectively resulted in a net impact on the technical result of $581.3 million. In addition, we established a full valuation allowance against the net deferred tax balances previously recorded at CRNA of $269.8 million and a valuation allowance on the net operating losses carried forward at Converium AG of $19.9 million, and recorded an impairment of goodwill of $94.0 million.

The table below shows the reconciliation between pre-tax results and pre-tax operating results. We use pre-tax operating results to measure performance, as this measure focuses on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, or other non-operating items such as goodwill impairment.

Pre-Tax Operating (Loss) Income	Year Ended December 31,
	2004			2003		2002
				($ millions)
(Loss) income before taxes	$	(422.6	)	$	224.4	$	57.4
Net realized capital gains (losses)		46.5			18.4		(10.3	)
Impairment of goodwill		(94.0	)		—		—
Amortization of intangible assets		(9.9	)		—		—
Restructuring costs		(2.7	)		—		—
Pre-tax operating (loss) income	$	(362.5	)	$	206.0	$	67.7
Net (loss) income	$	(760.8	)	$	185.1	$	106.8

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Converium Consolidated Net (Loss) Income

For the year ended December 31, 2004 we reported a net loss of $760.8 million versus net income of $185.1 million for the same period in 2003. The decline is primarily due to the impact of those items as described above, in addition to losses related to the natural catastrophes that occurred in 2004.

We reported a pre-tax operating loss (defined as pre-tax income or loss excluding pre-tax net realized capital gains or losses, impairment of goodwill, amortization of intangible assets and restructuring costs) of $362.5 million for the year ended December 31, 2004, a decrease of $568.5 million as compared to the same period in 2003. We use pre-tax operating results to measure performance, as this measure focuses on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, or other non-operating items such as goodwill impairment and restructuring costs.

For the year ended December 31, 2004, gross premiums written decreased 9.1%, net premiums written decreased 7.2% and net premiums earned increased 0.2%. The reduction in gross and net premiums written primarily resulted from clients exercising their rights of special termination under various reinsurance contracts and adjustments of ultimate premium estimates, as described below. Despite the decrease in premiums, there still remained some growth across lines of business within the Specialty Lines segment as well as in the Life & Health Reinsurance segment resulting from overall market conditions and new client relationships.

Adjustments of ultimate premium estimates: During the course of 2004 Converium implemented enhanced procedures for establishing written premium estimates. Our processes require underwriters and others to assess the realization of premium estimates on a quarterly basis. This was supplemented at year-end by a detailed review using actuarial techniques, primarily for European non-life business, which compare estimates with actuarially derived amounts using ceding companies actual reported premium information. These analyses resulted in a decrease in net premiums written and earned in the Standard Property & Casualty Reinsurance and Specialty Lines segments in the amount of $219.8 million; after reflecting the impact on accrued underwriting expenses of $16.5 million and losses of $206.4 million, the impact of these adjustments on the technical result was $3.0 million.

Our non-life combined ratio was 118.2% for the year ended December 31, 2004 as compared to 97.9% for the same period in 2003. Reserve actions and natural catastrophes in 2004 increased the combined ratio by 17.3 points and 4.8 points, respectively for the year ended December 31, 2004.

We recorded net realized capital gains of $46.5 million and $18.4 million for the years ended December 31, 2004 and 2003, respectively. The 2004 amount includes pre-tax net realized capital gains associated with the sale of equity securities to adjust our asset allocation. Impairment charges of $6.2 million are included in the pre-tax net realized capital gains in 2004 as compared to $27.4 million in 2003. Included in the impairment charges for 2004 were $2.5 million related to our equity

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securities portfolio, $3.0 million related to our real estate portfolio and $0.7 million related to other investments.

Our effective tax rate was 80.0% for the year ended December 31, 2004 as compared to 17.5% for the same period in 2003. The 2004 consolidated income tax expense reflects an additional expense of $289.7 million related to the establishment of a full valuation allowance against the net deferred tax balances previously carried at CRNA ($269.8 million) and a valuation allowance on the net operating losses carried forward at Converium AG ($19.9 million).

Converium Consolidated Premiums

Net premiums written decreased for the year ended December 31, 2004 over the same period in 2003 largely due to premium reductions resulting from clients exercising their rights of special termination under various reinsurance contracts, as described below, adjustments of ultimate premium estimates, and a reduction of reinsurance recoverables of $12.0 million. For the year ended December 31, 2004, Standard Property & Casualty Reinsurance decreased by $190.6 million or 11.6% and Specialty Lines decreased by $153.8 million or 8.5%. Despite this, net premiums written in the Life & Health Reinsurance segment grew by $70.4 million or 19.1%. We retained 92.5% and 90.6% of our gross premiums written for the year ended December 31, 2004 and 2003, respectively.

Special terminations: Many reinsurance contracts include a ratings or statutory surplus level provision. Ratings and surplus triggers typically give rise to a right of termination in favor of the cedent that allows the cedent to terminate the contract on a prospective basis from the date of termination. As a result of the rating agencies’ actions and the reduction in surplus due to the reserve strengthening, contracts with an estimated ultimate premium income of $508.8 million were triggered in the second half of 2004. This resulted in an estimated impact on gross premiums written of $(114.5) million for the second half of 2004.

As of December 31, 2004, Converium’s reserves for unearned premiums, gross were $1,312.3 million, which relates to business primarily written in 2003 and 2004, and is expected to materially earn out in 2005. The earn out of these reserves for unearned premiums and the reduced non-life premium income of the January 1, 2005 renewal period, are expected to result in a reduction of reserves for unearned premiums in future periods.

For the year ended December 31, 2004, based on stable exchange rates, gross premiums written decreased by 13.1%, net premiums written decreased by 11.5%, and net premiums earned decreased by 4.3%.

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 increased $78.6 million, or 33.7% for the year ended December 31, 2004 as compared to the same period in 2003. The increase largely resulted from growth in invested assets during 2004, particularly in our fixed maturities portfolio, as well as income received from the transition of a fixed income bond fund to a direct fixed income investment portfolio. The decline in income from the Funds Withheld Asset is due to the declining asset balance.

Our average annualized total investment income yield (pre-tax) was 4.4% for the year ended December 31, 2004 as compared to 3.5% for the same period in 2003. Yields are calculated based on the average of beginning and ending total invested assets balances (including cash and cash equivalents). The total investment income yields were positively impacted by the increase in realized gains in 2004 resulting from the sale of equity securities to adjust our asset allocation in order to reduce investment portfolio risks as well as the decline in impairment charges compared to 2003. We paid fees in the amount of $11.6 million and $8.0 million to our asset managers and custodians in 2004 and 2003, respectively, including other investment-related costs.

Our average annualized total investment return (pre-tax) was 4.1% for the year ended December 31, 2004 as compared to 5.7% for the same period in 2003. The return was driven by a reduction in net unrealized capital gains due to the realization of gains triggered by the sale of equity securities, partially offset by the continued positive development of the stock markets in 2004. In 2003, we had an increase in net unrealized capital gains of $94.5 million as a result of the strong recovery of the stock markets. As of 2003 and forward, the currency effect on the change in net unrealized capital gains and losses was directly booked to cumulative currency translation adjustments, and therefore no longer affects the investment return.

We recorded $6.2 million and $27.4 million of impairment charges during 2004 and, 2003, respectively.

Converium Consolidated Other (Loss) Income

Other loss for the year ended December 31, 2004 was $2.6 million as compared to other income of $2.7 million in 2003. Other loss for 2004 includes an amount of $20.0 million for a retroactive stop-loss retrocession cover from National Indemnity

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Company, offset by a reduction of $9.6 million in the bad debt provision related to the U.S. Life Insurance Company settlement (see Notes 21 and 26 to our 2004 consolidated financial statements). Other (loss) income components also include 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 and non-life loss ratio increased for the year ended December 31, 2004 as compared to the same period in 2003, mainly due to the development of prior years’ loss reserves, as described below. In addition, the impact of the hurricanes, typhoons and the tsunami in 2004 added $154.5 million of incurred losses, or 4.8 points to the 2004 loss ratio.

Development of prior years’ reserves: Converium has experienced significant adverse development, predominantly in its US casualty reinsurance lines, for the last several years. Since 2000, Converium has recorded a total of $868.2 million of additional net provisions on prior years’ non-life business (2000: $65.4 million: 2001: $123.6 million; 2002: $148.5 million; 2003: $(31.3) million; and 2004: $562.0 million).

During early 2004, Converium announced that reported losses from prior year US casualty business had exceeded expected loss emergence and that the volatility of longer-tail risks was likely to persist for some time. This adverse loss-reporting trend continued and accelerated into mid-2004 and prompted Converium to initiate additional reviews of its US business from an integrated underwriting, claims and actuarial perspective in order to examine the adequacy of prior years’ provisions. In addition, in order to obtain an external review of our overall reserve position, we commissioned the actuarial consulting firm Tillinghast-Towers Perrin to perform an independent actuarial review of our non-life loss and allocated loss adjustment expense reserves as of June 30, 2004 in respect of the Zurich and New York originated businesses. The outcome of these in-depth internal and external reviews resulted in an aggregate strengthening of prior years’ non-life loss reserves by $562.0 million for the year ended December 31, 2004. This action was taken in response to the continued adverse loss emergence due to increased claims reporting activity from clients relating to US casualty business written from 1997 to 2001 as well as deterioration from European non-proportional motor business written in recent years. While we believe that we have fully addressed this issue through our reserving actions, volatility is expected to persist for some time.

In the Standard Property & Casualty Reinsurance segment, the development of prior years’ reserves of $73.5 million primarily related to adverse developments of General Third Party Liability ($116.3 million), motor liability outside the United States ($91.7 million) and Personal Accident (non-life) ($8.1 million), which was partially offset by positive developments related to Property ($82.1 million) and miscellaneous liability ($60.5 million) that also included the impact of whole account retrocessions. In the Specialty Lines segment, the development of prior years’ reserves of $488.5 million primarily related to adverse developments of the Professional Liability and other Special Liability lines ($449.3 million), particularly excess & surplus lines and umbrella, Workers’ Compensation ($55.3 million), and Engineering ($12.9 million). These adverse developments in the Specialty Lines were partially offset by positive developments related to Aviation & Space ($24.5 million), Agribusiness ($0.7 million), and Credit & Surety ($3.8 million).

In 2003, the positive development of $31.3 million consisted of positive development on Property lines ($113.5 million) and Aviation & Space ($102.2 million), offset by adverse development on Workers’ Compensation and Professional Liability and other Special Liability lines ($120.3 million) and the Motor and General Third Party Liability lines ($64.1 million). The reserve releases in 2003 were primarily from the 2002 underwriting year, while the US business written in 1997 to 2001 mostly saw continued strengthening.

Commutations: Based on the developments of 2004, we placed our US reinsurance operations into run-off and started to implement and execute a commutation strategy. Commutations can accelerate the realization of profit inherent in long-tail reserves by crystallizing outstanding claims reserves into payments, which are discounted to reflect the time value of money. Since commutation payments essentially reflect a discounted present value of estimated future cash flows, future investment income earned is expected to decline as the assets backing those reserves are liquidated to make payments. As of December 31, 2004, we agreed upon commutations with primarily North American cedents regarding gross loss reserves of $545.8 million that resulted in a cash outflow of $526.8 million.

Guaranteed Minimum Death Benefit (GMDB) business: For the year ended December 31, 2004 there were no additional reserving actions required for the GMDB book of business. In 2003 and 2002, the Life & Health Reinsurance segment strengthened reserves for this closed block of variable annuity business by $20.5 million (to net $56.0 million) and $15.6 million, respectively. As a result of the positive performance of the US stock markets, GMDB’s net amount at risk further decreased to $635.5 million at December 31, 2004 from $809.7 million at December 31, 2003.

Impact of aviation and space business: Our aviation and space business contributes substantially to the profitability of the

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Specialty Lines segment. Related to this business, we had net premiums written of $404.5 million and $341.8 million and a net non-life technical result (defined as net premiums earned minus losses and loss adjustment expenses and underwriting acquisition costs) of $73.2 million and $126.0 million in 2004 and 2003, respectively.

Impact of property catastrophe losses: We reported the following large natural catastrophe losses, defined as those in excess of $10.0 million or more of net incurred losses to us for our proportional and non-proportional property catastrophe business: hurricanes in the US and the Caribbean, the Japanese typhoons and the tsunami in the Indian Ocean ($154.5 million) in 2004 and Typhoon Maemi ($15.4 million) and the Algerian earthquake ($10.6 million) in 2003.

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

In December 2004, a federal jury in New York concluded that the two planes that crashed into the World Trade Center during the attacks of September 11th, for insurance purposes, represented two separate attacks. This ruling increased our gross losses and loss adjustment expenses by $8.7 million, but as our losses are capped at $289.2 million by Zurich Financial Services, as described above, this ruling did not have an effect on our net loss position. In 2004 and 2003 there was no additional development in net reserves for the September 11th terrorist attacks.

Asbestos and environmental exposures: As of December 31, 2004 and 2003, we had reserves for environmental impairment liability and asbestos-related claims of $49.2 million and $45.8 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, 2004 and 2003.

Converium Consolidated Underwriting Acquisition Costs

Underwriting acquisition costs primarily relate to commissions on treaty and individual risk business. Our underwriting acquisition costs increased for the year ended December 31, 2004 as compared to the same period in 2003. The underwriting expense ratio was relatively stable in 2004 as compared to 2003.

Converium Consolidated Operating and Administration Expenses

Operating and administration expenses increased for the year ended December 31, 2004 over the same period in 2003 due to increased expenditures to support the growth in operations, additional costs of $15.7 million related to the retention plans that were rolled out in late 2004 (see Note 15 to our 2004 consolidated financial statements), and the continued weakening of the US dollar. In addition approximately $7.0 million of advisory fees were recorded in conjunction with various corporate strategic initiatives during 2004. The non-life administration expense ratio remained relatively stable for the year ended December 31, 2004 as compared to the same period in 2003.

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 $10.7 million and $6.1 in 2004 and 2003, respectively.

Converium Consolidated Interest Expense, Goodwill and other intangible assets and Restructuring costs

Interest expense: Interest expense remained relatively stable for the year ended December 31, 2004 as compared to the same period in 2003.

Goodwill and other intangible assets: Impairment of goodwill was $94.0 million for the year ended December 31, 2004. Amortization of intangible assets was $9.9 million for the year ended December 31, 2004.

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SFAS 142, “Goodwill and Other Intangible Assets”, requires impairment testing of goodwill annually or more regularly if any event or change in business circumstances occurs which would indicate that the carrying value of goodwill may be impaired. An impairment charge of $94.0 million was recorded due to the reserving actions taken during 2004 in respect of prior year development in the Specialty Lines segment’s business written in North America, and the subsequent decision to take a full valuation allowance against the net deferred tax asset at CRNA. The goodwill impairment charge represents all the goodwill relating to CRNA.

SFAS 142 also requires that useful lives for intangible assets other than goodwill be reassessed and the remaining amortization periods be adjusted accordingly. On October 1, 2004, the useful life of our intangible asset relating to GAUM was reduced to less than one year resulting in an amortization charge of $9.9 million. See Note 8 to our 2004 consolidated financial statements for additional information regarding the reassessment of the useful life related to GAUM.

Restructuring costs: The placement of CRNA into orderly run-off and the ratings downgrades resulted in a reduction of premium volume and subsequently the need to reduce the global cost base going forward. As a result, Converium notified certain of its employees that their employment would be terminated. For the year ended December 31, 2004, $2.7 million in restructuring costs has been expensed primarily due to the costs associated with these severance plans. In addition, as a result of the global restructuring, a decision was made in January 2005 to vacate our primary office space in New York, New York and consolidate in our Stamford, Connecticut office space. We expect the effective date of the transfer to be July 1, 2005. Office space in Zurich is also under review. Associated costs will be recorded as restructuring costs.

Converium Consolidated Income Tax Expense

Converium’s consolidated income tax expense for the year ended December 31, 2004 reflects an additional expense of $289.7 million related to the establishment of a full valuation allowance against the net deferred income tax balances previously carried at CRNA and a valuation allowance against the net operating losses carried forward at Converium AG. The 2003 consolidated tax expense reflects an increase in the tax loss carryforward due to the retrocession of certain contracts from Germany to Switzerland.

As required under SFAS 109, “Accounting for Income Taxes”, Converium is required to assess if it is more likely than not that some or all of the net deferred tax assets will not be realized. In making this assessment, reference is made to, among other things, historical losses. Therefore, a full valuation allowance was established against CRNA’s net deferred tax assets to reflect the continued net loss position of CRNA. CRNA may offset future taxable income against the existing net operating losses carried forward, resulting in no US federal tax expense on such income until such time as the net operating losses are utilized or expire. In addition, Converium AG presents deferred taxes for timing differences only. Future positive income will offset against net operating losses carried forward and will not cause any income taxes except changes in timing differences.

As of December 31, 2004, Converium’s valuation allowance on deferred tax assets was $711.9 million, comprising net operating losses carried forward ($571.7 million), loss reserve discount ($110.2 million) and other temporary differences, net ($30.0 million). As of December 31, 2003, the valuation allowance was $47.9 million, all of which related to net operating losses carried forward.

As of December 31, 2004, Converium has total net operating losses carried forward of $2,512.5 million available to offset future taxable income of certain branches and subsidiaries. The majority of these net operating losses carried forward relate to CRNA and Converium AG and expire in the years 2020 through 2024 and 2010 through 2011, respectively.

Converium will continue to monitor its tax position and reassess the need for a full valuation allowance on its net deferred tax assets on a periodic basis. Realization of the deferred tax asset related to net operating losses carried forward is dependent upon generating sufficient taxable income within specified future periods. The decision to place CRNA into run-off may limit the ability to generate taxable income to fully utilize its net operating loss carryforwards.

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 was 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. 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

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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 reflected 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. For the year eneded December 31, 2003, the Specialty Lines segment grew by $256.6 million or 16.5% compared with 2002, driven by strong growth in Agribusiness, Workers’ Compensation, Credit & 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 was 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 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.

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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 were 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 was 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 US 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 felt, as of December 31, 2003 that its carried reserves for its GMDB exposure were adequate, it 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 then current volatility and the valuation of the equity markets in the United States. The annual expense associated with this protection was expected to be less than $0.5 million per year. Based on information available at the time, Converium felt this additional reinsurance protection adequately addressed 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: As of December 31, 2003, a substantial portion of our property catastrophe business was 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 were 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).

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

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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 Group (“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 US dollar against the strengthening 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 reflected 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.

Converium Consolidated Combined Ratios

Our 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.

Results of Operations by Operating Segment

In 2004, Converium’s business was 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. See “Item 4. — Information on the Company — B. Business Overview” for discussion regarding the reorganization of our segment structure in the first quarter of 2005.

During 2004, there were several items that resulted in measurable effects on Converium’s financial results. These items include (i) the strengthening of prior years’ reserves, (ii) adjustments of premium accruals and associated loss and underwriting expenses, (iii) adjustment of retrocessional recoveries to reflect gross loss developments, and (iv) commutations, which collectively resulted in a net impact on the technical result of $581.3 million. In addition, we established a full valuation allowance against the net deferred tax balances previously recorded at CRNA of $269.8 million and a valuation allowance on the net operating losses carried forward at Converium AG of $19.9 million, and recorded an impairment of goodwill of $94.0 million. The following table compares Converium’s segment results for the years ended December 31, 2004, 2003, and 2002 and reconciles segment results to (loss) income before taxes:

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	Year Ended December 31,
	2004			2003			2002
	($ millions)
Segment (loss) income:
Standard Property & Casualty Reinsurance	$	(12.5	)	$	183.7		$	55.8
Specialty Lines		(245.2	)		115.2			56.0
Life & Health Reinsurance		15.4			(11.9	)		(6.5	)
Corporate Center		(38.0	)		(34.3	)		(30.3	)
Total segment (loss) income		(280.3	)		252.7			75.0
Other (loss) income		(2.6	)		2.7			(1.2	)
Interest expense		(33.1	)		(31.0	)		(16.4	)
Impairment of goodwill		(94.0	)		—			—
Amortization of intangible assets		(9.9	)		—			—
Restructuring costs		(2.7	)		—			—
(Loss) income before taxes		(422.6	)		224.4			57.4
Income tax (expense) benefit		(338.2	)		(39.3	)		49.4
Net (loss) income	$	(760.8	)	$	185.1		$	106.8

Non-Life

The table below presents information regarding results of operations of our non-life business for the years ended December 31, 2004, 2003 and 2002. This information is further discussed on a segment basis below.

	Year Ended December 31,
	2004			2003			2002
	($ millions, except ratios)
Revenues:
Gross premiums written	$	3,394.9		$	3,817.4		$	3,192.6
Net premiums written	$	3,113.1		$	3,457.5		$	3,007.5
Net premiums earned	$	3,251.2		$	3,293.5		$	2,854.7
Net investment income and net realized capital gains (losses)		328.4			233.9			223.4
Total revenues		3,579.6			3,527.4			3,078.1
Losses and expenses:
Losses and loss adjustment expenses		(2,935.7	)		(2,354.6	)		(2,231.9	)
Underwriting acquisition costs		(744.7	)		(723.2	)		(602.7	)
Other operating and administration expenses		(156.9	)		(150.7	)		(131.7	)
Total losses and expenses		(3,837.3	)		(3,228.5	)		(2,996.3	)
Segment (loss) income	$	(257.7	)	$	298.9		$	111.8
Ratios:
Loss ratio		90.3	%		71.5	%		78.2	%
Underwriting expense ratio		22.9	%		22.0	%		21.1	%
Administration expense ratio		5.0	%		4.4	%		4.4	%
Combined ratio		118.2	%		97.9	%		103.7	%

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, 2004, 2003 and 2002.

	Year Ended December 31,
	2004			2003			2002
	($ millions, except ratios)
Revenues:
Gross premiums written	$	1,617.6		$	1,795.4		$	1,542.3
Net premiums written	$	1,455.0		$	1,645.6		$	1,452.2
Net premiums earned	$	1,552.0		$	1,629.9		$	1,396.7
Net investment income and net realized capital gains (losses)		142.3			101.5			98.1
Total revenues		1,694.3			1,731.4			1,494.8
Losses and expenses:
Losses and loss adjustment expenses		(1,246.1	)		(1,113.6	)		(1,065.0	)
Underwriting acquisition costs		(376.8	)		(363.1	)		(310.4	)
Other operating and administration expenses		(83.9	)		(71.0	)		(63.6	)
Total losses and expenses		(1,706.8	)		(1,547.7	)		(1,439.0	)
Segment (loss) income	$	(12.5	)	$	183.7		$	55.8
Ratios:

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	Year Ended December 31,
	2004			2003			2002
	($ millions, except ratios)
Loss ratio		80.3	%		68.3	%		76.3	%
Underwriting expense ratio		24.3	%		22.3	%		22.2	%
Administration expense ratio		5.8	%		4.3	%		4.4	%
Combined ratio		110.4	%		94.9	%		102.9	%

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Standard Property & Casualty Reinsurance Segment (Loss) Income

Standard Property & Casualty Reinsurance reported a segment loss of $12.5 million in 2004 as compared to segment income of $183.7 million in 2003. The segment loss in 2004 was primarily attributable to the following:

• Premium volume was impacted by clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $57.6 million in the second half of 2004. In addition to the reductions triggered by special termination clauses, the decrease of the Standard Property & Casualty Reinsurance segment’s net premium written was further affected by adjustments of ultimate premium estimates in the amount of $119.3 million resulting from a change in estimate due to the implementation of enhanced procedures for establishing written premium estimates throughout 2004, as well as additional expenses of $18.8 million for catastrophe protection.

• Hurricanes in the US and the Caribbean, the Japanese typhoons and the tsunami in the Indian Ocean impacted results negatively by $154.5 million and added 4.8 points to the consolidated loss ratio.

• The development of prior years’ reserves of $73.5 million primarily related to adverse developments of General Third Party Liability ($116.3 million), motor liability outside the United States ($91.7 million) and Personal Accident (assumed from non-life insurers) ($8.1 million), and was partially offset by positive developments related to Property ($82.1 million) and miscellaneous liability ($60.5 million) which also included the impact of whole account retrocessions.

• Slightly offsetting the results for 2004 was the increase in investment results due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risk during 2004.

Standard Property & Casualty Reinsurance Premiums

For the year ended December 31, 2004, gross premiums written decreased 9.9% to $1,617.6 million, net premiums written decreased 11.6% to $1,455.0 million and net premiums earned decreased 4.8% to $1,552.0 million. Adjustments of ultimate premium estimates resulted in a decrease in net premiums written and earned in the amount of $119.3 million; after reflecting for accrued underwriting expenses ($18.1 million) and losses ($101.1 million), the impact of these adjustments of ultimate premium estimates on the technical result was ($0.1) million.

For the year ended December 31, 2004, the reduction in net premiums written in the Standard Property & Casualty Reinsurance segment by line of business included:

• Motor, which decreased by 0.8% or $3.7 million to $484.8 million, due to cedents in North America exercising special termination clauses, as well as a decrease in net premiums written in North America due to the ratings agencies’ actions. These decreases were mostly offset by growth in Western Europe;

• Property, which decreased by 26.1% or $205.3 million to $581.7 million, due to cedents in North America exercising special termination clauses as well as a restructuring of a specific treaty; and

• Personal accident (non-life), which decreased by 22.8% or $8.0 million to $27.1 million, due to the cancellation of a major contract.

These decreases were offset by an increase in net premiums written within the General Third Party Liability line of business, which increased by 7.9% or $26.4 million to $361.4 million as a result of continuing rate increases and new business.

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 $142.3 million for the year ended December 31, 2004, an increase of $40.8 million, or 40.1%, compared to net investment income and net

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realized capital gains of $101.5 million for the same period in 2003. The investment results were positively impacted due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risk during 2004.

Standard Property & Casualty Reinsurance Losses and Loss Adjustment Expenses

Standard Property & Casualty Reinsurance had losses and loss adjustment expenses incurred of $1,246.1 million in 2004, an increase of $132.5 million, or 11.9%, over 2003. The non-life loss and loss adjustment expense ratio was 80.3% in 2004 as compared to 68.3% in 2003.

The development of prior years’ reserves of $73.5 million primarily related to adverse developments of General Third Party Liability ($116.3 million), motor liability outside the United States ($91.7 million) and Personal Accident (assumed from non-life insurers) ($8.1 million), and was partially offset by positive developments related to Property ($82.1 million) and miscellaneous liability ($60.5 million) which also included the impact of whole account retrocessions.

In the latter half of 2004, the Standard Property & Casualty Reinsurance segment agreed upon commutations with primarily North American cedents regarding gross loss reserves of $125.9 million.

Standard Property & Casualty Reinsurance Underwriting Acquisition Costs

Underwriting acquisition costs primarily relate to commissions on treaty and individual risk business. Standard Property & Casualty Reinsurance underwriting acquisition costs increased $13.7 million or 3.8% to $376.8 million. The non-life underwriting expense ratio was 24.3% in 2004 compared to 22.3% in 2003.

Standard Property & Casualty Reinsurance Operating and Administration Expenses

Operating and administration expenses increased $12.9 million or 18.2% to $83.9 million in 2004. The increase primarily arose from costs related to the retention plans that were rolled out in late 2004 and the continued weakening of the US dollar. The non-life administration ratio was 5.8% in 2004 compared to 4.3% in 2003.

Standard Property & Casualty Reinsurance Combined Ratios

Standard Property & Casualty Reinsurance’s combined ratio was 110.4% in 2004 and 94.9% in 2003. The increase in the combined ratio was primarily driven by the adverse development of prior years’ loss reserves as well as losses due to the hurricanes in the US and Caribbean, the Japanese typhoons and the tsunami in the Indian Ocean, which added 4.8 points to the loss ratio.

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, net premium written growth in Standard Property & Casualty Reinsurance by line of business included:

• Property, increased by 25.7% or $161.0 million to $787.0 million; and

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• Motor, 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 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 US dollar against the strengthening 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.

Specialty Lines

The table below presents information regarding results of operations of our Specialty Lines segment for the years ended December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2004		2003		2002
	($ millions, except ratios)
Revenues:
Gross premiums written	$	1,777.3	$	2,022.0	$	1,650.3
Net premiums written	$	1,658.1	$	1,811.9	$	1,555.3
Net premiums earned	$	1,699.2	$	1,663.6	$	1,458.0
Net investment income and net realized capital gains (losses)		186.1		132.4		125.3
Total revenues		1,885.3		1,796.0		1,583.3

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	Year Ended December 31,
	2004			2003			2002
	($ millions, except ratios)
Losses and expenses:
Losses and loss adjustment expenses		(1,689.6	)		(1,241.0	)		(1,166.9	)
Underwriting acquisition costs		(367.9	)		(360.1	)		(292.3	)
Other operating and administration expenses		(73.0	)		(79.7	)		(68.1	)
Total losses and expenses		(2,130.5	)		(1,680.8	)		(1,527.3	)
Segment (loss) income	$	(245.2	)	$	115.2		$	56.0
Ratios:
Loss ratio		99.4	%		74.6	%		80.0	%
Underwriting expense ratio		21.7	%		21.6	%		20.0	%
Administration expense ratio		4.4	%		4.4	%		4.4	%
Combined ratio		125.5	%		100.6	%		104.4	%

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Specialty Lines Segment (Loss) Income

Specialty Lines reported a segment loss of $245.2 million in 2004 compared to segment income of $115.2 million in 2003. The segment loss in 2004 was primarily attributable to the following:

• Premium volume was impacted by clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $50.5 million in the second half of 2004. In addition to the reductions triggered by special termination clauses, the decrease of the Specialty Lines segment’s net premium written was further affected by adjustments of ultimate premium estimates, net of expenses, in the amount of $100.5 million resulting from a change in estimate due to the implementation of enhanced procedures for establishing written premium estimates throughout 2004.

• In late 2004, we commuted the stop-loss protection regarding underwriting year 2001 of the professional liability business generated through our strategic partnership with the MDU that resulted in a $10.5 million charge.

• The development of prior years’ reserves of $488.5 million primarily related to adverse developments of the Professional Liability and other Special Liability lines ($449.3 million), particularly excess & surplus lines and umbrella, Workers’ Compensation ($55.3 million) and Engineering ($12.9 million). These adverse developments in the Specialty Lines were partially offset by positive developments related to Aviation & Space ($24.5 million), Agribusiness ($0.7 million) and Credit & Surety ($3.8 million).

• Slightly offsetting the results for 2004 was the increase in investment results due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risks during 2004.

Specialty Lines Premiums

For the year ended December 31, 2004, gross premiums written decreased 12.1% to $1,777.3 million, net premiums written decreased 8.5% to $1,658.1 million and net premiums earned increased 2.1% to $1,699.2 million. Adjustments of ultimate premium estimates resulted in a decrease in net premiums written and earned in the amount of $100.5 million; after reflecting for accrued underwriting expenses ($(1.7) million) and losses ($105.3 million), the impact of these adjustments of ultimate premium estimates on the technical result was $3.1 million. Included in the adjustments were premium estimate adjustments of the business relationship with a Lloyds’ syndicate, a major client of ours, which resulted in a decrease in net premiums written and earned in the amount of $25.5 million. After reflecting for accrued underwriting expenses ($0.4 million) and losses ($19.0 million), the impact of this specific premium accrual adjustment on the technical result was $(6.1) million.

For the year ended December 31, 2004, the reduction in net premiums written in the Specialty Line segment by line of business included:

• Workers’ Compensation, which decreased by 27.4% or $85.1 million to $225.8 million, due to the result of lower premium accruals in 2004 related to the 2003 underwriting year based on revised estimated premiums received from a large cedent who reports on a lag, as well as a decrease in run-off premiums from older underwriting years. In addition, there was a reduction of participation on premiums written through the involuntary market with one of our ceding companies;

• Credit & Surety, which decreased by 27.5% or $64.9 million to $171.1 million, due to cedents in North America exercising special termination clauses, as well as a decrease in net premiums written due to the ratings agencies’ actions;

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	and
•	Professional Liability and other Special Liability, which decreased by 11.1% or $66.3 million to $531.7 million, due to cedents in North America exercising special termination clauses, as well as a decrease in net premiums written due to the ratings agencies’ actions.

These decreases were offset by an increase in net premiums written in the Agribusiness line of business, which increased by 41.0% or $36.9 million to $126.9 million. This was mainly the result of new business written, as well as return premium received on a specific contract due to favorable technical results. In addition the Aviation & Space line of business increased by 18.3% or $62.7 million to $404.5 million, which grew as a result of an increased retention in the business underwritten by GAUM.

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

Specialty Lines reported a net investment income and net realized capital gains of $186.1 million for the year ended December 31, 2004, an increase of $53.7 million, or 40.6%, compared to net investment income and net realized capital gains of $132.4 million. The investment results and returns for 2004 were positively impacted by the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risks during 2004.

Specialty Lines Losses and Loss Adjustment Expenses

Specialty Lines losses and loss adjustment expenses increased $448.6 million, or 36.1%, in 2004. The non-life loss and loss adjustment expense ratio was 99.4% in 2004 compared to 74.6% in 2003, an increase of 24.8 percentage points.

The development of prior years’ reserves of $488.5 million primarily related to adverse developments of the Professional Liability and other Special Liability lines ($449.3 million), particularly excess & surplus lines and umbrella, Workers’ Compensation ($55.3 million) and Engineering ($12.9 million). These adverse developments in the Specialty lines were partially offset by positive developments related to Aviation & Space ($24.5 million), Agribusiness ($0.7 million) and Credit & Surety ($3.8 million).

In the latter half of 2004, the Specialty Lines segment agreed upon commutations with primarily North American cedents regarding gross loss reserves of $401.3 million.

Specialty Lines Underwriting Acquisition Costs

Underwriting acquisition costs increased $7.8 million, or 2.2%, in 2004. This increase is mainly related to the increase in net premiums earned. The non-life underwriting expense ratio remained stable at 21.7% in 2004 as compared to 21.6% in 2003.

Specialty Lines Operating and Administration Expenses

Operating and administration expenses decreased $6.7 million, or 8.4%, in 2004. The main driver for the decrese was the reduction in net premiums written for 2004 as compared to the 2003. The non-life administration ratio was stable at 4.4% in 2004 and 2003.

Specialty Lines Combined Ratios

Specialty Lines combined ratio was 125.5% in 2004 and 100.6% in 2003. The increase in the combined ratio was largely the result of prior years’ loss reserve development.

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:

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

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	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, net premium written growth in Specialty Lines by line of business included:

• Professional Liability and other Special Liability, which increased by 11.4% or $61.1 million to $598.0 million, 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, which increased by 40.9% or $90.3 million to $310.9 million, as a result of the renewal of a large program in 2003;

• Credit & Surety, which increased by 17.9% or $35.9 million to $236.0 million; and

• Agribusiness, which increased by 309.1% or $68.0 million to $90.0 million, reflecting the hardening market that 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

Underwriting acquisition costs increased $67.8 million or 23.2% in 2003. This increase is mainly related to the increase in net

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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 US 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.

Life & Health Reinsurance

The table below presents information regarding results of operations of our Life & Health Reinsurance segment for the years ended December 31, 2004, 2003 and 2002.

	Year Ended December 31,
	2004			2003			2002
	($ millions, except ratios)
Revenues:
Gross premiums written	$	446.0		$	406.5		$	343.2
Net premiums written	$	439.9		$	369.5		$	314.7
Net premiums earned	$	433.9		$	383.0		$	310.8
Net investment income and net realized capital gains (losses)		29.7			17.5			18.1
Total revenues		463.6			400.5			328.9
Losses and expenses:
Losses, loss adjustment expenses and life benefits		(327.4	)		(319.6	)		(260.1	)
Underwriting acquisition costs		(97.8	)		(80.0	)		(64.0	)
Other operating and administration expenses		(23.0	)		(12.8	)		(11.3	)
Total benefits, losses and expenses		(448.2	)		(412.4	)		(335.4	)
Segment income (loss)	$	15.4		$	(11.9	)	$	(6.5	)
Ratios:
Underwriting expense ratio		22.5	%		20.9	%		20.6	%
Administration expense ratio		5.2	%		3.5	%		3.6	%

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Life & Health Reinsurance Segment Income (Loss)

The Life & Health Reinsurance reported a segment income of $15.4 million for the year ended December 31, 2004 as compared to a segment loss of $11.9 million for the same period in 2003. The technical result for the year ended December 31, 2004 was $14.7 million as compared to ($8.0) million for the same period in 2003. Technical result is defined as net premiums earned minus losses, loss adjustment expenses and life benefits minus underwriting acquisition costs plus technical interest. The increase in 2004 was primarily attributable to the following:

• Strong growth in premium volume driven by the expansion of existing reinsurance transactions in Continental Europe and increased shares of current business, which was slightly offset by a decline in premiums due to commutations in the Accident and Health line of business.

• The termination of the Life & Health Reinsurance segment’s Master Retrocession Agreement for its financing contracts, resulting in a repayment of the non-amortized financing of $36.9 million. The provisions for this termination led to a realization of a profit of $3.4 million in 2004.

• The development of our Guaranteed Minimum Death Benefit (GMDB) book during 2004 as compared to 2003. In 2003 net reserves were strengthened by $20.5 million, while no actions were required in 2004. As a result of the strong performance of the US stock markets, the GMDB’s net amount at risk further decreased to $635.5 million at December 31, 2004 from $809.7 million at December 31, 2003.

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In late 2004, Converium entered into an agreement to terminate its $75.0 million GMDB reinsurance protection purchased in 2003, for an amount of $9.7 million, giving rise to a net cost of the cover for 2004 of $0.1 million. The purpose of this cover was to address the volatility in the United States’ equity markets and potential adverse deviations to other key assumptions such as mortality risks, lapse rate risks and surrenders.

•

The increase was offset by a reduction in premium volume due to clients exercising their rights of special termination under various reinsurance contracts, which resulted in a reduction of estimated ultimate premium of $6.4 million in the second half of 2004.

Life & Health Reinsurance Premiums

For the year ended December 31, 2004, gross premiums written increased 9.7% to $446.0 million, net premiums written increased 19.1% to $439.9 million and net premiums earned increased 13.3% to $433.9 million.

For the year ended December 31, 2004, net premiums written growth in the Life & Health Reinsurance segment by line of business included:

• Life and Disability reinsurance, which increased by 50.2% or $81.3 million to $243.4 million, which grew due to the expansion of existing financing reinsurance transactions in Continental Europe and increased shares of current business.

This increase was offset by a decrease of 5.3% or $10.9 million in net premiums written to $196.5 million in the Accident and Health line of business due to commutations.

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 $29.7 million for the year ended December 31, 2004, which was higher by $12.2 million, or 69.7%, compared to net investment income and net realized capital losses of $17.5 million for the same period of 2003. The increase was largely due to the continued recovery of the global capital markets as well as capital gains realized from the sale of equity securities to adjust our asset allocation to reduce investment portfolio risks during 2004.

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

Life & Health Reinsurance had losses, loss adjustment expenses and life benefits incurred of $327.4 million, an increase of $7.8 million, or 2.4% for the year ended December 31, 2004.

For the year ended December 31, 2004 there were no additional reserving actions required for the GMDB book of business. In 2003, the Life & Health Reinsurance segment strengthened reserves for this closed block of variable annuity business by $20.5 million (to net $56.0 million). As a result of the positive performance of the US stock markets, GMDB’s net amount at risk further decreased to $635.5 million at December 31, 2004 from $809.7 million at December 31, 2003.

In the latter half of 2004, the Life & Health Reinsurance segment agreed upon commutations with primarily North American cedents regarding gross loss reserves of $18.6 million.

Life & Health Reinsurance Underwriting Acquisition Costs

Underwriting acquisition costs increased $17.8 million or 22.3% to $97.8 in 2004. This increase is mainly related to the increase in net premiums earned. The underwriting expense ratio was 22.5% in 2004 as compared to 20.9% in 2003.

Life & Health Reinsurance Operating and Administration Expenses

Operating and administration expenses increased $10.2 million or 79.7% to $23.0 million in 2004. The increase primarily arose from increased expenditures to support the growth in operations, additional costs related to the retention plans that were rolled out in late 2004, and the continued weakening of the US dollar. The administration expense ratio was 5.2% in 2003.

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

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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 US 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 felt, as of December 31, 2003, that its carried reserves for its GMDB exposure were adequate, it 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 then current volatility and the valuation of the equity markets in the United States. The annual expense associated with this protection was expected to be less than $0.5 million per year. Based on information available at the time, Converium felt this additional reinsurance protection adequately addressed 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. In late 2004, Converium entered into an agreement to terminate its $75.0 million GMDB reinsurance protection purchased in 2003, for an amount of $9.7 million.

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, net premium written growth in the Life & Health Reinsurance segment by line of business included:

• Accident and Health, which 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 US dollar against the strengthening 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.

Corporate Center

The table below presents information regarding results of operations of our Corporate Center for the years ended December 31, 2004, 2003 and 2002. The Corporate Center carries certain administration expenses, such as costs of the Board of Directors, the Global Executive Committee, and other global functions.

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	Year Ended December 31,
	2004			2003			2002
	($ millions)
Other operating and administration expenses	$	(38.0	)	$	(34.3	)	$	(30.3	)
Segment loss	$	(38.0	)	$	(34.3	)	$	(30.3	)

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Corporate Center Operating and Administration Expenses

The Corporate Center reported operating and administration expenses of $38.0 million in 2004, compared to $34.3 million in 2003. The increases primarily arose from consulting costs relating to the 2004 rights offering, expenditures to support the growth in operations and the continued weakening of the US dollar.

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 US dollar.

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

In the event of local short-term cash requirements, internal loans are available, subject to certain required approvals based on amount.

Liquidity requirements

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

As of December 31, 2004, we reported total investments including cash and cash equivalents, excluding the Funds Withheld Asset, of $7,164.2 million, of which (i) $1,060.8 million were pledged as collateral relating to outstanding letters of credit of $955.7 million of the $1.6 billion Syndicated Letter of Credit Facility, (ii) $704.7 million were pledged as collateral relating to other irrevocable letters of credit, (iii) $109.3 million were pledged primarily as deposits with French cedents, and (iv) $562.1 million were pledged to support Converium-internal reinsurance transactions.

Interest on debt and short-term borrowings was $33.1 million for 2004, $31.0 million in 2003 and $16.4 million in 2002. We had no scheduled debt repayments in 2004, 2003 or 2002. The carrying value of our outstanding debt was $390.9 million at December 31, 2004, $390.6 million at December 31, 2003 and $390.4 million at December 31, 2002.

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, Zurich Insurance Company (“ZIC”) and Zurich International Bermuda Ltd. (“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

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As a holding company, Converium Holding AG 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. Dividend payments from Converium AG to Converium Holding AG may be subject to regulatory review, but for 2005 this is not considered a relevant issue as no payment is expected to be made; any dividend payments from CRNA to CHNA requires approval of the regulator of the state of Connecticut (see Note 22 to our 2004 consolidated financial statements).

Debt Outstanding

As of December 31, 2004, we had total debt outstanding with a principal amount of $400.0 million and a carrying amount of $390.9 million. We had no scheduled debt repayments in 2004, 2003, or 2002.

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 Transactions, for more information see “Item 4. Information on the Company – A. History and Development of Company”, Converium Holdings (North America) Inc. assumed $200.0 million principal amount of non-convertible, unsecured, unsubordinated senior notes issued originally during October 1993. These notes mature in full on October 15, 2023 and bear interest at the rate of 7.125%. In 2004, the interest payments regarding the 7.125% non-convertible, unsecured, unsubordinated senior notes of CRNA were funded (i) by corresponding dividends of CRNA with regards to the coupon payment of April 15, 2004; and (ii) by Converium AG with regards to the coupon payment of October 15, 2004, due to the dividend restrictions of CRNA (see Note 22 to our 2004 consolidated financial statements).

In November 2004, Converium AG signed a $1.6 billion, three-year syndicated letter of credit facility from various banks. The facility provides Converium’s non-US operating companies with a $1.5 billion capacity for issuing letters of credit and a $100.0 million liquidity reserve. It replaces the existing $900.0 million letter of credit facility, which was signed in July 2003. As of December 31, 2004, Converium had outstanding letters of credit of $955.7 million under the facility. Investments of $1,060.8 million were pledged as collateral related to the Syndicated Letter of Credit Facility. Converium must maintain the following financial covenants in order to avoid default under the agreement: (i) consolidated total borrowings do not at any time exceed 35% of consolidated tangible net worth, which is defined as total shareholders’ equity less goodwill; and (ii) consolidated tangible net worth must remain greater than $1,237.5 million at all times. Converium pays commission fees on outstanding letters of credit, which are distributed to the facility banks and can only be impacted by a change in the company’s credit rating. The maximum amount of this fee is .50%.

In addition to the syndicated letter of credit facility, other irrevocable letters of credit of $639.1 million were outstanding at December 31, 2004 to secure certain assumed reinsurance contracts. Investments of $704.7 million were pledged as collateral related to certain of these letters of credit.

Capital Requirements

As of December 31, 2004, we had total shareholders’ equity of $1,720.2 million ($11.76 per share) compared to $2,083.3 million ($52.38 per share) as of December 31, 2003. This decrease is mainly comprised of the 2004 net loss of $760.8 million, a reduction in net unrealized gains on investments, net of taxes of $28.6 million, and $47.8 million of dividends to shareholders paid in 2004. This decrease was offset by the 2004 rights offering whereby an additional 106,683,245 shares of Converium Holding AG were issued, generating additional shareholders’ equity of $399.1 million, net of underwriting issuance costs of $29.7 million.

Cash Flows	Year Ended December 31,
	2004			2003			2002
	($ millions)
Cash flow data:
Cash provided by operating activities	$	224.5		$	1,265.3		$	870.4
Net cash used in investing activities		(195.3	)		(1,327.8	)		(1,093.3	)
Net cash provided by (used in) financing activities		349.5			(47.2	)		179.0
Effect of exchange rate changes on cash and cash equivalents		5.4			29.0			(15.1	)
Change in cash and cash equivalents		384.1			(80.7	)		(59.0	)
Cash and cash equivalents, beginning of period		280.8			361.5			420.5
Cash and cash equivalents, end of period	$	664.9		$	280.8		$	361.5

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Cash and cash equivalents increased by $384.1 million to $664.9 million as of December 31, 2004 from $280.8 million as of December 31, 2003. Our cash position increased due to the sale of equity securities and was offset by commutations executed in 2004 that resulted in a cash outflow of $526.8 million. The cash balance was maintained in anticipation of pending cash outflows in connection with commutations.

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 $224.5 million for the year ended December 31, 2004 compared to $1,265.3 million and $870.4 million for the years ended December 31, 2003 and 2002, respectively. This represented a decrease of $1,040.8 million, or 82.2% in 2004 versus an increase of $394.9 million, or 45.4% in 2003. This decrease was due to increased claims payment activity, particularly related to the cash outflows for commutations that have taken place during the latter part of 2004, as well as amounts paid related to the retroactive stop-loss retrocession cover from National Indemnity Company. In addition there was a reduction of new business growth as a result of active cycle management. 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 during 2002.

Cash provided by financing activities in 2004 was primarily due to the proceeds, net of related expenses, received from the 2004 rights offering, offset by the payment of dividends. In 2003, cash used in financing activities was primarily driven by the payment of dividends to shareholders. Cash provided by financing activities in 2002 was due to the issuance of our guaranteed subordinated notes.

The charges in 2004 for reserve strengthening, deferred income taxes, and impairment of goodwill do not have a current impact on cash provided by operating activities. However, future periods may be affected by higher claim payments on those reserves and the run-off of the North American operations, offset by lower tax payments (due to net operating loss carryforwards).

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.

New Accounting Standards

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

SFAS 123 (revised 2004), “Share-Based Payment”

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment”. This Statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. For public entities, this Statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. As Converium has already adopted the standards of SFAS No.123, this statement is not expected to have a material impact on the financial condition or results of operations.

SFAS 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits – an amendment of FASB Statements No. 87, 88, and 106”

In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits – an amendment of FASB Statements No. 87, 88 and 106”. This Statement retains the disclosures required by SFAS No. 132, “Employers’ Disclosures about Pensions and Other Post-retirement Benefits – an amendment of

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FASB Statements No. 87, 88, and 106”, which standardized the disclosure requirements for pensions and other post-retirement benefits to the extent practicable and requires additional information on changes in the benefit obligations and fair values of plan assets.

Additional disclosures have been added in response to concerns expressed by users of financial statements; those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. This statement is effective for financial statements with fiscal years ending after December 15, 2003, with interim-period disclosures effective for interim periods beginning after December 15, 2003. This statement has been adopted for all of Converium’s plans. See Note 14 to our 2004 consolidated financial statements for additional information.

In December 2003, the Medicare Prescription Drug, Improvements and Modernization Act of 2003 (The Medicare Act) was approved in the United States. The Medicare Act expands prescription drug coverage under Medicare. As CRNA’s retiree medical coverage is very limited, the Medicare Act did not have a material impact on the financial condition or results of operations.

FASB Interpretation 46, “Consolidation of Variable Interest Entities – an interpretation of ARB No. 51”

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an interpretation of ARB No. 51” (“FIN 46”), which requires an enterprise to assess whether consolidation of an entity is appropriate based upon its interests in a variable interest entity (the “VIE”). A VIE is an entity in which the equity investors do not have the characteristics of a controlling financial interest, or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 was effective immediately for new VIEs established or purchased subsequent to January 31, 2003. The adoption of FIN 46 did not have a material impact on Converium’s consolidated financial condition or results of operations, as there were no VIEs identified which required consolidation.

In December 2003, the FASB issued a revised version of FIN 46 (“FIN 46(R)”), which incorporates a number of modifications and changes made to the original version. FIN 46(R) replaces the previously issued FIN 46 and, subject to certain special provisions, became effective no later than the end of the first reporting period that ends after December 15, 2003 for entities considered to be special-purpose entities and no later than the end of the first reporting period that ends after March 15, 2004 for all other VIEs. Early adoption was permitted. Converium adopted FIN 46(R) at December 31, 2003. The adoption of FIN 46(R) did not result in the consolidation of any VIEs.

We have performed an evaluation of the catastrophic protection counter-party agreement with Helix 04 Limited, issued in 2004, to establish whether we are the primary beneficiary of the VIE which issued the securities. Management has concluded that we are not the primary beneficiary of the VIE (see Note 11 to our 2004 consolidated financial statements).

EITF Issue 03-1, “The Meaning of Other-than-temporary Impairment and Its Application to Certain Investments (EITF 03-1)”.

On September 30, the FASB delayed the effective date for the measurement and recognition guidance included in paragraphs 10 through 20 of EITF Issue 03-1. The adoption of EITF 03-1 did not have a material impact on the financial condition or results of operations.

     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

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Contractual Obligations	Payment due by period
			Less than 1						More than
($ thousands)	Total		year		1-3 years		3-5 years		5 years
Long-Term Debt Obligations – Principal	$	400,000		—		—		—	$	400,000
Long-Term Debt Obligations – Interest		732,750		30,750		61,500		61,500		579,000
Operating Lease Obligations		85,600		13,300		26,500		24,900		20,900
Losses and loss adjustment expenses, gross (1)		8,776,900		2,071,348		2,554,078		1,430,635		2,720,839
Total	$	9,995,250	$	2,115,398	$	2,642,078	$	1,517,035	$	3,720,739

(1) The company’s unpaid losses and loss expenses represent management’s best estimate of the cost to settle the ultimate liabilities based on information available as of December 31, 2004 and are not fixed amounts payable pursuant to contractual commitments. The timing and amounts of actual claims payments related to these reserves might vary significantly based on many factors including large individual losses as well as general market conditions.

For further detail on our long-term debt principal and interest payments, see Note 12 to our 2004 consolidated financial statements. For further detail on our operating lease payments, see Note 21 to our 2004 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 six. 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 the case of an 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 2004 the Board of Directors met six times physically and held 17 further meetings by way of conference calls. 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 (“CEO”) and the members of the Global Executive Committee, about the course of the business and the activity of the business segments and the Global Executive Committee. 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 CEO, the Chief Financial Officer (“CFO”) and the General Legal Counsel attend Board meetings on a regular basis. Members of the Global Executive Committee 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 Global Executive Committee 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, terms of office and committee memberships as of December 31, 2004 are as follows:

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Name	Date of Birth	Nationality	Term Expires in
Peter C. Colombo (Chairman)(1)(2)(4)	June 15, 1934	Swiss		2007
Georg Mehl (Vice-Chairman)(1)(2)(4)	August 11, 1939	German		2006
Terry G. Clarke (1)(2)(3)(5)	October 31, 1941	British		2007
Derrell J. Hendrix (3)	August 9, 1953	American		2007
George G. C. Parker (3)(4)	March 29, 1939	American		2006
Anton K. Schnyder (1)(2)	November 29, 1952	Swiss		2006
Markus Dennler (6)	January 24, 1956	Swiss		2008
Rudolf Kellenberger (6)	April 30, 1945	Swiss		2008

(1)	Member of the Nomination Committee
(2)	Member of the Remuneration Committee
(3)	Member of the Finance Committee
(4)	Member of the Audit Committee
(5)	In connection with his appointment as Chief Executive Officer in February 2005, Mr. Clarke has resigned from all committees of the Board.
(6)	Member elected to the Board of Directors at the Company’s Annual General Meeting on April 12, 2005 in Zug, Switzerland, for a three-year term of office.

Jürgen Förterer resigned from the Board of Directors on September 21, 2004.

Curricula Vitae of the Board members

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 Directors in 1997. He 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. Georg Mehl had worked for almost 30 years for the Allianz Group, Hamburg and Munich, Germany. He is Chairman of the Board of Directors 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 institutions. He graduated from the German Insurance Academy in Cologne, Germany, in 1961.

Terry G. Clarke was a consulting actuary with the Tillinghast Business of 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 prior to retiring 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 has been a member of a number of professional committees both in the United Kingdom and in Continental Europe. Mr Clarke was appointed as Managing Director on September 10, 2004 and since February 24, 2005 has served as Chief Executive Officer of the Company at which point he resigned from all committees of the Board.

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 US 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

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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 and in 2004 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.

Markus Dennler served in a series of positions within the Credit Suisse Group, most recently as a member of the Executive Board of Credit Suisse Financial Services and as Chief Executive Officer responsible for the global operational Life & Pensions business. Prior, he was a member of the Corporate Executive Board of Winterthur Insurance (subsidiary of Credit Suisse Group). Mr Dennler studied law at the University of Zurich and graduated in 1982. He received his doctorate degree in 1984 and was admitted to the Bar of Zurich in 1986. Further he attended the International Bankers School in New York and the Harvard Business School (AMP) in Boston. Currently he is a member of the Board of Directors of Swissquote Group and a councilor of the British-Swiss Chamber of Commerce.

Rudolf Kellenberger served as Deputy Chief Executive Officer of Swiss Re from April 1, 2000 until the end of 2004. In this function he dedicated much of his time to tasks within the Corporate Center, in particular in the field of Management Development and E-Business Development. Previously, he served in a series of positions within Swiss Re’s Executive Board assuming responsibilities for the Northern European reinsurance sector and Special Lines and, as of July 1998, taking on the leadership of Swiss Re’s then newly founded Europe division. Mr Kellenberger studied civil engineering at the Federal Institute of Technology (ETH), Zurich, graduating in 1970. He is a member of the Board of Directors of Swiss Life.

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

Global Executive Committee

The Board of Directors has delegated the management of Converium to the Global Executive Committee. The Global Executive Committee comprises an executive management team currently with seven members. It is responsible for implementing Converium’s global strategy, ensuring effective collaboration between each subsidiary, and business segment, and reviewing progress against financial and operating plans as approved by the Board of Directors.

At December 31, 2004 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
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
Terry G. Clarke (1)	October 31, 1941	British	Chief Executive Officer
Andreas Zdrenyk (2)	June 5, 1959	Swiss	Chief Financial Officer

(1)	Appointed Chief Executive Officer of the Company as of February 24, 2005.
(2)	Appointed interim Chief Financial Officer of the Company as of February 28, 2005.

Gary Prestia resigned as Chief Technical Officer effective September 10, 2004. Dirk Lohmann took over the responsibilities of the Chief Technical Officer in the interim. On November 4, 2004 Martin Kauer announced his resignation as Chief Financial Officer. The Board appointed Andreas Zdrenyk as interim Chief Financial Officer of Converium following Martin Kauer’s agreed departure on February 28, 2005. Andreas Zdrenyk serves as Converium’s Global Chief Information Officer. A

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search and recruitment process for Mr Kauer’s replacement is under way. On February 23, 2005 the Board of Directors appointed Terry G. Clarke as Chief Executive Officer and replaced Dirk Lohmann with immediate effect. Mr Clarke continues to be a member of the Board of Directors.

Dirk Lohmann was the Chief Executive Officer of Converium until leaving the Company on February 23, 2005. 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 GAUM and a director and chairman of 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 Zurich. 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 GAUM. Mr Gentsch holds a degree in business administration of 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. 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.

Hans Peter Boller is the Chief Risk Officer and an Executive Vice President of Converium. He is responsible for risk management, corporate compliance, pricing, reserving, Asset and Liability Management (ALM) and natural hazard modeling. In the first quarter of 2005, he additionally assumed responsibility for group retrocession and corporate compliance. 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) as well as a member of the International Actuarial Association (IAA). He serves as Chairman of the Reinsurance Subcommittee of the IAA and was a member of the Risk-Based Capital Solvency Structure Working Party of the IAA, advising the supranational regulatory bodies on actuarial matters. He also serves on the Swiss Solvency Board advising the Swiss Federal Office of Private Insurance. Mr Boller holds a Master’s degree in economics and engineering and a doctorate in actuarial science from the University of Karlsruhe.

Martin Kauer was the Chief Financial Officer and an Executive Vice President of Converium until leaving the Company on February 28, 2005. 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.

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Andreas Zdrenyk is Chief Information Officer of Converium and has been appointed interim Chief Financial Officer of the Company as of February 28, 2005. He joined Zurich Re in 1998 and has gained in-depth insight into the Company’s operations in various functions such as Chief Financial Officer of Converium Zurich and Zurich Re Zurich, respectively, and Head of Internal Audit & Consulting. Prior to joining Zurich Re Mr Zdrenyk spent a total of 16 years with the Winterthur Swiss Insurance Group, six years of which as regional Head of Internal Audit North America based in the United States. Mr Zdrenyk, a Swiss citizen, holds a Master’s of Business Administration degree from Cox School of Business (Dallas, USA) and a Master’s of Information Systems/Information Technology degree from the Swiss Association of Commerce (Zurich, Switzerland).

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 current 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.

Board remuneration

In 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. Since then the level of compensation remained unchanged. For the office term 2004/2005, basic cash compensation for an ordinary Board member, set at $80,593, includes compensation for membership of one Committee. Board members are entitled to receive 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 $20,148 with a restriction period of three years, and share options equal to a value of $20,148 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 of a second and third Committee:

• $3,224 for membership of a second Committee

• $2,418 for membership of a third and any subsequent Committee and additionally,

• $4,030 if the member holds one or more chairmanships in the Committees.

The remuneration of the Board of Directors is not performance-related.

The table below illustrates the compensation paid to each Board member in 2004. Cash compensation paid at the date of 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			Options		Options held
	Cash		allocated in		December 31,			allocated in		at December
Board Member	Compensation		2004		2004 (1)			2004 (2)		31, 2004 (3)
Peter C. Colombo	$	130,556		641		3,495			2,172		6,375
Georg Mehl		110,408		534		2,158			1,810		5,172
Terry G. Clarke(4)		128,944		427		1,563			1,448		3,993
Jürgen Förterer(5)		75,698		1,698		2,834			1,448		—
Derrell J. Hendrix		80,590		427		427			1,448		4,249
George G.C. Parker		87,843		427		727	(6)		1,448		4,249
Anton K. Schnyder		83,814		427		427			1,448		4,249

(1)	Includes shares personally bought.
(2)	Options vest immediately, have a term of 10.5 years and an exercise price to equal fair market value at the beginning of the period for which they were granted.
(3)	An adjustment to the exercise price of all options outstanding prior to the 2004 rights offering will be made in early 2005 in order to account for the dilution of the value of the options as a result of the 2004 rights offering. The reduction in exercise price maintains the same Black-

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	Scholes value of the option before and after the 2004 rights offering and does not reflect any other decrease in the share price.
(4)	Includes $38,683 for additional professional services as a Board member and does not include Mr Clarke’s compensation as Managing Director of £50,000 per month plus reimbursement of customary expenses.
(5)	Resigned as Board member as of September 21, 2004 and includes pro rata equity compensation for the office term 2004/2005. Options held by Mr Förterer expired on December 29, 2004 due to this resignation.
(6)	427 shares and 600 ADSs.

Until the end of 2004 Converium had retained The RISConsulting Group LLC, of which Mr Hendrix is co-owner and chief executive officer, for certain consulting services. For 2004 Converium paid total fees of $250,000 to RISConsulting Group LLC. Mr Hendrix is also a manager and owner of approximately 57% of the outstanding share capital of RISC Ventures LLC, a Delaware-based limited liability company created to manage and operate companies engaged in commercializing technologies and intellectual properties developed by The RISConsulting Group LLC and its affiliates. In April 2004, Converium AG invested $2.0 million in RISC Ventures LLC for an approximate 17.5% ownership interest in that entity.

In 2004 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 2004 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

Managing Director remuneration

Terry G. Clarke received for his services as Managing Director a remuneration of £50,000 per month plus reimbursement for customary expenses. For 2004, Converium paid Terry G. Clarke GBP 190,909 ($349,822) related to this role. In February 2005, Terry G. Clarke assumed the role of Chief Executive Officer of Converium and at the same time the function of Managing Director was cancelled.

Global Executive Committee remuneration

The Remuneration Committee sets compensation levels for members of the Global Executive Committee and proposes to the Board the remuneration of the Chief Executive Officer.

Compensation for each member of the Global Executive Committee consists of a base salary and an incentive component based on Converium’s and the individual’s performance. The incentive component may vary highly from year to year depending on the achievement of the incentive award targets set annually by the Board of Directors.

The Remuneration Committee determines the awards paid out to the Global Executive Committee.

The performance-based incentive component consists of the annual incentive plan (AIP) and the long-term incentive plan (LTIP). A minimum of 25% of the performance-based compensation paid under the AIP is paid in the form of Converium shares. The LTIP is part of Converium’s executive share ownership program and designed to align the interests of management closely with those of shareholders as well as to encourage stock ownership. 50% of the award paid out under the LTIP is delivered in Converium shares and the other 50% of the award is paid out in non-qualified options.

Total aggregate compensation of all officers of the Global Executive Committee in 2004 was $6.7 million. This total includes base salary and cash awards made under short- and long-term incentive plans paid during 2004, and the estimated value of other compensation-related items. This sum also includes the compensation of Gary Prestia who resigned on September 16, 2004. No severance payment other than the contractual salary and bonus entitlements were made to Gary Prestia.

Richard E. Smith, a former member of the Global Executive Committee, was available as consultant to Converium until December 31, 2004 in exchange for additional compensation of $1.5 million paid in early 2004. As of December 31, 2004, Converium has no other former members of the Global Executive Committee available as consultants to Converium.

Global Executive Committee members held shares and options at the end of December 2004. Some were awarded under Converium’s AIP and LTIP, 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. Global Executive Committee members participate in local pension plans. More information about Converium’s employee participation and pension plans is contained in Notes 14 and 15 to our 2004 consolidated financial statements.

Employee Incentive and Benefit Plans

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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-US employees, a standard stock purchase plan for our non-US employees, and an omnibus share plan for our US 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.

The shares required under the plans are 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 $9.6 million of incentive compensation expense in 2004.

An adjustment to the exercise price of all options outstanding prior to the 2004 rights offering will be made in early 2005 in order to account for the dilution of the value of the options as a result of the 2004 rights offering. The reduction in exercise price maintains the same Black-Scholes value of the option before and after the 2004 rights offering and does not reflect any other decrease in the share price. The re-pricing of options will not have a material impact on the financial condition or results of operations.

Grants to Global Executive Committee

Global Executive Committee members held shares and options at the end of December 2004. Some were awarded under Converium’s AIP and LTIP, 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.

									Options vested of
			Shares held at				Options held at		options held at
Global Executive	Shares granted		December 31,		Options granted		December 31,		December 31,
Committee member	in 2004 (1)		2004 (2)		in 2004 (3)		2004		2004
Dirk Lohmann		96,566		105,994		176,688		432,755		263,949
Frank Schaar		27,176		10,049		53,617		129,998		80,170
Benjamin Gentsch		28,610		36,006		53,239		99,672		50,032
Martin Kauer		25,104		—		56,537		138,196		84,416
Gary Prestia(4)		3,903		—		9,103		—		—
Hans Peter Boller		21,361		14,051		42,402		79,161		41,322
Christian Felderer		16,014		4,024		32,980		45,328		15,790
Christoph Ludemann		19,086		2,683		41,932		46,981		13,005

As a result of the 2004 rights offering this table is not comparable to the similar table issued for 2003 and does not allow any conclusion in respect of potential share sales by Global Executive Committee members.

(1) Shares granted in 2004 include shares awarded under the AIP and LTIP, which are subjected to various vesting schedules, and shares

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	purchased through the employee stock purchase plan.
(2)	Includes only vested shares (includes shares held by closely linked parties). A majority of shares granted in 2004 vest ratably over three years. Thus certain shares granted in 2004 or prior are not indicated to be held by Global Executive Committee members at December 31, 2004.
(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 16, 2004.

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 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

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.

Employee retention plan

In September 2004, Converium adopted a retention plan for certain of its key employees in order to ensure the successful continuation of business operations at Converium AG and Converium Rückversicherung (Deutschland) AG and the orderly run-off of its North American operations. The retention bonus is paid to the eligible employees in cash in two or three equal installments in amounts up to the equivalent of such employees’ base salary. The last installment becomes due on January 31, 2006. The estimated cost of the program is approximately $31.5 million, which will be expensed over the period October 1, 2004 through January 31, 2006. For the year ended December 31, 2004, $15.7 million has been expensed based on the terms of this plan. In addition, severance amounts of $6.0 million will be required to be paid to certain CRNA employees in the event of a change of control or certain other events.

Long Term Incentive Plan (“LTIP”)

The LTIP is designed to align the interests of management closely with those of shareholders, and to encourage share ownership. LTIP awards are made to senior employees, and are awarded in a combination of 50% Converium shares and 50% options to purchase Converium shares. Shares vest ratably over three years. Options are issued with an exercise price equal to the market value of the shares or ADSs on the grant date. 25% of the options vest immediately on the grant date, and 25% vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

Effective in 2005, CRNA has established a long-term incentive plan for its senior employees needed for the run-off. The CRNA LTIP is based on CRNA’s performance against target plan statutory surplus levels over a 5-year period, 2005 through 2009. Awards are payable to participants in cash, in early 2010, after performance can be determined.

Executive IPO Option Plan

In connection with the Transactions, Converium granted certain executives options to purchase shares in Converium Holding

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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. Executive IPO Options are now fully vested and expire 10.5 years after the date of grant.

For further information on our share-based incentive plans, see Note 15 to our 2004 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 the General Legal Counsel.

The Nomination Committee

The 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 Global Executive Committee. 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 Converium 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 2004 the Nomination Committee held four meetings.

The Remuneration Committee

The Remuneration Committee comprises at least three Board members and currently comprises four. It sets the compensation levels for the Global Executive Committee (except the CEO) and the Head of Internal Audit, and proposes to the Board of Directors the overall remuneration for the CEO, for each of the members of the Board of Directors and the Managing Director, as well as the principles of compensation, of incentive schemes, and bonus payments to employees. Standing invitees are the CEO and the Chief Human Resources Officer. In 2004 the Remuneration Committee held five meetings.

The Finance Committee

The Finance Committee comprises at least three Board members and currently comprises three. It approves external providers of asset management services and capital increases in subsidiaries between $5 million and $20 million. It submits to the Board for its approval the accounting standards framework for Converium, the annual budget and financial plans, investment and treasury policy, solvency and liquidity planning, strategic asset allocation, tax planning, the allocation of expenses to be charged to the Corporate Center, capital increases and the use of contingent or authorized capital, year-end results and dividend policy, as well as exchange listings and de-listings. Standing invitees are the CEO, the CFO and the Chief Investment Officer. In 2004 the Finance Committee held four meetings.

The Audit Committee

The Audit Committee comprises the Chairman of the Board of Directors and the Chairmen of the Finance, Nomination and Remuneration Committees. In connection with his appointment to the position of Managing Director, Terry G. Clarke resigned from the Audit Committee and also resigned as the Chairman of the Nomination Committee. The Audit Committee currently only comprises three members because the Chairman of the Remuneration and Nomination Committee is the same person. 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. The Audit Committee reviews and approves the quarterly financial statements, except year-end results; 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 Managing Director, the Head of Internal Audit and the external auditor. In 2004 the Audit Committee held seven meetings.

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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 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 processes 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 Converium’s assets;

• to evaluate and promote efficient use of resources; and

• 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 nine persons and covers all operations of Converium worldwide. Internal Audit has unrestricted access to all relevant information and documents.

The areas of responsibility between the Board of Directors, the Managing Director and the Global Executive Committee are defined in the Organizational By-laws of Converium Holding AG, which are available on the internet at www.converium.com.

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.

In addition, we have entered into agreements with each of our directors pursuant to which we have agreed to indemnify each such director for legal expenses incurred in conjunction with his or her professional liability to shareholders, bondholders, creditors or others caused by actions or omissions by such person in his or her capacity as a director, except where such professional liability was caused by the intent or negligence of such director and provided that (i) such indemnification is in our best interest considering the facts and circumstances and (ii) such legal expenses are not covered by our existing Directors and Officers Liability Insurance or are otherwise reimbursable to such director by the plaintiff.

     D. EMPLOYEES

As of December 31, 2004, Converium employed 771 people globally, including 369 at our offices in Switzerland, 138 at our offices in the United States, 169 at our offices in Germany, 21 in other European countries, 33 in the Asia-Pacific region and 41 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 May 31,		As of December 31,
	2005*		2004		2003		2002
Number of employees		676		771		847		813
Breakdown by geographic location
Switzerland		331		369		332		274
United States		105		138		231		237
Germany		165		169		160		148
Asia-Pacific region		29		33		31		29

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	As of May 31,		As of December 31,
	2005*		2004		2003		2002
Other regions		46		62		59		52
Breakdown by main category of activity
Underwriting		215		257		290		274
Finance		180		212		200		176
Actuarial		64		67		77		69
Other		217		235		246		221

* As a result of ratings downgrades and the placement of CRNA into orderly run-off, during 2005 we are in the process of downsizing our organization to adjust our cost base to the reduced volume of business. The reduction in headcount is reflected above.

     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 May 31, 2005, 75,642,207 shares were registered in our share register. These shares were owned by 8,104 shareholders, of which 7,429 were private individuals holding 11.27% of total outstanding shares, 207 were foundations and pension funds holding 5.52% of total outstanding shares and 468 were other legal entities holding 34.78% of total outstanding shares.

As of May 31, 2005, 26 holders with registered addresses in the United States, including nominees with registered addresses in the United States, held 15,153,604 of our registered shares and 3,907 holders with registered addresses in the United States, including nominees with registered addresses in the United States, held 10,856,842 ADSs. These holdings represented 13.70% of the total number of shares outstanding as of May 31, 2005. 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 US beneficial holders or the number of registered shares or ADSs beneficially held by persons in the United States.

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:

• Odey Asset Management LLP, London, United Kingdom: 11.2% (date of notification March 4, 2005). Odey Asset Management LLP acts as the investment manager for several funds.

• Dodge & Cox, San Francisco, California, United States: 5.04% (date of notification June 22, 2005). Dodge & Cox provides investment management to institutions and individuals through separately managed portfolios and mutual funds.

Our major shareholders hold the same voting rights as all other shareholders.

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, 2004.

GAUM

In 2003, Converium finalized an agreement to acquire a 25% stake in GAUM, a leading international commercial and general aviation underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and space line of business. At that same time, 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 under which it became a member of the aviation and aerospace pools run by GAUM and its subsidiary, Associated Aviation Underwriters Inc.

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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 GAUM, which increased its overall stake 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 pool’s capacity of the aviation risks managed by GAUM, compared to 25% for the 2003 underwriting year. Gross premiums assumed through the pools managed by GAUM were $289.0 million, $266.4 million and $64.4 million for 2004, 2003 and 2002, respectively.

See “Item 3. — Key information — D. Risk factors — Ratings changes” and Notes 3, 8 and 18 to our 2004 consolidated financial statements for additional information on GAUM.

MDU

Converium entered into a strategic alliance with the MDU that resulted in a 49.9% participation in the Medical Defence Union Services Ltd (“MDUSL”). MDUSL distributes medical malpractice insurance policies to the members of the MDU. 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 MDU beginning July 1, 2003. These insurance policies replaced policies formerly issued in the United Kingdom by Zurich Financial Service’s entities, the majority of which were reinsured by Converium. Gross premiums written from MDU were $170.9 million, $137.3 million and $140.0 million for 2004, 2003 and 2002, respectively.

The MDU Shareholders’ Agreement provides that if Converium’s credit rating is lowered by more than seven points, from its initial “A+” rating, by a recognized credit ratings agency, MDU may serve it with a Termination Notice. Within sixty days after service of such termination notice, MDU has the right to purchase Converium’s 49.9% shareholding in MDU Services Ltd. at a price to be mutually agreed upon by the parties, or to be determined by a valuation expert. The recent ratings downgrades have not triggered the termination provisions of the MDU Shareholders’ Agreement. See Notes 8 and 18 to our 2004 consolidated financial statements for additional information on MDU.

SATEC

Converium has a 48% participation in SATEC, a leading global space-underwriting agency based in Venice, Italy. Additionally, in 2002 Converium entered into a usufruct agreement with each of the two other owners of SATEC regarding some of their participation rights. Gross premiums assumed through the pool managed by SATEC were $10.2 million, $5.9 million and $5.0 million for 2004, 2003 and 2002, respectively. Profit distributions paid from SATEC to Converium with regards to the participation and the usufruct were $0.9 million, $0.8 million and nil for 2004, 2003 and 2002, respectively. In 2004, we have recorded an impairment charge with regard to the usufruct agreement in the amount of $2.4 million.

RISC Ventures

Until the end of 2004 Converium has retained The RISConsulting Group LLC for certain consulting services, of which Derrell J. Hendrix, a member of the Converium AG Board of Directors, is Manager and Chief Executive Officer. In addition, Derrell J. Hendrix is a manager and owner of approximately 57% of the outstanding share capital of RISC Ventures LLC, a Delaware-based limited liability company created to manage and operate companies engaged in commercializing technologies and intellectual properties developed by The RISConsulting Group LLC and its affiliates. In April 2004, Converium AG invested $2.0 million in RISC Ventures LLC for an approximate 17.5% ownership interest in the entity. For 2004, Converium paid total fees of $250,000 to The RISConsulting Group LLC.

Managing Director

In order to enhance the effectiveness of strategic and operational decision-making and greater collaboration between the Board of Directors and the Global Executive Committee, Converium established the position of Managing Director. On September 10, 2004, Terry G. Clarke was appointed as Converium’s new Managing Director. The Managing Director serves on the Board and has oversight over the day-to-day management of Converium’s business. The Managing Director attends all meetings of the Global Executive Committee and has veto power over decisions taken by the Global Executive Committee. In addition to the Managing Director’s regular compensation as a member of the Board of Directors, Terry G. Clarke received a remuneration of GBP50,000 ($91,620) per month plus reimbursement for customary expenses. For 2004, Converium paid Terry G. Clarke GBP190,909 ($349,822) related to this role. In February 2005, Terry G. Clarke assumed the role of Chief Executive Officer of Converium and at the same time the role of Managing Director was cancelled.

     C. INTERESTS OF EXPERTS AND COUNSEL

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     Not applicable.

ITEM 8. FINANCIAL INFORMATION

     A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

     See our 2004 consolidated financial statements beginning on page F-1.

Legal Proceedings

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:

Superior National Matters

On January 6 and January 7, 2005, CRNA and CINA, respectively, entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with the California Insurance Commissioner (the “Commissioner”) relating to the January 16, 2002 complaint that the Commissioner filed against a subsidiary of ZFS, Centre Insurance Company (“CIC”) and affiliates, as well as CRNA and CINA (see Note 26 to our 2004 consolidated financial statements). The Commissioner had initiated this action in Superior Court of the State of California, County of Los Angeles, on behalf of the Superior National Insurance Companies in Liquidation (“SNICL”).

The complaint alleged several counts, including voidable preferences and fraudulent transfers, the recovery of transfers totaling $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 appeared to arise out of CIC transactions, not CRNA or CINA transactions. As part of the transactions which effectively spun-off CRNA and CINA from ZFS, ZFS agreed to indemnify CRNA and CINA for liabilities arising out of or related to the assets not assumed by or transferred to CRNA and CINA in the separation from ZFS. The principal claim brought against CRNA appeared to arise from CRNA’s commutation of certain reinsurance obligations. In that connection, however, while the complaint did in fact reference the commutation, the payment involved was a commutation payment made by CRNA, not to CRNA. As best as could be discerned, the liquidator was apparently claiming that the amount paid by CRNA was inadequate consideration for the reinsurance obligations commuted and thus this commutation constituted a fraudulent transfer. All the claims, though, were never well defined and no discovery was ever undertaken to better elucidate them.

Neither CRNA nor CINA shall pay any amounts whatsoever in exchange for the full and final discharge of liabilities, as set forth in the Settlement Agreement, that the Commissioner has granted to both companies. Instead, CIC shall be making the full payment that will provide the complete release to CRNA and CINA, as well as all other parties in the complaint. At a hearing on February 17, 2005, the Settlement Agreement was approved by the court presiding over the liquidation of the estates of SNICL. On April 18, 2005 the settlement was deemed final and on or about May 18, 2005 payments required of parties under the Settlement Agreement (which did not include CRNA or CINA), were made. A dismissal of the case was entered by the court on June 1, 2005.

U.S. Life Insurance Company arbitration

The arbitration initiated on November 29, 1999 by U.S. Life Insurance Company (“U.S. Life”) against Superior National Insurance Company in Liquidation (“SNICIL”), CINA and CIC, which was previously reported, has been settled as between U.S. Life and CINA. The settlement in January 2005 followed a December 2004 decision of the arbitration panel to reject U.S. Life’s claim for rescission and to instead reform the reinsurance treaty provided by U.S. Life to a 90% quota share as opposed to a 100% quota share. Life and CINA agreed to settle the matter with a full and final commutation of the treaty in exchange for a commutation payment by U.S. Life (see Note 26 to our 2004 consolidated financial statements).

All American Life Insurance Company arbitration

The arbitration initiated on December 23, 2002 by CRNA and CINA against All American Life Insurance Company (“All American”), which was previously reported, has been settled. In May 2004, the parties to the dispute, which concerned a

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reinsurance treaty provided by All American, agreed to settle the matter with a full and final commutation of the treaty in exchange for a commutation payment by All American. Incurred losses of $9.2 million were recorded in 2004 to reflect this commutation.

Continental Casualty Company arbitration

In December 2002, Continental Casualty Company (“Continental”) and CRNA each demanded arbitration from the other to resolve a dispute arising from a retrocessional contract pursuant to which Continental reinsured CRNA for 50% of certain accident and health exposures CRNA assumed from a third-party insurer. The dispute arose in October 2002 when Continental asserted that the third-party insurer had violated the reinsurance agreement with CRNA in such a way that might give rise to defenses under the reinsurance agreement.

Effective June 2004, Continental and CRNA entered into an Assignment of Rights, Limited Indemnity and Cooperation Agreement (the “Assignment Agreement”) pursuant to which the parties agreed to withdraw their respective demands for arbitration with prejudice. The Assignment Agreement enables Continental, with the cooperation of CRNA, to assert its defenses directly against the insurer and indemnifies CRNA for monetary liability or expenses it incurs resulting from CRNA’s cooperation or Continental’s assertion of its defenses. Following the signing of the Assignment Agreement, Continental, CRNA and the third-party insurer have entered into a series of commutation agreements related to the exposures. These commutations became effective in April 2005 following the approval of the liquidation court governing the insurer.

Great American Insurance Company arbitration

The arbitration initiated on July 30, 2004 by Great American Insurance Company (“GAIC”) against CRNA, challenging CRNA’s right to invoke a special termination or settlement clause under certain Automobile Residual Value Proportional Reinsurance Agreements (the “Reinsurance Agreements”) with GAIC and seeking resolution of a billing dispute related to the Reinsurance Agreements, which was previously reported, has been settled. In December 2004, the parties to the dispute agreed to settle the matter with a full and final commutation of the Reinsurance Agreements in exchange for a commutation payment by CRNA.

Canada Life

On December 21, 2001, The Canada Life Assurance Company, Toronto (“Canada Life”), brought an action against Converium Rückversicherung (Deutschland) AG (“Converium Germany”) in the US District Court of the Southern District of New York. Canada Life alleged that Converium Germany 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 Germany 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 US 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 US District Court of the Southern District of New York, Converium Germany sent Canada Life a request to arbitrate. Following the organizational meeting of the arbitrators on October 8, 2003, the discovery and deposition began. The hearing is expected to take place in the second quarter of 2005. Meanwhile, the arbitration panel ordered Converium Germany to post pre-award security in the form of a Letter of Credit in the amount of $66.0 million, which Converium Germany has complied with.

Converium Germany has fully reserved this claim. However, arrangements entered into with Zurich Financial Services provide for the claim to be covered by the agreed-to cap for September 11th related losses provided to us by Zurich Financial Services in conjunction with Converium’s Initial Public Offering.

Review of Certain of our Reinsurance Transactions

Ongoing investigations of the insurance and reinsurance industry and certain insurance and reinsurance products are being conducted by U.S. regulators and governmental authorities, including the Securities and Exchange Commission and the New York Attorney General.

On March 8, 2005, MBIA Inc. (“MBIA”) issued a press release stating that MBIA’s audit committee undertook an investigation to determine whether there was an oral agreement with MBIA under which MBIA would replace Axa Re Finance as a reinsurer to CRNA by no later than October 2005. The press release stated that it appears likely that such an agreement or understanding with Axa Re Finance was made in 1998. Thereafter, on April 19, 2005, CRNA received subpoenas from the U.S. Securities and Exchange Commission and the Office of the New York Attorney General seeking documents related to certain transactions between CRNA and MBIA.

In view of the industry investigations and the events relating to MBIA described above, we have engaged counsel to assist us in a review and analysis of certain of our reinsurance transactions, including the MBIA transactions. We are fully cooperating with the governmental authorities in connection with their investigation. The impact of our ongoing review and analysis and the ongoing regulatory investigations on us is uncertain, and there can be no assurance as to whether or not the outcome of such investigations will have a material impact on Converium.

Class action lawsuits

Commencing on October 4, 2004, seven securities class action lawsuits have been filed against Converium and certain of its

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officers and directors. The complaints are as follows: Meyer v. Converium Holding AG, et al., 04 CV 07897, which names Converium Holding AG, Dirk Lohmann and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and July 20, 2004; Criden v. Converium Holding AG, et al., 04 CV 8060, which names Converium Holding AG, Dirk Lohmann and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and July 20, 2004; Taylor v. Converium Holding AG, et al., 04 CV 8038, which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, Martin Kauer, Richard E. Smith and Frank Schaar as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004; Jakob v. Converium Holding AG, et al., which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, Martin Kauer, Richard E. Smith and Frank Schaar as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004; Maxfield v. Converium Holding AG, et al., 04-CV-08994, which names Converium Holding AG, Peter C. Colombo, Martin Kauer and Dirk Lohmann, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and September 2, 2004; Bassin v. Converium Holding AG, et al., 04 CV 08295, which names Converium Holding AG, Peter C. Colombo, Martin Kauer and Dirk Lohmann as defendants, and is purportedly brought as a class action on behalf of purchasers of our securities between December 11, 2001 and September 2, 2004 (see Note 26 to our 2004 consolidated financial statements); and Rubin v. Converium Holding AG, et al., Index No. 04-117332, which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004. On January 21, 2005, Bassin v. Converium Holding AG, et al., 04 CV 08295, was voluntarily dismissed, without prejudice, by the plaintiff in that action.

The first five complaints, each of which was filed in the Southern District of New York, assert claims for violations of Section 10(b), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Securities Exchange Act of 1934, and allege, among other things, that, contrary to representations, we did not establish adequate loss reserves to cover claims by policyholders; that our announced reserve increases prior to July 20, 2004 were insufficient; and that, as a result of the foregoing, our earnings and assets were materially overstated. Further, certain of the complaints allege violations of Securities and Exchange Commission reporting obligations and generally accepted accounting principles. Rubin v. Converium Holding AG, et al., Index No. 04-117332, filed in New York State Court, makes similar claims directed at the Company’s Registration Statement and Prospectus issued in connection with the IPO under sections 11, 12, and 15 of the Securities Act of 1933. Converium, among other defendants, removed Rubin to the Southern District of New York. Plaintiffs have filed a motion to remand. In each one of these cases, plaintiffs are seeking unspecified compensatory damages, attorney’s fees and expert fees. It is possible that additional suits alleging similar claims may be filed in the future.

We intend to defend the remaining lawsuits vigorously. The actions are in the preliminary phases; thus, the timing and outcome of these matters are not currently predictable. An unfavorable outcome could have a material effect on our financial condition, results of operations and cash flows.

US Securities and Exchange Commission Trading Inquiry

In August 2004, CRNA received a request for voluntary production of documents and information from the enforcement staff of the US Securities and Exchange Commission (the “Commission”). As a result of that request, CRNA understands that the Commission is conducting an informal inquiry to determine whether there have been violations of the US federal securities laws in connection with transactions in Converium’s securities by certain persons prior to Converium’s announcement on July 20, 2004 that its second quarter 2004 earnings would fall short of expectations due to higher than modeled US casualty loss emergence primarily related to the underwriting years 1997 to 2001.

CRNA voluntarily responded to the Commission’s request, and will continue to cooperate with the Commission in the event of any follow-up requests for information.

Investigation by the Swiss Federal Banking Commission

In November 2004, the Federal Banking Commission requested certain information in conjunction with the sequence of events in conjunction with Converium’s announcement on July 20, 2004 that its second quarter 2004 earnings would fall short of expectations due to higher than modeled US casualty loss emergence primarily related to the underwriting years 1997 to 2001. Converium is fully complying with the respective requests by providing all relevant information to the Commission.

Dividends and Dividend Policy

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The Ordinary General Meeting of shareholders held in Zug on April 12, 2005 approved the proposal of the Board of Directors to allocate the net loss for the 2004 fiscal year in the amount of CHF 1,518,291,374 to the free reserves and not to pay out a dividend.

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.

As a holding company, we are dependent on dividends, and interests 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 16 to our 2004 consolidated financial statements. In addition to the dividend restrictions stated in Note 16 to our 2004 consolidated financial statements, CRNA is required to obtain approval from the Connecticut Department of Insurance prior to making any dividend payments.

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.

     B. SIGNIFICANT CHANGES

Except as otherwise disclosed in this annual report, there has been no significant change in our financial position since December 31, 2004.

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 June 24, 2005, 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 10.35 per registered share.

	High		Low
	CHF		CHF
Calendar Year 2001 (from December 11, 2001)		82.10		79.00
Calendar Year 2002		89.75		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 (1)		73.75		7.42
First Quarter		73.75		60.25
Second Quarter		68.95		60.50
Third Quarter		65.05		16.25
Fourth Quarter (1)		17.05		7.42
Calendar Year 2005 (until May 31, 2005)		12.50		9.00
First Quarter		12.20		10.05
Last 6 Months
December 2004		10.90		9.77
January 2005		11.50		10.05
February 2005		12.20		10.60
March 2005		12.00		10.20
April 2005		12.50		10.30
May 2005		10.90		9.00

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(1) Includes the effect of the 2004 rights offering.

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 June 24, 2005, 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 $4.09 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		29.57		3.15
First Quarter		29.57		23.55
Second Quarter		26.80		23.70
Third Quarter		26.04		6.76
Fourth Quarter		6.85		3.15
Calendar Year 2005 (until May 31, 2005)		5.20		3.59
First Quarter		5.18		4.44
Last 6 Months
December 2004		4.87		4.29
January 2005		5.06		4.44
February 2005		5.08		4.50
March 2005		5.18		4.50
April 2005		5.20		4.37
May 2005		4.59		3.59

     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

     Not applicable.

     E. DILUTION

     Not applicable.

     F. EXPENSES OF THE ISSUE

     Not applicable.

ITEM 10. ADDITIONAL INFORMATION

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     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. The Articles of Incorporation were amended in 2004 to reflect the following changes to our issued, authorized and conditional share capital.

Issued Share Capital

At the Extraordinary General Meeting on September 28, 2004 the shareholders resolved to reduce the share capital of the company from CHF 400,062,170 by 200,031,085 to CHF 200,031,085 by reducing the nominal value of CHF 10 per share by CHF 5 to CHF 5 per share and to increase the share capital by CHF 533,416,225 through the issuance of 106,683,245 fully paid registered shares with a nominal value of CHF 5 each at an issue price of CHF 5 per share

Authorized Share Capital

At the Annual General Meeting on April 27, 2004, the shareholders resolved to create authorized share capital and amended the Articles of Incorporation, which provides that the Board of Directors is authorized, on or before April 27, 2006, to increase the share capital by the issuance of up to a maximum of four million fully paid-up registered shares each of CHF 10 nominal value amounting to a maximum of CHF 40 million.

Subsequent to the reduction of the nominal value of each of Converium’s shares from CHF 10 to CHF 5 as a result of the resolution by the shareholders at the EGM of September 28, 2004, Converium’s authorized capital is now CHF 20,000,000 with the Board being authorized to issue up to four million shares.

Conditional Share Capital

At the Annual General Meeting on April 27, 2004, Converium Holding AG amended its Articles of Incorporation to state that the previously available conditional share capital for use in conjunction with the employee participation plans has been replaced by a conditional share capital for option rights and/or conversion rights for four million shares or CHF 40,000,000 in nominal share capital.

Subsequent to the reduction of the nominal value of each of Converium’s shares as a result of the resolution by the shareholders at the EGM of September 28, 2004, its conditional capital is now four million shares of CHF 5 nominal value each, amounting to a maximum of CHF 20,000,000 pursuant to which up to four million shares can be issued upon exercise of conversion or option rights allotted in connection with bonds and other financial market instruments.

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 at www.converium.com 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

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• 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

• 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 20 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 had to be registered in the share register was April 4, 2005 in order to be invited to the Annual General Meeting of April 12, 2005, 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 set out the overall principles and the rights and obligations of the parties in connection with the Formation Transactions. It also addressed 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.

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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 agreed, following the completion of the Formation Transactions:

• to execute the agreements, and to cooperate and act in accordance with the arrangements described below; 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.

September 11th Coverage

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, 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 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 CRNA, 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 are exposed to the risk of non-payment of Zurich Financial Services units and we are exposed to credit risk from these subsidiaries of Zurich Financial Services. See — Note 8 to our 2004 consolidated financial statements, and “Item 4. — Information on the Company — B. Business Overview — Retrocessional Reinsurance”.

Acquisition of the Converium AG Business

Historically, Converium AG was not a separate legal entity and underwrote substantially all of its business pursuant to reinsurance policies issued by ZIC and 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, 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.

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 we 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 us 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. We receive interest on the Funds Withheld Asset based on fixed interest rates.

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

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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.

We will receive the surplus remaining with respect to the Funds Withheld Asset, if any, after all liabilities have been discharged. Any surplus will be recorded in the financial statements in the period when it occurs. Additionally, Zurich Financial Services has the right to prepay to us the full amount or a portion thereof of the Funds Withheld Asset prior to termination of the agreement.

We will continue to administer the transferred business on behalf of ZIC and ZIB, which remain liable to the original cedents of the business. Additionally, we will manage third party retrocessions related to the business transferred. 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 will bear the credit risk for uncollectible reinsurance balances excluding those related to the September 11th terrorist attacks. We 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 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 our consent.

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 CRNA reinsurance business was acquired through the transfer by a subsidiary of Zurich Financial Services of all of the voting securities of CRNA to CHNA, pursuant to a Stock Purchase Agreement between ZRCH and us, dated November 20, 2001.

Assumption of $200 Million Public Notes

On October 20, 1993, ZRCH issued $200 million principal amount of 7.125% Senior Notes due October 15, 2023, (the “Notes”). In connection with the issuance of the Notes, ZRCH executed an Indenture. As partial consideration for the transfer to CHNA of CRNA, CHNA 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 CHNA and rank on a parity with all other unsecured and unsubordinated indebtedness of CHNA.

CENY Arrangements

Prior to the Formation Transactions, the CRNA balance sheet reflected business originally written by Centre Reinsurance Company of New York, or CENY. CENY was originally part of the Zurich Centre Group of companies, a business unit of Zurich Financial Services. Zurich Financial Services historically operated and managed CENY separately from Converium. In 1997, the CENY legal entity was merged into Zurich Reinsurance Centre, Inc., a predecessor of CRNA. As a result of this merger, certain liabilities of CENY, referred to below as “CENY Business,” became direct obligations of CRNA, 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 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, dated as of October 21, 2001. Under this agreement, CRNA 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 Centre Insurance Company and Centre Solutions (U.S.) Limited on an indemnity reinsurance basis and is reflected in our financial statements as 100% retroceded business for all periods presented.

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CRNA historically obtained stop-loss reinsurance coverage on the CENY Business from members of the Zurich Centre Group. In connection with the Formation Transactions, CRNA has commuted these policies pursuant to various commutation agreements dated 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

CRNA and its wholly owned subsidiary, CINA, terminated certain existing affiliated tax group allocation arrangements and settled balances due under certain such arrangements in preparation for the transfer of CRNA to Converium pursuant to an agreement dated October 1, 2001.

CRNA entered into a sublease with ZC Resource LLC, a subsidiary of Zurich Financial Services, in July 2001. See “— Lease arrangements”.

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

Converium Rückversicherung (Deutschland) AG was historically known as Agrippina Rückversicherung and subsequently known as ZRK. Historically, Zurich Re Zürich, 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 Zürich 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.

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 us. 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 CRNA 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 our 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 novated, commuted or retroceded to affiliates of Zurich Financial Services or third parties. Any related rights and obligations of ours have been extinguished. Accordingly, all of this business is excluded from our financial statements.

Other Indemnity Matters

Pursuant to the Master Agreement, we and Zurich Financial Services have indemnified 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 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 us) 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 US and non-US 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 us); and

• losses suffered by Zurich Financial Services or any of its affiliates (other than us) that relate to any reasonable action to

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avoid, resist or defend against liabilities assumed by or indemnified against by us.

Zurich Financial Services 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 us 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 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 our 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 have indemnified 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.

Also, we agreed to indemnify Zurich Financial Services and its subsidiaries for losses arising from Zurich Financial Services’ involvement in the MDU strategic partnership 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 have indemnified each other with respect to losses arising out of our lease arrangements at CRNA’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 US Converium entities, which we refer to as the “US Tax Sharing Agreement;” and

• Zurich Financial Services in respect of the non-US Converium entities, which we refer to as the “Non-US Tax Sharing Agreement”.

The tax allocation agreement in effect involving CRNA and CINA was terminated as to those parties. CRNA and CINA paid the compensation due under the tax allocation agreement through the date of sale of CRNA to CHNA. Under the US Tax Sharing Agreement, payments previously made may be adjusted based on amendments to the tax returns or completion of IRS audits. The US Tax Sharing Agreement provides we will generally be liable for taxes imposed on our US 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 US 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-US Tax Sharing Agreement provides, in general, that we will be liable for all taxes arising from the business previously conducted by ZIC and Zurich 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 our initial public 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 US Tax Sharing Agreement are guaranteed by ZIC.

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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 offering of Converium shares to the public in our initial public offering triggered retroactively 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”.

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 loss development on ZRC’s revenues as of December 31, 1992. As we described above under “CENY Arrangements”, ZRC was a predecessor of CRNA, 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

CRNA has 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 CRNA 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 CRNA. In October 2001, the 1997 Aggregate Excess of Loss Agreement was amended as follows:

• CRNA’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;

• CRNA’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 also provided CRNA 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 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, has entailed 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.

Lease Arrangements

Converium AG leases office space from Zurich Financial Services. The lease term is fixed until 2011, with two renewal options for five-year terms each. The lease payments are fixed with annual rent escalations based on a cost of living index.

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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.

CRNA 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, CRNA 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 CRNA’s default under the sublease that results in a default under the prime lease; GAHL, in turn, will indemnify CRNA 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 CRNA enforcing the guaranty. See Note 25 to our 2004 consolidated financial statements for additional information on guarantees. As a result of the transition to a run-off entity in North America, a decision was made in January 2005 to vacate our primary office space in New York, New York and consolidate in our Stamford, Connecticut office space. We expect the effective date of the transfer to be July 1, 2005.

     D. EXCHANGE CONTROLS AND OTHER LIMITATIONS

Other than in connection with government sanctions imposed on Yugoslavia, Myanmar, Zimbabwe, Iraq, Ivory Coast, Liberia, Sierra Leone and persons and organizations with connection to Osama bin Laden, the “al Qaeda” group or the Taliban, there are currently no laws, decrees or regulations in Switzerland that restrict the export or import of capital, including, but not limited to, Swiss foreign exchange controls on payment of dividends, interest or liquidation proceeds, if any, to non-Swiss resident holders of shares. In addition, there are no limitations imposed by Swiss law or the Company’s Articles of Incorporation on the rights of non-Swiss residents or non-Swiss citizens to hold or vote the shares of the Company.

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 US Federal income tax and Swiss tax consequences to a holder of shares or 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 US 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 US/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 US 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 US 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 US 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

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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 US Residents

Article 10 of the US/Switzerland Treaty provides for a reduced 15% withholding tax rate for US 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 US/Switzerland Treaty is granted by way of a refund. Under the ADS program in effect through The Bank of New York, a US holder of ADSs that qualifies for US/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 US holders of ADSs. The Bank of New York will pay 85% or 95% of the dividend to the eligible US holders of ADSs, depending on the applicable US/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 US/Switzerland Treaty is granted for holders of shares by way of a refund of the withholding tax. A US 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.

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.

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United States Federal Income Taxation

This discussion applies only to beneficial owners of shares or ADSs that hold the shares or ADSs as capital assets and are US holders. For purposes of this discussion, a “US holder” for US federal income tax purposes is either (1) a citizen or resident of the United States, (2) a corporation, or other entity treated as 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 US 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 US 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 US taxation other than federal income taxation. Holders are urged to consult their tax advisors regarding the US federal, state and local and other tax consequences of owning and disposing of shares or ADSs.

US holders of ADSs will be treated as owners of the shares underlying the ADSs for US federal income tax purposes. Accordingly, except as noted, the US federal income tax consequences discussed below apply equally to US 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.

Taxation of Dividends

Subject to the passive foreign investment company, or PFIC, rules described below, US 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 US federal income tax purposes) as foreign source ordinary income when the dividend is actually or constructively received by the US holder. The dividend will not be eligible for the dividends-received deduction. Dividends paid to a non-corporate US holder before January 1, 2009 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 121 day period beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. The amount of the dividend paid in Swiss francs will be the US dollar value of the Swiss francs received, including the amount of any Swiss tax withheld, determined at the spot Swiss franc/US dollar rate on the date such dividend is 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 US 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 US federal income tax purposes, will be treated as a return of capital to the extent of the US 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 US/Switzerland Treaty and paid over to Switzerland will be creditable against the US holder’s US 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 15 days during the 31 day period beginning on the date which is 15 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 US holder under the US/Switzerland Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the US holder’s US federal income tax liability. See “— Swiss Taxation — Obtaining a Refund of Swiss Withholding Tax for US Residents” above for the procedures for obtaining a refund of tax.

The ability of a US holder to utilize foreign taxes as a credit to offset US 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”.

A US 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 US 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. US holders should consult their tax advisors to determine whether and to what extent a foreign tax credit would be available to them.

The US Treasury Department has expressed concern that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming by US holders of ADSs of foreign tax credits for US federal income tax purposes. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by certain non-corporate US holders, described above. Accordingly, the discussion of the creditability of foreign taxes and the availability of the reduced rate for dividends received by certain non-corporate US holders could be affected by future actions that may be

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taken by the US Treasury Department.

Sale or Exchange

Subject to the PFIC rules described below, gain or loss recognized by a US holder on the sale, exchange or other disposition of shares or ADSs will, be subject to US federal income taxation as capital gain or loss in an amount equal to the difference between the US holder’s adjusted tax basis in the shares or ADSs and the amount realized on the disposition. Capital gain or loss will be long-term capital gain or loss where the shares or ADSs have been held for more than one year. Any gain or loss recognized will generally be treated as US source gain or loss. US 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 US federal income tax purposes.

PFIC Rules

Converium believes that it was not a PFIC for US federal income tax purposes for 2004 and it does not expect to be considered a PFIC in the foreseeable future. However, since PFIC status depends upon the composition of a company’s income and assets and the market value of its assets (including, among others, less than 25 percent owned equity investments) from time to time, there can be no assurance that Converium will not be considered a PFIC for any taxable year. If Converium were treated as a PFIC for any taxable year during which a US holder held a share or ADS, certain adverse consequences could apply to the US holder.

If Converium were treated as a PFIC for any taxable year, gain recognized by such US holder on a sale or other disposition of a share or ADS would be allocated ratably over the US holder’s holding period for the share or ADS. The amounts allocated to the taxable year of the sale or other exchange and to any year before Converium became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to such taxable year. Further, any distribution in respect of ADSs or shares in excess of 125 percent of the average of the annual distributions on ADSs or shares received by the US holder during the preceding three years or the US holder’s holding period, whichever if shorter, would be subject to taxation as described above. Certain elections may be available (including a mark to market election) to US persons that may mitigate the adverse consequences resulting from PFIC status.

In addition, if Converium were to be treated as a PFIC in a taxable year in which Converium pays a dividend or the prior taxable year, the 15% dividend rate discussed above with respect to dividends paid to non-corporate US holders would not apply.

Backup Withholding

A US 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 US holder’s federal income tax liability, provided appropriate information is furnished to the IRS. A US 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

You may 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:

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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 it 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 interest rate risks, 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 and the correlation between financial risks and underwriting 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 and repayments generated by our investment assets and to improve our understanding of the correlation between financial risks and underwriting risks. 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 testing and stochastic modeling.

To help manage our aggregate exposure to concentration and credit risks, we analyze and review the concentration of our risk by entity, risk category (asset, underwriting, retrocession), industry and credit rating on a periodic basis.

Sensitivity Analyses for Invested Assets

Approximately 85.5% 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, US 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

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and changing individual issuer credit spreads.

Equity Market Risk

We hold approximately 5.2% (including our participation in PSP Swiss Property AG) 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, 2004 would be an after-tax reduction in net assets of $34.8 million, which represents approximately 2.0% of our total shareholders’ equity as of December 31, 2004.

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 $121.7 million, which represents approximately 7.1% of our total shareholders’ equity as of December 31, 2004. 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 3.4. Additionally, we expanded our portfolio of held-to-maturity government bonds totaling $850.4 million (15.0% of our fixed maturities portfolio, excluding the Funds Withheld Asset). The duration of the held-to-maturity portfolio is 4.3.

As of December 31, 2004, 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.

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 US dollar that may result in adverse effects on our reported shareholders’ equity when expressed in US 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, 2004 against the US dollar.

	Adverse exchange rate movement			Approximate decline in
	against the US dollar(1)			shareholders’ equity
Euro		10	%	$66.7 million
Swiss franc		10	%	$46.9 million
UK pound		10	%	$  9.6 million

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(1) A weakening of the respective currency against the US dollar

As of December 31, 2004 and 2003, we had unrealized cumulative translation gains of $187.7 million and $116.1 million, respectively.

Our reported premiums, losses and expenses are also affected by exchange rate fluctuations. Business written in currencies other than the US 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 US 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, 2004:

	US						U.K			Swiss			Japanese
	Dollar			Euro			pound			franc			yen			Other			Total
Income statement
Net premiums written		43	%		25	%		17	%		1	%		2	%		12	%		100	%
Net investment income		57	%		19	%		20	%		1	%		—			3	%		100	%
Losses, loss adjustment expenses and life benefits		58	%		20	%		13	%		2	%		—			7	%		100	%
Underwriting acquisition costs		46	%		26	%		12	%		1	%		3	%		12	%		100	%
Other operating and administration expenses		33	%		17	%		4	%		44	%		—			2	%		100	%
Interest expense		100	%		—			—			—			—			—			100	%
Balance sheet
Total invested assets		56	%		17	%		18	%		2	%		—			7	%		100	%
Reinsurance assets		79	%		10	%		10	%		—			—			1	%		100	%
Losses and loss adjustment expenses, gross		57	%		19	%		19	%		—			—			5	%		100	%
Unearned premiums, gross		53	%		15	%		24	%		—			1	%		7	%		100	%
Future life benefits, gross		42	%		54	%		1	%		1	%		—			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.

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 due to the material weaknesses described below, as of such date our disclosure controls and procedures were ineffective 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.

Material Weaknesses

For purposes of Section 404 of the Sarbanes-Oxley Act, a “material weakness” is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

112

Two material weaknesses were identified within Converium’s financial accounting and reporting function. The first weakness identified was the need to train or recruit suitably qualified individuals to fill the knowledge and experience gaps caused by the departure of various key finance employees. The second weakness identified was the failure in the operation of key internal controls over the initiation of reinsurance and financial accounting data.

Converium is in the process of addressing these weaknesses by actively undertaking a recruitment search to identify and hire additional suitably qualified staff and by providing further training to existing staff in order to address the current knowledge and experience gaps within the financial accounting and reporting function. In addition, Converium is actively addressing the key internal control weakness identified over the initiation of reinsurance and financial accounting data by committing both internal and third-party consulting resources to address this issue and to further enhance our overall control environment.

Under current rules, we will become subject to Section 404 of the Sarbanes-Oxley Act in respect of our fiscal year ended December 31, 2006.

We expect to successfully address these weaknesses before Converium’s management is required to provide an assessment of the Company’s internal control over financial reporting pursuant in annual reports to Section 404 of the Sarbanes-Oxley Act.

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 audit partners 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 financially 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

113

mitigating the risks. Standing invitees are the CEO, the Head of Internal Audit and the external auditor. In 2004 the Audit Committee held six 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:

			%
($ thousands)	2004		Approved (1)			2003
Audit Fees	$	4,741		100	%	$	2,296
Audit-Related Fees		1,060		100	%		374
Tax Fees		189		100	%		161
All Other Fees		145		100	%		7
Total fees	$	6,135		100	%	$	2,838

(1) Represents percentage of 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, US GAAP training, pension and benefit plan audits and other accounting consultation.

Tax Fees represent tax compliance and fees related to transfer pricing analysis.

All Other Fees consist of fees related to a PricewaterhouseCoopers Ltd accounting and reporting database that Converium subscribes to, as well as advisory fees for CRNA’s run-off.

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

PART III

ITEM 17. FINANCIAL STATEMENTS

     Not applicable.

ITEM 18. FINANCIAL STATEMENTS

See the consolidated financial statements beginning on page F-1.

ITEM 19. EXHIBITS

114

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 October 12, 2004. ^
1.4	Bylaws of Converium Holding AG, revised April 11, 2005.
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 filed 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.*

115

Exhibit Number	Description
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. *
4.24	Form of Converium Standard Stock Option Plan for Non-US Employees. *

116

Exhibit Number	Description
4.25	Form of Converium Standard Stock Purchase Plan for Non-US Employees. *
4.26	Omnibus Share Plan for US Employees. *
4.27	Converium Employee Stock Purchase Plan for US 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. #
4.40	Agreement dated November 29, 2004, USD 1,600,000,000 Credit Facility for Converium AG, arranged by ABN AMRO Bank N.V., Barclay’s Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan.
4.41	Deed of Pledge, dated December 15, 2004, Converium Rückversicherung (Deutschland) AG as the Pledgor and ABN Amro Mellon Global Securities Services as the Account Bank and ABN Amro Bank N.V. as the Pledgee.
4.42	Deed of Pledge, dated December 15, 2004, Converium AG, Zürich, as the Pledgor, and ABN Amro Bank N.V. as the Pledgee and ABN Amro Mello Global Securities Services as the Account Bank.
4.43	Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Insurance (UK) Limited
4.44	Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Rückversicherung (Deutschland) AG.

117

Exhibit Number	Description
4.45	Fronting and Administration Agreement relating to the Global Aerospace Underwriters Pool, dated January 7, 2005, between Global Aerospace Underwriting Managers Limited, Global Aerospace, Inc., Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, National Indemnity Company and Converium AG.
7.1	Computation of ratio of earnings to fixed charges.
8.1	Subsidiaries of the Registrant.
12.1	302 Certification of Chief Executive Officer.
12.2	302 Certification of Chief Financial Officer.
13.1	906 Certification of Chief Executive Officer.
13.2	906 Certification of Chief Financial Officer.
14.1	Consent of PricewaterhouseCoopers Ltd, independent accountants.

*	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 .
#	Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2003, filed on April 5, 2003 .

118

CONVERIUM
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

	Page
Report of the independent Group Auditors on the Financial Statements		F-2
Consolidated Statements of (Loss) income for the years ended December 31, 2004, 2003 and 2002		F-3
Consolidated Balance Sheets as of December 31, 2004 and 2003		F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002		F-5
Consolidated Statements of Changes in Equity for the years ended December 31, 2004, 2003 and 2002		F-6
Notes to the Consolidated 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, 2004 and 2003		S-2
II   Condensed Financial Information of the Registrant
Statements of Income for the years ended December 31, 2004, 2003 and 2002		S-3
Balance Sheets as of December 31, 2004 and 2003		S-4
Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002		S-5
IV Reinsurance for the years ended December 31, 2004, 2003 and 2002		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, 2004 and 2003 and the related consolidated statements of income, cash flows and changes in equity for each of the three years in the period ended December 31, 2004, included on pages F-3 through F-53 all expressed in United States dollars.

The consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated 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 the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Converium Holding AG at December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be approved.

PricewaterhouseCoopers Ltd

A. Hill M. Frei

Zurich,
March 4, 2005, except as to the subsequent events described in Note 27, as to which the date is June 30, 2005.

F-2

Converium Holding AG and Subsidiaries
Consolidated statements of (loss) income

(US$ million, except per share information)
Year ended December 31	Notes		2004		2003		2002
Revenues
Gross premiums written				3,840.9		4,223.9		3,535.8
Less ceded premiums written				–287.9		–396.9		–213.6
Net premiums written		11		3,553.0		3,827.0		3,322.2
Net change in unearned premiums				132.1		–150.5		–156.7
Net premiums earned		11		3,685.1		3,676.5		3,165.5
Net investment income		7		311.6		233.0		251.8
Net realized capital gains (losses)		7		46.5		18.4		–10.3
Other (loss) income				–2.6		2.7		–1.2
Total revenues				4,040.6		3,930.6		3,405.8
Benefits, losses and expenses
Losses, loss adjustment expenses and life benefits		9,11		–3,263.1		–2,674.2		–2,492.0
Underwriting acquisition costs		11		–842.5		–803.2		–666.7
Other operating and administration expenses				–217.9		–197.8		–173.3
Interest expense		12		–33.1		–31.0		–16.4
Impairment of goodwill		8		–94.0		–		–
Amortization of intangible assets		8		–9.9		–		–
Restructuring costs		4		–2.7		–		–
Total benefits, losses and expenses				–4,463.2		–3,706.2		–3,348.4
(Loss) income before taxes				–422.6		224.4		57.4
Income tax (expense) benefit		13		–338.2		–39.3		49.4
Net (loss) income				–760.8		185.1		106.8
Basic (loss) earnings per share		24		–12.00		2.33		1.34
Diluted (loss) earnings per share		24		–12.00		2.32		1.33

The notes to the consolidated 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		2004		2003
Assets
Invested assets
Held-to-maturity securities:
Fixed maturities		7		850.4		500.4
Available-for-sale securities:
Fixed maturities		7		4,834.8		4,428.2
Equity securities		7		408.5		840.2
Other investments		7		272.3		173.5
Short-term investments				133.3		55.8
Total investments				6,499.3		5,998.1
Funds Withheld Asset		7		1,305.1		1,530.6
Total invested assets				7,804.4		7,528.7
Other assets
Cash and cash equivalents				664.9		280.8
Premiums receivable:
Current				318.5		182.8
Accrued				1,859.5		1,825.5
Reinsurance assets:
Underwriting reserves		11		1,337.8		1,718.6
Insurance balances receivable, net				233.5		224.0
Funds held by reinsureds				1,721.3		1,374.0
Deferred policy acquisition costs				484.7		380.1
Deferred income taxes		13		78.3		345.1
Other assets		8		439.7		495.0
Total assets				14,942.6		14,354.6
Liabilities and equity
Liabilities
Losses and loss adjustment expenses, gross		9		8,776.9		7,842.8
Unearned premiums, gross		11		1,312.3		1,467.4
Future life benefits, gross		11		545.8		483.5
Other reinsurance liabilities				1,375.3		1,087.3
Funds held under reinsurance contracts				379.3		529.8
Deferred income taxes		13		157.2		158.3
Accrued expenses and other liabilities				284.7		311.6
Debt		12		390.9		390.6
Total liabilities				13,222.4		12,271.3
Equity
Common stock CHF 5 nominal value, 146,689,462 shares issued, (146,272,886 shares outstanding), respectively, CHF 10 nominal value, 40,006,217 shares issued, (39,775,620 shares outstanding)		16		554.9		253.0
Additional paid-in capital				1,430.6		1,326.7
Treasury stock, (416,576 and 230,597 shares, respectively)				–7.7		–10.0
Unearned stock compensation		15		–7.5		–6.1
Accumulated other comprehensive income:
Net unrealized gains on investments, net of taxes		7		116.7		145.3
Cumulative translation adjustments				187.4		116.1
Total accumulated other comprehensive income				304.1		261.4
Retained (deficit) earnings				–554.2		258.3
Total equity				1,720.2		2,083.3
Total liabilities and equity				14,942.6		14,354.6

The notes to the consolidated financial statements are an integral part of these financial statements.

F-4

Converium Holding AG and Subsidiaries
Consolidated statements of cash flows

(US$ million)
Year ended December 31	2004		2003		2002
Cash flows from operating activities
Net (loss) income		–760.8		185.1		106.8
Adjustments for
Net realized capital (gains) losses on investments		–46.5		–18.4		10.3
Amortization of premium/discount		59.1		43.9		20.6
Depreciation and amortization		34.2		30.5		38.2
Impairment of goodwill and deferred tax asset		383.7		–		–
Total adjustments		430.5		56.0		69.1
Changes in operational assets and liabilities
Deferred policy acquisition costs		–82.0		–90.5		–47.0
Reinsurance assets		443.2		13.6		331.1
Funds held by reinsureds		–237.4		–307.8		–311.2
Funds Withheld Asset		283.8		230.6		100.0
Premiums receivable		–98.3		–162.2		–565.1
Unearned premiums, gross		–212.2		204.2		139.0
Losses and loss adjustment expenses, gross		622.1		603.7		744.5
Future life benefits, gross		40.7		85.0		119.7
Funds held under reinsurance contracts		–177.4		72.7		–38.2
Other reinsurance liabilities		227.1		329.0		280.2
Income taxes, net		29.1		40.3		–32.8
Net changes in all other operational assets and liabilities		–283.9		5.6		–25.7
Total changes in operational assets and liabilities		554.8		1,024.2		694.5
Cash provided by operating activities		224.5		1,265.3		870.4
Cash flows from investing activities
Purchases of fixed maturities held-to-maturity		–228.2		–192.4		–
Proceeds from sales and maturities of fixed maturities available-for-sale		4,116.0		3,813.4		4,573.3
Purchases of fixed maturities available-for-sale		–4,420.2		–5,054.0		–5,375.3
Cash flows from investing activities (fixed maturities)		–532.4		–1,433.0		–802.0
Proceeds from sales of equity securities		983.1		94.3		599.2
Purchases of equity securities		–541.3		–244.2		–651.1
Cash flows from investing activities (equity securities)		441.8		–149.9		–51.9
Net (increase) decrease in short-term investments		–71.2		277.1		–228.5
Proceeds from sales of other assets		82.3		47.4		33.0
Purchases of other assets		–115.8		–69.4		–43.9
Cash flows from investing activities (other)		–104.7		255.1		–239.4
Net cash used in investing activities		–195.3		–1,327.8		–1,093.3
Cash flows from financing activities
Issuance of guaranteed subordinated notes		–		–		193.7
Net purchases of common shares		–6.0		–17.3		–14.7
Dividends to shareholders		–47.8		–29.9		–
Proceeds from Rights Offering		428.4		–		–
Rights Offering issuance costs		–25.1		–		–
Net cash provided by (used in) financing activities		349.5		–47.2		179.0
Effect of exchange rate changes on cash and cash equivalents		5.4		29.0		–15.1
Change in cash and cash equivalents		384.1		–80.7		–59.0
Cash and cash equivalents as of January 1		280.8		361.5		420.5
Cash and cash equivalents as of December 31		664.9		280.8		361.5

The notes to the consolidated financial statements are an integral part of these financial statements.

F-5

Converium Holding AG and Subsidiaries
Consolidated statements of changes in equity

(US$ million)

Accumulated

Additional

Unearned

other

Retained

Common

paid-in

Treasury

stock

comprehensive

earnings

Total

stock

capital

stock

compensation

income

(deficit)

equity

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

Net loss

–

–

–

–

–

–760.8

–760.8

Change in net unrealized gains (losses) on investments, net of taxes

–

–

–

–

–28.6

–

–28.6

Translation adjustments

–

–

–

–

71.3

–

71.3

Total comprehensive loss

–718.1

Dividends to shareholders

–

–

–

–

–

–47.8

–47.8

Transfer to general legal reserve

–

3.9

–

–

–

–3.9

–

Purchases of common shares

–

–

–6.0

–

–

–

–6.0

Releases of common shares from treasury

–

–8.2

8.3

–

–

–

0.1

Net amortization of stock compensation

–

11.0

–

–1.4

–

–

9.6

Increase in capital due to Rights Offering

428.4

–

–

–

–

–

428.4

Decrease of nominal value

–126.5

126.5

–

–

–

–

–

Rights Offering issuance costs

–

–29.3

–

–

–

–

–29.3

Balance, December 31, 2004

554.9

1,430.6

–7.7

–7.5

304.1

–554.2

1,720.2

The notes to the consolidated financial statements are an integral part of these financial statements.

F-6

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements

Schedule of segment data
(US$ million)

	Standard Property &
	Casualty Reinsurance									Specialty Lines
Year ended December 31	2004			2003			2002			2004			2003			2002
Gross premiums written		1,617.6			1,795.4			1,542.3			1,777.3			2,022.0			1,650.3
Less ceded premiums written		–162.6			–149.8			–90.1			–119.2			–210.1			–95.0
Net premiums written		1,455.0			1,645.6			1,452.2			1,658.1			1,811.9			1,555.3
Net change in unearned premiums		97.0			–15.7			–55.5			41.1			–148.3			–97.3
Net premiums earned		1,552.0			1,629.9			1,396.7			1,699.2			1,663.6			1,458.0
Total investment results		142.3			101.5			98.1			186.1			132.4			125.3
Revenues		1,694.3			1,731.4			1,494.8			1,885.3			1,796.0			1,583.3
Losses, loss adjustment expenses and life benefits		–1,246.1			–1,113.6			–1,065.0			–1,689.6			–1,241.0			–1,166.9
Underwriting acquisition costs		–376.8			–363.1			–310.4			–367.9			–360.1			–292.3
Other operating and administration expenses		–83.9			–71.0			–63.6			–73.0			–79.7			–68.1
Benefits, losses and expenses		–1,706.8			–1,547.7			–1,439.0			–2,130.5			–1,680.8			–1,527.3
Segment (loss) income		–12.5			183.7			55.8			–245.2			115.2			56.0
Other (loss) income
Interest expense
Impairment of goodwill
Amortization of intangible assets
Restructuring costs
(Loss) income before taxes
Income tax (expense) benefit
Net (loss) income
At December 31
Reinsurance assets – underwriting reserves		435.9			553.2			622.8			861.9			989.9			926.5
Losses and loss adjustment expenses, gross		3,602.2			3,231.3			2,774.7			4,961.5			4,427.2			3,898.9
Future life benefits, gross		–			–			–			–			–			–
Ratios
Loss ratio (Losses divided by net premiums earned)		80.3	%		68.3	%		76.3	%		99.4	%		74.6	%		80.0	%
Underwriting expense ratio (Underwriting acquisition costs divided by net premiums earned)		24.3	%		22.3	%		22.2	%		21.7	%		21.6	%		20.0	%
Administration expense ratio (Other operating and administration expenses divided by net premiums written)		5.8	%		4.3	%		4.4	%		4.4	%		4.4	%		4.4	%
Combined ratio (Sum of the loss, underwriting expense and administration expense ratios)		110.4	%		94.9	%		102.9	%		125.5	%		100.6	%		104.4	%

F-7

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements

Total
Non-life consolidated									Life & Health Reinsurance									Corporate Center						Total consolidated
2004			2003			2002			2004			2003			2002			2004		2003		2002		2004		2003		2002
	3,394.9			3,817.4			3,192.6			446.0			406.5			343.2			–		–		–		3,840.9		4,223.9		3,535.8
	–281.8			–359.9			–185.1			–6.1			–37.0			–28.5			–		–		–		–287.9		–396.9		–213.6
	3,113.1			3,457.5			3,007.5			439.9			369.5			314.7			–		–		–		3,553.0		3,827.0		3,322.2
	138.1			–164.0			–152.8			–6.0			13.5			–3.9			–		–		–		132.1		–150.5		–156.7
	3,251.2			3,293.5			2,854.7			433.9			383.0			310.8			–		–		–		3,685.1		3,676.5		3,165.5
	328.4			233.9			223.4			29.7			17.5			18.1			–		–		–		358.1		251.4		241.5
	3,579.6			3,527.4			3,078.1			463.6			400.5			328.9			–		–		–		4,043.2		3,927.9		3,407.0
	–2,935.7			–2,354.6			–2,231.9			–327.4			–319.6			–260.1			–		–		–		–3,263.1		–2,674.2		–2,492.0
	–744.7			–723.2			–602.7			–97.8			–80.0			–64.0			–		–		–		–842.5		–803.2		–666.7
	–156.9			–150.7			–131.7			–23.0			–12.8			–11.3			–38.0		–34.3		–30.3		–217.9		–197.8		–173.3
	–3,837.3			–3,228.5			–2,966.3			–448.2			–412.4			–335.4			–38.0		–34.3		–30.3		–4,323.5		–3,675.2		–3,332.0
	–257.7			298.9			111.8			15.4			–11.9			–6.5			–38.0		–34.3		–30.3		–280.3		252.7		75.0
																									–2.6		2.7		–1.2
																									–33.1		–31.0		–16.4
																									–94.0		–		–
																									–9.9		–		–
																									–2.7		–		–
																									–422.6		224.4		57.4
																									–338.2		–39.3		49.4
																									–760.8		185.1		106.8
	1,297.8			1,543.1			1,549.3			40.0			175.5			78.4			–		–		–		1,337.8		1,718.6		1,627.7
	8,563.7			7,658.5			6,673.6			213.2			184.3			147.7			–		–		–		8,776.9		7,842.8		6,821.3
	–			–			–			545.8			483.5			371.7			–		–		–		545.8		483.5		371.7
	90.3	%		71.5	%		78.2	%
	22.9	%		22.0	%		21.1	%		22.5	%		20.9	%		20.6	%
	5.0	%		4.4	%		4.4	%		5.2	%		3.5	%		3.6	%
	118.2	%		97.9	%		103.7	%

F-8

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

1. Organization and nature of operations

Converium Holding AG and subsidiaries (“Converium”) is an international reinsurer whose business operations are recognized for innovation, professionalism and service. We believe we are accepted as a professional reinsurer for all major lines of non-life and life reinsurance in Europe, Asia-Pacific and Latin America. We actively seek to create innovative and efficient reinsurance solutions to complement our target clients’ business plans and needs. We focus on core underwriting skills and on developing close client relationships while honoring our and our clients’ relationships with intermediaries.

Converium offers a broad range of traditional non-life and life reinsurance products as well as “non-traditional” solutions to help its target clients efficiently manage capital and risks. In non-life reinsurance, its lines of business are General Third Party Liability, Motor, Personal Accident (assumed from non-life insurers), Property, Agribusiness, Aviation & Space, Credit & Surety, Engineering, Marine & Energy, Professional Liability and other Special Liability and Workers’ Compensation. In Life & Health Reinsurance, its lines of business are 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 (the “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 (the “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 11 and 17).

Due to the reserving actions and subsequent lowering of Converium’s ratings during 2004, it placed its US reinsurance operations into run-off, which resulted in the discontinuation of writing reinsurance from offices located in North America. Converium, however, offers reinsurance for attractive US-originated business to a limited number of select accounts. This business will be underwritten and managed through Converium AG, Zurich. Converium Reinsurance (North America) Inc. (“CRNA”) was placed into orderly run-off and Converium is seeking to commute CRNA’s liabilities wherever appropriate.

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, 2004 and 2003 and the related statements of income, cash flows and changes in equity for each of the three years in the period ended December 31, 2004.

The financial statements include all companies which Converium, directly or indirectly controls (more than 50% of voting rights). Special purpose entities, irrespective of their legal structure, are consolidated in instances where Converium has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Investments in associated companies (investments of between 20% and 50% in a company’s voting rights) and joint ventures are accounted for by using the equity method with Converium recording its share of the associated company’s net income and equity.

(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 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.

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. During the course of 2004 Converium implemented enhanced procedures for establishing written premium estimates. The new process derives the accrued written and earned premium from our ultimate premium estimates for a period of two years after the expiration of the underlying direct policy. Following this, the cedent’s actual reported premiums are used.

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 (the “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.

F-10

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

(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.

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 retro-cessional 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 amortized 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 (i) exceed 20% over a period of six months, that (ii) exceed 50% regardless of the period of decline or (iii) 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.

F-11

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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. Investments in hedge funds are recorded at fair value with changes in net asset value flowing through other comprehensive income as a separate component in shareholders’ equity.

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 7 and 17 for further description.

(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.”

Converium utilizes foreign exchange swaps as part of its overall currency risk management. The objective is to manage the liquidity situation of Converium’s entities in various currencies. There were no foreign exchange swaps outstanding at December 31, 2004 or 2003.

(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 straight-line 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 and intangible assets

SFAS No. 142, “Goodwill and Other Intangible Assets, “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.

SFAS No. 142 requires that goodwill be tested 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.

Upon application of SFAS No. 142, Converium ceased amortizing goodwill on January 1, 2002.

F-12

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

(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 carryforwards. A valuation allowance is recorded to reduce a deferred tax asset to that amount that is expected to be realized.

(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) Restructuring costs

Restructuring costs relating to employee service termination are measured initially at the communication date based on the fair value of the liability as of the termination date. Converium recognizes the liability ratably over the future service period of employees. Restructuring costs associated with changing the provisions of an existing lease are recognized and measured at fair value in the period in which the liability occurs.

(p) New accounting pronouncements

The following new standards have been or will be required to be adopted by Converium in the future:

SFAS 123 (revised 2004), “Share-Based Payment”

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment”. This Statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. For public entities, this Statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. As Converium has already adopted the standards of SFAS No.123, this statement is not expected to have a material impact on the financial condition or results of operations.

SFAS 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits – an amendment of FASB Statements No. 87, 88, and 106”

In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postre-tirement Benefits – an amendment of FASB Statements No. 87, 88 and 106”. This Statement retains the disclosures required by SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits – an amendment of FASB Statements No. 87, 88, and 106”, which standardized the disclosure requirements for pensions and other postretirement benefits to the extent practicable and requires additional information on changes in the benefit obligations and fair values of plan assets. Additional disclosures have been added in response to concerns expressed by users of financial statements; those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. This statement is effective for financial statements with fiscal years ending after December 15, 2003, with interim-period disclosures effective for interim periods beginning after December 15, 2003. This statement has been adopted for all of Converium’s plans. See Note 14 for additional information.

F-13

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

In December 2003, the Medicare Prescription Drug, Improvements and Modernization Act of 2003 (The Medicare Act) was approved in the United States. The Medicare Act expands prescription drug coverage under Medicare. As CRNA’s retiree medical coverage is very limited, the Medicare Act did not have a material impact on the financial condition or results of operations.

FASB Interpretation 46, “Consolidation of Variable Interest Entities – an interpretation of ARB No. 51”

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an interpretation of ARB No. 51” (“FIN 46”), which requires an enterprise to assess whether consolidation of an entity is appropriate based upon its interests in a variable interest entity (the “VIE”). A VIE is an entity in which the equity investors do not have the characteristics of a controlling financial interest, or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The initial determination of whether an entity is a VIE shall be made on the date at which an enterprise becomes involved with the entity. An enterprise shall consolidate a VIE if it has a variable interest that will absorb a majority of the VIE’s expected losses if they occur, receive a majority of the entity’s expected residual returns if they occur, or both. FIN 46 was effective immediately for new VIEs established or purchased subsequent to January 31, 2003. The adoption of FIN 46 did not have a material impact on Converium’s consolidated financial condition or results of operations, as there were no VIEs identified which required consolidation.

In December 2003, the FASB issued a revised version of FIN 46 (“FIN 46(R)”), which incorporates a number of modifications and changes made to the original version. FIN 46(R) replaces the previously issued FIN 46 and, subject to certain special provisions, is effective no later than the end of the first reporting period that ends after December 15, 2003 for entities considered to be special-purpose entities and no later than the end of the first reporting period that ends after March 15, 2004 for all other VIEs. Early adoption is permitted. Converium adopted FIN 46(R) at December 31, 2003. The adoption of FIN 46(R) did not result in the consolidation of any VIEs.

Converium has performed an evaluation of the catastrophic protection counter-party agreement with Helix 04 Limited, issued in the second quarter of 2004, to establish whether Converium is the primary beneficiary of the VIE which issued the securities. Management has concluded that Converium is not the primary beneficiary of the VIE (see Note 11).

EITF Issue 03-1, “The Meaning of Other-than-temporary Impairment and Its Application to Certain Investments (EITF 03-1).”

On September 30, the FASB delayed the effective date for the measurement and recognition guidance included in paragraphs 10 through 20 of EITF Issue 03-1. The adoption of EITF 03-1 did not have a material impact on the financial condition or results of operations.

(q) 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.

3. Run-off of North American operations

Converium has ceased the writing of substantially all business generated by Converium Reinsurance (North America), Inc. (“CRNA”) in North America and has decided to take the following additional steps with respect to its North American business:

•   CRNA has been placed into run-off and will seek to commute its liabilities wherever appropriate. In addition, CRNA has hired an experienced run-off professional as its new President and CEO and has restructured its senior level staffing to function as an entity in run-off;

•   Converium implemented a fronting arrangement to enable it to continue to participate in the Global Aerospace Underwriting Managers Limited (“GAUM”) pool;

•   Converium Insurance (North America) Inc. (“CINA”) is now a limited writer, offering continuing coverage for only two discrete primary programs, one of which is mandated by state law. The plan is for CINA to maintain this status until such time as it becomes a wider accepted carrier for its clients; and

•   Converium will offer reinsurance for US-origin business to select US-based clients. This business will be underwritten and managed through Converium AG, Zurich.

The recent ratings downgrades, as well as Converium’s decision to place CRNA into run-off, have triggered “special funding” clauses in CRNA’s and CINA’s reinsurance and insurance contracts. These clauses require CRNA and CINA to provide collateral for their payment obligations under those contracts. In addition, state insurance regulators may request that CRNA and CINA make special deposits in their states or provide collateral for contracts issued to residents of their states (see Note 22).

F-14

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

The following table shows the results for CRNA for the years ended December 31, 2004, 2003 and 2002:

(US$ million)	2004		2003		2002
Gross premiums written		572.9		1,401.2		1,206.9
Loss before income taxes		459.0		44.6		67.3
Net loss		714.6		64.5		36.8

4. Restructuring costs

In September 2004, as a result of the announced run-off of CRNA operations, Converium notified certain of its employees that their employment would be terminated between two to six months after such notification. For the year ended December 31, 2004, US$ 2.7 million has been expensed primarily due to the costs associated with these severance plans. CRNA is currently evaluating certain of its office leases, and a plan for reduced office space is expected to be approved in 2005 resulting in additional restructuring costs (see Note 26). Additionally, Converium is currently evaluating the cost base of its non-US operations, and a plan for cost reductions is expected to be approved in early 2005 resulting in additional restructuring costs. Converium did not incur any restructuring cost during 2003 or 2002.

5. Foreign currency translation and transactions

Table 5.1 summarizes the principal exchange rates, which have been used for translation purposes (US dollar per foreign currency unit). Net realized (losses) gains on foreign currency transactions were US$ (5.8) million, US$ (1.8) million and US$ 1.4 million for the years ended December 31, 2004, 2003 and 2002, respectively.

Table 5.1						Statements of (loss)
	Balance sheets					income and cash flows
Exchange rates against US$	2004		2003		2004		2003		2002
UK pound		1.9199		1.7804		1.8324		1.6349		1.5031
Euro		1.3593		1.2531		1.2439		1.1317		0.9453
100 Japanese yen		0.9759		0.9352		0.9254		0.8637		0.7998
Swiss franc		0.8794		0.8033		0.8059		0.7441		0.6446

6. Segment information

The primary measure of segment information, as reflected in the Schedule of Segment Data, is segment (loss) income, defined as (loss) income before other (loss) income, interest expense, impairment of goodwill, amortization of intangible assets, restructuring costs and income taxes.

Converium’s segment structure centers on global lines of business. The three global business segments by which Converium sets strategy and measures results are 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.

F-15

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Table 6.1 below shows net premiums written by line of business.

Table 6.1
Net premiums written by line of business

(US$ million) Year ended December 31	2004		2003		2002
Standard Property & Casualty Reinsurance:
General Third Party Liability		361.4		335.0		337.7
Motor		484.8		488.5		453.5
Personal Accident (assumed from non-life insurers)		27.1		35.1		35.0
Property		581.7		787.0		626.0
Total Standard Property & Casualty Reinsurance		1,455.0		1,645.6		1,452.2
Specialty Lines:
Agribusiness		126.9		90.0		22.0
Aviation & Space		404.5		341.8		365.3
Credit & Surety		171.1		236.0		200.1
Engineering		111.9		139.9		116.1
Marine & Energy		86.2		95.3		94.3
Professional Liability and other Special Liability		531.7		598.0		536.9
Workers’ Compensation		225.8		310.9		220.6
Total Specialty Lines		1,658.1		1,811.9		1,555.3
Total non-life reinsurance		3,113.1		3,457.5		3,007.5
Life & Health Reinsurance:
Life and Disability		243.4		162.1		154.7
Accident and Health		196.5		207.4		160.0
Total Life & Health Reinsurance		439.9		369.5		314.7
Total		3,553.0		3,827.0		3,322.2

Table 6.2 below shows gross premiums written by geographic area of ceding company. Gross premiums written reflect the markets where the business is originally produced.

Table 6.2
Gross premiums written by geographic area of ceding company

(US$ million) Year ended December 31	2004		2003		2002
United Kingdom*		1,005.9		1,083.0		910.4
Germany		389.6		286.9		176.1
France		158.2		160.5		106.9
Italy		162.2		131.2		84.0
Rest of Europe		379.9		338.8		224.0
Far East		238.5		266.4		191.9
Near and Middle East		124.3		134.3		124.3
North America		1,252.3		1,671.1		1,553.2
Latin America		130.0		151.7		165.0
Total		3,840.9		4,223.9		3,535.8

* Premiums from the United Kingdom include business assumed through GAUM and Lloyd’s 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 2004, two reinsurance intermediaries produced approximately 12% and 9% 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 12% and 11% in 2003, and 13% each in 2002, 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, 2004.

F-16

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

7. Invested assets and investment income

Table 7.1
Investment income
(US$ million)

Year ended December 31	2004		2003		2002
Investment income:
Fixed maturities		201.3		121.0		132.7
Equity securities		11.5		11.4		14.5
Short-term investments and cash and cash equivalents		8.0		7.5		12.9
Real estate		9.4		11.5		11.5
Other		19.6		7.0		11.0
Funds Withheld Asset		75.1		85.6		81.1
Total investment income		324.9		244.0		263.7
Investment expenses		–11.6		–8.0		–6.1
Real estate expenses		–1.7		–3.0		–5.8
Net investment income		311.6		233.0		251.8

The Funds Withheld Asset (see Note 17) was US$ 1,305.1 million and US$ 1,530.6 million as of December 31, 2004 and 2003, 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 7.2
Net realized capital gains and losses
(US$ million)

Year ended December 31	2004		2003		2002
Fixed maturities:
Realized capital gains		23.9		46.1		145.9
Realized capital losses		–18.2		–11.3		–57.9
Equity securities:
Realized capital gains		61.2		9.1		37.5
Realized capital losses		–10.0		–1.7		–90.4
Write-down of impaired investments		–6.2		–27.4		–48.3
Other		–4.2		3.6		2.9
Net realized capital gains (losses)		46.5		18.4		–10.3

In 2004, Converium’s realized capital gains increased by US$ 28.1 million to US$ 46.5 million, primarily resulting from sales of equity securities to adjust its asset allocation to reduce investment portfolio risks.

In 2003, realized capital gains on sales of fixed income investments in order to reduce the duration of Converium’s bond portfolio were mostly offset by realized losses and impairment charges.

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.

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.

F-17

Converium Holding AG and Subsidiaries

Notes to the consolidated financial statements (continued)

Table 7.3
Unrealized investment gains and losses
(included in other comprehensive income)

	Net change for the						Total as
	year ended December 31						of December 31
(US$ million)	2004		2003		2002		2004		2003
Fixed maturities held-to-maturity		–4.3		14.1		–		9.8		14.1
Fixed maturities available-for-sale		0.9		–8.0		11.2		26.7		25.8
Equity securities available-for-sale		–24.2		148.1		–75.7		70.3		94.5
Hedge funds		2.5		–		–		2.5		–
Less amounts of net unrealized investment gains (losses) attributable to: Net deferred income taxes		–3.5		–5.9		31.2		7.4		10.9
Foreign currency effect		–		50.3		–50.3		–		–
Total		–28.6		198.6		–83.6		116.7		145.3

Table 7.4
Investments in fixed maturities
and equity securities

	Cost or				Gross				Gross				Estimated
(US$ million)	amortized cost				unrealized gains				unrealized losses				fair value
As of December 31	2004		2003		2004		2003		2004		2003		2004		2003
Held-to-maturity
Fixed maturities:
Transferred in:
US government		414.2		294.0		–		6.2		–11.3		–		402.9		300.2
Other governments		15.3		14.0		0.5		0.1		–		–		15.8		14.1
Newly invested:
US government		170.1		169.8		0.9		1.8		–0.2		–		170.8		171.6
Other governments		250.8		22.6		3.7		–		–		–0.8		254.5		21.8
Total held-to-maturity		850.4		500.4		5.1		8.1		–11.5		–0.8		844.0		507.7
Available-for-sale
Fixed maturities:
US government		1,765.6		1,728.0		9.1		13.6		–11.6		–8.0		1,763.1		1,733.6
Other governments		1,769.3		1,163.4		15.7		3.8		–2.0		–2.6		1,783.0		1,164.6
Corporate and other debt securities		661.1		671.6		13.4		12.7		–2.4		–3.4		672.1		680.9
Mortgage and asset-backed securities		612.2		839.4		5.7		11.5		–1.3		–1.8		616.6		849.1
Total		4,808.2		4,402.4		43.9		41.6		–17.3		–15.8		4,834.8		4,428.2
Equity securities		338.0		745.7		73.0		96.2		–2.5		–1.7		408.5		840.2
Total available-for-sale		5,146.2		5,148.1		116.9		137.8		–19.8		–17.5		5,243.3		5,268.4

In 2003, a reclassification within accumulated other comprehensive income of US$ 18.7 million was made between net unrealized gains (losses) on investments and cumulative translation adjustments; this reclassification had no impact on accumulated other comprehensive income or total equity.

The following table presents the continuous periods during which investment positions were carried at an unrealized loss as of December 31, 2004:

Table 7.5
Maturities of unrealized investment losses on
fixed maturities and equity securities

			Gross unrealized losses
							Total gross
(US$ million)	Estimated fair		Less than		Greater		unrealized
As of December 31, 2004	value		one year		than one year		losses
Held-to-maturity
Fixed maturities		91.6		–11.2		–0.3		–11.5
Available-for-sale
Fixed maturities		1,989.2		–15.8		–1.5		–17.3
Equity securities		31.9		–2.5		–		–2.5
Total available-for-sale		2,021.1		–18.3		–1.5		–19.8

F-18

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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 7.6
Fixed maturity schedule by maturity

(US$ million)	Estimated fair value		% of total		Carrying value		% of total
As of December 31, 2004	Available-for-sale (AFS)		AFS		Held-to-maturity (HTM)		HTM
Less than one year		182.5		3.8		15.9		1.9
One year through five years		2,871.8		59.4		450.8		53.0
Five years through ten years		923.2		19.1		353.5		41.6
Over ten years		91.8		1.9		30.2		3.5
Subtotal		4,069.3		84.2		850.4		100.0
Mortgage and asset-backed securities		616.6		12.7		–		–
Unit trust bonds		148.9		3.1		–		–
Total		4,834.8		100.0		850.4		100.0

At December 31, 2004 and 2003, real estate held for investment of US$ 138.8 million and US$ 130.2 million, respectively, net of accumulated depreciation of US$ 9.5 million and US$ 5.8 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$ 237.5 million and US$ 222.7 million at December 31, 2004 and 2003, respectively.

There are no investments in any entity in excess of 10% of equity at December 31, 2004 and 2003, other than investments issued or guaranteed by the US or sovereign governments or their agencies. Cash and investments with a carrying value of US$ 282.1 million and US$ 234.6 million were deposited in trust or with regulatory authorities as of December 31, 2004 and 2003, respectively.

Converium utilizes foreign exchange swaps as part of its overall currency risk management. The objective is to manage the liquidity situation of Converium’s entities in various currencies. There were no foreign exchange swaps outstanding at December 31, 2004 or 2003.

As of December 31, 2004, Converium reported total investments including cash and cash equivalents of US$ 7,164.2 million, of which (i) US$ 1,060.8 million were pledged as collateral relating to outstanding letters of credit of US$ 955.7 million of the US$ 1.6 billion Syndicated Letter of Credit Facility, (ii) US$ 704.7 million were pledged as collateral relating to other irrevocable letters of credit, (iii) US$ 109.3 million were pledged primarily as deposits with French cedents, and (iv) US$ 562.1 million were pledged to support Converium-internal reinsurance transactions.

8. Goodwill and other intangible assets

Goodwill was US$ 49.2 million and US$ 140.2 million, at December 31, 2004 and 2003, respectively. The carried value of other intangible assets was US$ 20.6 million and US$ 24.7 million at December 31, 2004 and 2003, respectively. Goodwill and other intangible assets are included in the balance sheet under the caption “Other assets”.

During August 1997, Zurich Financial Services acquired all the remaining equity interests in CRNA then not owned by Zurich Financial Services. The acquisition of the minority interest in CRNA 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 of US$ 94.0 million was recorded as goodwill.

SFAS 142, ‘‘Goodwill and Other Intangible Assets’’, requires impairment testing of goodwill annually or more regularly if any event or change in business circumstances occurs which would indicate that the carrying value of goodwill may be impaired. SFAS 142 also requires that useful lives for intangible assets other than goodwill be reassessed and the remaining amortization periods be adjusted accordingly.

Due to the reserving actions in 2004 in respect of prior year development in the Specialty Lines segment’s business written in North America, and a subsequent decision to take a full valuation allowance against the net deferred tax asset at CRNA, a goodwill impairment test was conducted to assess the fair value of the reporting unit. As a result of this assessment, an impairment charge of US$ 94.0 million was recorded as at June 30, 2004, representing all goodwill relating to CRNA. There were no intangible assets recorded on the CRNA balance sheet; therefore there was no requirement to perform impairment testing on intangible assets at CRNA as of June 30, 2004.

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 commercial and general aviation-underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and space line of 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

F-19

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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). Converium as a shareholder also provided a loan to GAUM in the amount of GBP 12.6 million (US$ 19.8 million).

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 GAUM, which increased its overall stake in GAUM 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 GBP 2.5 million (US$ 4.5 million).

At December 31, 2004, the current value of the amortizable intangible asset associated with the 30.1% stake in GAUM is GBP 11.2 million (US$ 20.6 million). The intangible asset relates to established customer relationships of GAUM and was initially intended to be amortized over a useful life of ten years. At December 31, 2003 the value of the intangible asset associated with the 25% stake in GAUM was GBP 13.9 million (US$ 24.7 million).

In the light of changing business circumstances associated with Converium’s S & P rating downgrade, Converium entered into fronting agreements with Munich Re and National Indemnity in order to support and sustain the aviation business from GAUM. The fronting agreements currently extend to September 30, 2005 with no contractual guarantee that they will be extended beyond this date. In view of this fact Converium management have reassessed the remaining useful life of the intangible asset to be less than one year so that the intangible asset will be amortized until September 30, 2005, the date of cessation of the existing fronting agreement. As a result of this change, we recorded an additional amortization charge of GBP 3.7 million (US$ 6.8 million) in the fourth quarter of 2004, resulting in a charge of US$9.9 million for the year.

At December 31, 2004, the current carried value of goodwill associated with the 30.1% stake in GAUM is GBP 13.1 million (US$ 25.2 million). At December 31, 2003, the current carried value of goodwill associated with the 25.0% stake in GAUM was GBP 11.4 million (US$ 18.4 million). An annual goodwill impairment test was carried out at December 31, 2004 in respect of the 30.1% investment in GAUM and it is considered that no impairment is warranted as of December 31, 2004. Converium will reassess whether any impairment is warranted as and when there is a change in current business circumstances including a final decision as to whether the fronting arrangements with Munich Re and National Indemnity will be extended beyond the current ending date of September 30, 2005.

The remaining balance of goodwill as of December 31, 2004 relates to Converium AG’s 49.9% strategic investment in the Medical Defence Union Services Ltd (“MDUSL”) executed during 2000. Upon application of SFAS No. 142, Converium ceased amortizing goodwill in respect of MDUSL effective January 1, 2002. Converium has conducted its normal impairment test in respect of MDUSL in the fourth quarter of 2004. This business continues to perform in line with management’s expectations and accordingly no impairment is considered appropriate as of December 31, 2004.

See Notes 3 and 18 for additional information on GAUM. See Note 18 for additional information on the Medical Defence Union (the “MDU”) and MDUSL.

9. 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.

F-20

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Table 9.1
Reserves for losses and loss adjustment expenses

(US$ million)	2004		2003		2002
As of January 1
Gross reserves for losses and loss adjustment expenses		7,842.8		6,821.3		5,710.5
Less reinsurance recoverable		1,385.4		1,459.8		1,545.0
Net reserves for losses and loss adjustment expenses		6,457.4		5,361.5		4,165.5
Loss and loss adjustment expenses incurred
Current year		2,865.4		2,527.9		2,186.8
Prior years		342.5		–31.3		148.5
Total		3,207.9		2,496.6		2,335.3
Losses and loss adjustment expenses paid
Current year		498.1		324.7		299.4
Prior years		1,766.4		1,464.7		1,095.5
Total		2,265.4		1,789.4		1,394.9
Foreign currency translation effects		240.7		388.7		255.6
As of December 31
Net reserves for losses and loss adjustment expenses		7,641.5		6,457.4		5,361.5
Reinsurance recoverable		1,135.4		1,385.4		1,459.8
Gross reserves for losses and loss adjustment expenses		8,776.9		7,842.8		6,821.3

Prior years’ loss and loss adjustment expenses incurred in 2004 of US$ (342.5) million net were primarily driven by reserve strengthening of (US$ 562.0 million) and the impacts on losses and loss adjustment expenses incurred of (i) adjustments of ultimate premium estimates (US$ 206.4 million) (see Note 11), (ii) the commutation of the stop-loss protection regarding underwriting year 2001 of the professional liability business generated through our joint venture with MDU (US$ (10.5) million), and (iii) the reduction of reinsurance recoverables of (US$ (12.0) million), which is offset by the effect of commutations.

Converium has experienced significant adverse development predominantly in its US casualty reinsurance lines for the last several years. Since 2000, Converium has recorded a total of US$ 868.2 million of additional net provisions on prior years’ non-life business (2000: US$ 65.4 million; 2001: US$ 123.6 million; 2002: US$ 148.5 million; 2003: US$ (31.3) million; and 2004: US$ 562.0 million).

During early 2004, Converium announced that reported losses from prior years’ US casualty business had exceeded expected loss emergence and that the volatility of longer-tail risks was likely to persist for some time. This adverse loss-reporting trend continued and accelerated into mid-2004 and prompted Converium to initiate additional reviews of its US business from an integrated underwriting, claims and actuarial perspective in order to examine the adequacy of prior years’ provisions. In addition, in order to obtain an external review of our overall reserve position, Converium commissioned the actuarial consulting firm Tillinghast-Towers Perrin to perform an independent actuarial review of our non-life loss and allocated loss adjustment expense reserves as of June 30, 2004 in respect of the Zurich and New York originated businesses. The outcome of these in-depth internal and external reviews resulted in an aggregate strengthening of prior years’ non-life loss reserves by US$ 562.0 million for the year ended December 31, 2004. This action was taken in response to the continued adverse loss emergence due to increased claims reporting activity from clients relating to US casualty business written from 1997 to 2001 as well as deterioration from European non-proportional motor business written in recent years. While Converium believes that it has fully addressed this issue through our reserving actions, volatility is expected to persist for some time.

In the Standard Property & Casualty Reinsurance segment, the development of prior years’ reserves of US$ 73.5 million primarily related to adverse developments of General Third Party Liability (US$ 116.3 million), motor liability outside the United States (US$ 91.7 million) and Personal Accident (non-life) (US$ 8.1 million), which was partially offset by positive developments related to property (US$ 82.1 million) and miscellaneous liability (US$ 60.5 million) that also included the impact of whole account retrocessions. In the Specialty Lines segment, the development of prior years’ reserves of US$ 488.5 million primarily related to adverse developments of the Professional Liability and other Special Liability lines (US$ 449.3 million), particularly excess & surplus lines and umbrella, Workers’ Compensation (US$ 55.3 million), and Engineering (US$ 12.9 million). These adverse developments in the Specialty Lines were partially offset by positive developments related to Aviation & Space (US$ 24.5 million), Agribusiness (US$ 0.7 million), and Credit & Surety (US$ 3.8 million).

F-21

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

In 2003, the positive development of US$ 31.3 million consisted of positive development on the property (US$ 113.5 million) and aviation and space (US$ 102.2 million) lines of business, offset by adverse development on workers’ compensation and professional liability and other special liability lines (US$ 120.3 million) and the motor and general third party liability lines (US$ 64.1 million). The reserve releases in 2003 were primarily from the 2002 underwriting year, while the US business written in 1997 to 2001 mostly saw continued strengthening.

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, which resulted in 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 liability, motor and property lines. In the Specialty Lines segment, there were additional provisions of US$ 86.3 million, primarily related to the commercial umbrella and medical errors and omissions liability lines of business.

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$ 618.6 million and US$ 594.4 million have been discounted using an average interest rates of 3.5% in 2004 and 2003, respectively. This has reduced reserves by US$ 69.6 million and US$ 65.3 million as of December 31, 2004 and 2003, respectively. In addition, deferred charges relating to retrospective reinsurance and structured settlements totaling US$ 75.9 million and US$ 64.3 million as of December 31, 2004 and 2003, 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 CRNA. Additionally, CRNA 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, 2004 and 2003, Converium Rückversicherung (Deutschland) AG had reserves for environmental impairment liability and asbestos-related claims of US$ 49.2 million and US$ 45.8 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 for each year.

Impact of recent hurricanes, typhoons, and the tsunami: In 2004, Converium recorded losses from Hurricanes Charley, Frances, Ivan and Jeanne in the United States and the Caribbean, the typhoons in Japan, and the tsunami in the Indian Ocean of US$ 154.5 million.

September 11th terrorist attacks

As of December 31, 2004, Converium recorded gross and net incurred losses and loss adjustment expenses related to the September 11th terrorist attacks as follows:

Segment			Retrocessional
(US$ million)			reinsurance
	Gross losses		recoveries		Net losses
Standard Property & Casualty Reinsurance		263.7		155.2		108.5
Specialty Lines		380.0		211.3		168.7
Life & Health Reinsurance		20.0		8.0		12.0
Total		663.7		374.5		289.2

Included in the reinsurance recoveries above are US$ 133.3 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 CRNA above the initial loss amounts recorded of US$ 289.2 million, net of retrocessional reinsurance recoveries.

In December 2004, a federal jury in New York concluded that the two planes that crashed into the World Trade Center during the attacks of September 11th, for insurance purposes, represented two separate attacks. This ruling increased Converium’s gross losses and loss adjustment expenses by US$ 8.7 million, but as Converium’s losses are capped at US$ 289.2 million by Zurich Financial Services, this ruling did not have an effect on Converium’s net loss position. In 2004, 2003 and 2002, there was no additional development in net reserves for the September 11th terrorist attacks.

Converium AG’s exposure under the Quota Share Retrocession Agreement (see Note 17) 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

F-22

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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.

CRNA 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 CRNA against loss development in excess of the available limits under the ZIC 1997 Aggregate Excess of Loss Agreement. See Note 17 for further information.

10. Guaranteed Minimum Death Benefit (GMDB)

Converium assumed certain retrocession liability with regard to Guaranteed Minimum Death Benefit (“GMDB”) features attached to variable annuity policies written in the United States. These treaties are all in run-off and cover in total 1.5 million policies that were issued mainly in the late 1990’s and that incorporate various benefit types originating from different primary insurers. Claims occur in the event of death if a policy is in-the-money, which means that the GMDB exceeds the account balance. Under these circumstances, the difference between the GMDB and the account balance or the GMDB and the cash surrender value becomes due, depending on the definition of the underlying reinsurance agreements.

The following types of Guaranteed Minimum Death Benefits are covered:

•   Return of premium: The GMDB is the amount of total deposits adjusted for partial withdrawals, if any.

•   Ratchet: After a given number of years, the GMDB is adjusted to the current account balance, if greater. Most common is a one-year ratchet, meaning that the GMDB is adjusted annually on the policy’s anniversary date.

•   Rollup: The GMDB increases each year from the initial premium adjusted for later deposits and partial withdrawals by a fixed percentage. Rollup guarantees reinsured under Converium’s agreements grant an annual accumulation percentage between 3% and 7%. In many products, especially for higher rollup percentages, an upper limit applies (e.g. 200% of the paid policy- holder premium adjusted for later deposits and partial withdrawals).

•   Reset: After a given number of years, the GMDB is adjusted to the current account balance. This means that the GMDB can be reduced but often not below the paid-up premium (adjusted for later deposits and partial withdrawals).

•   Combinations of the above.

Guarantees that increase over the time are, for a majority of the assumed business, only applied up to a certain age (e.g. 85). For the majority of the portfolio, a maximum death benefit age exists and, as a consequence, Converium will be off the risk afterwards.

Converium does not hold any contract holder funds. These assets remain with the originating ceding companies.

The GMDB liability is determined each period based on the information provided by Converium’s ceding companies. The current account value, the guaranteed death benefit and details of the covered benefit types are taken into consideration for the evaluation of the net amount at risk (“NAR”) and the expected future liability. The liability according to SOP 03-1 is estimated at the end of the reporting period.

For the evaluation of the liabilities, Converium uses an actuarial model that considers 1,000 stochastically generated investment performance scenarios. The mean performance assumed for equities is 9.6% and the mean performance for other investment types such as bonds and cash deposits varies between 4.8% and 5.7%. The corresponding volatility assumptions are 18.3% and 1.5% to 2.2%, respectively. The discount rate used in the model is stochastically generated in line with the other investment scenarios and takes into consideration the current yield level. It is assumed to be an average of 5.7% over the long run. The mortality assumption is 100% of the Annuity 2000 table. Lapse rates vary by duration and range from 6.5% to 20%. Partial withdrawals, either applied pro rata or on a dollar-for-dollar basis according to the policy conditions, are also considered in the modeling. The corresponding parameter, reflecting the on average withdrawn amount of the account value, varies by duration and is assumed to range from 2.4% to 7.5% per annum.

F-23

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

As of December 31, 2004, the following values were estimated as described above:

Table 10.1

(US$ million)									Gross
	Average				Account				SOP 03-1
Guarantee type	age		GMDB		value		NAR		reserve
Ratchet		65.4		2,110.4		1,771.9		407.4		24.7
Rollup		70.1		585.0		405.5		188.7		21.7
Rollup & ratchet		66.7		21.6		18.2		4.9		0.2
Return of premium		63.3		21.5		21.2		2.6		0.1
Reset		58.3		288.4		296.9		23.3		1.1
Reset & return of premium		59.8		131.1		131.0		8.6		0.4
Total		66.5		3,158.0		2,644.7		635.5		48.2

The table below shows the cash flow and claim reserves balances for the periods shown:

Table 10.2
(US$ million)

Year ended December 31	2004		2003		2002
Received reinsurance premium, net of commission and brokerage		5.1		4.5		5.4
Paid losses		13.3		20.4		12.5

As of December 31	2004		2003
Claim reserves (including case reserves and IBNR)		4.9		7.7

For the year ended December 31, 2004 there were no exceptional reserving actions required for the GMDB book of business. In 2003 and 2002, the Life & Health Reinsurance segment strengthened reserves for this closed block of variable annuity business by US$ 20.5 million (to net US$ 56.0 million) and US$ 15.6 million, respectively. As a result of the strong performance of the US stock markets, the GMDB’s net amount at risk further decreased to US$ 635.5 million at December 31, 2004 from US$ 809.7 million at December 31, 2003.

In late 2004, Converium entered into an agreement to terminate its US$ 75.0 million GMDB reinsurance protection purchased at the end of 2003, for an amount of US$ 9.7 million giving rise to a net cost of the cover for 2004 of US$ 0.1 million. The primary purpose of this cover was to address the volatility in the United States equity markets and potential adverse deviations to other key assumptions such as mortality risks, lapse rate risks and surrenders.

Although Converium feels that its current carried reserves for its GMDB exposure are adequate, the company will continue to monitor and review other reinsurance and financial product solutions to address the risks associated with this business.

11. 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, 2004 and 2003, Converium held US$ 559.4 million and US$ 635.3 million, respectively, 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, 2004, recoverables from subsidiaries of Zurich Financial Services total 19.7% of equity. There were no recoverables from any other retrocessionaire that exceeded 10% of equity at December 31, 2004. Allowances of US$ 40.6 million and US$ 35.4 million have been recorded for estimated uncollectible receivables and reinsurance recoverables at December 31, 2004 and 2003, respectively.

National Indemnity Cover

In order to provide additional comfort as regards to Converium’s reserve position, Converium has acquired a retroactive stop-loss retrocession cover from National Indemnity Company, a Standard & Poor’s AAA-rated member of the Berkshire Hathaway

F-24

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

group of insurance companies. The stop-loss provides an additional US$ 150.0 million of cover against potential adverse reserve development on the underwriting years 1987 through 2003 for Converium AG, CRNA and CINA. The cover of US$ 150.0 million attaches at US$ 100.0 million in excess of the ultimate third-party net non-life reserves; which are defined as non-life carried losses and allocated loss adjustment expense reserves as of June 30, 2004 plus the expected losses and allocated loss adjustment expenses emanating out of the unearned premium reserves as of June 30, 2004 of the portfolio subject to cover, carried by these legal entities for these underwriting years as of June 30, 2004 and therefore excludes inter-group reinsurance arrangements. The reinsurance charge for this retrocession is US$ 20.0 million and has been recorded in the income statement under the caption “Other (loss) income”. There are additional consideration features associated with this layer of coverage, which may result in additional consideration of up to US$ 60.0 million being paid in the event that the cover is fully utilized. No losses have been ceded as of December 31, 2004.

In addition, this contract has another layer of coverage of US$ 235.0 million for which a consideration of US$ 135.0 million has been paid. This layer attaches at US$ 235.0 million below the ultimate third-party net non-life reserves on the same underwriting years. The economics of this layer of coverage are such that the reinsurance risk transfer requirements of US GAAP are not met. Accordingly, this protection is accounted for under deposit accounting rules. As a result, there is no material income statement impact for 2004 in respect of this layer of coverage.

Converium has retained the right to commute the whole transaction on July 1, 2009, or thereafter at mutually agreeable terms.

Master Retrocession Agreement

The Life & Health Reinsurance segment’s Master Retrocession Agreement for its financing contracts was terminated, resulting in a repayment of the non-amortized financing of US$ 36.9 million. The provisions for this termination led to a realization of a profit of US$ 3.4 million in 2004.

Table 11.1

(US$ million)	Gross				Reinsurance assets				Net of reinsurance
Year ended December 31	2004		2003		2004		2003		2004		2003
Reserves for losses and loss adjustment expenses		8,776.9		7,842.8		1,135.4		1,385.4		7,641.5		6,457.4
Reserves for unearned premiums		1,312.3		1,467.4		111.7		177.0		1,200.6		1,290.4
Future life benefits		545.8		483.5		90.7		156.2		455.1		327.3
Total underwriting reserves		10,635.0		9,793.7		1,337.8		1,718.6		9,297.2		8,075.1

Table 11.2
Premiums written and earned

(US$ million)	Premiums written						Premiums earned
For the years ended December 31	2004		2003		2002		2004		2003		2002
Direct premiums		490.9		561.4		88.0		574.1		326.0		77.1
Assumed premiums		3,350.0		3,662.5		3,447.8		3,465.8		3,668.3		3,289.0
Ceded premiums		–282.3		–387.5		–204.2		–349.2		–308.4		–191.2
Catastrophe Agreement		–5.6		–9.4		–9.4		–5.6		–9.4		–9.4
Total		3,553.0		3,827.0		3,322.2		3,685.1		3,676.5		3,165.5

Adjustments of ultimate premium estimates: During the course of 2004 Converium implemented enhanced procedures for establishing written premium estimates. Our processes require underwriters and others to assess the realization of premium estimates on a quarterly basis. This was supplemented at year-end by a detailed review using actuarial techniques, primarily for European non-life business, which compare estimates with actuarially derived amounts using ceding companies actual reported premium information. These analyses resulted in a decrease in net premiums written and earned in the Standard Property & Casualty Reinsurance and Specialty Lines segments in the amount of US$ 219.8 million; after reflecting the impact on accrued underwriting expenses of US$ 16.5 million and losses of US$ 206.4 million, the impact of these adjustments on the technical result was an increase of US$ 3.0 million.

F-25

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Table 11.3
Benefits, losses and expenses
(US$ million)

For the years ended December 31	2004		2003		2002
Losses, loss adjustment expenses and life benefits
Direct		481.4		238.5		124.5
Assumed		2,891.3		2,633.2		2,587.7
Ceded		–109.6		–197.5		–220.2
Total		3,263.1		2,674.2		2,492.0
Underwriting acquisition costs
Direct		64.9		39.6		24.6
Assumed		821.1		798.5		681.3
Ceded		–43.5		–34.9		–39.2
Total		842.5		803.2		666.7

Catastrophe protection

On June 15, 2004, Converium AG announced the successful private placement of US$ 100.0 million of floating rate notes issued by Helix 04 Limited (“Helix 04”), a Bermuda special purpose exempted company. By means of a counter-party contract with the issuer, the transaction provides Converium with fully collateralized second and subsequent event protection for North Atlantic hurricane, US earthquake, Japanese earthquake and European windstorm property catastrophe exposures. The notes are triggered only by second and subsequent events in any of the four peril regions during the five-year term of the transaction.

Payments from Helix 04 to Converium AG are based on modeled reinsurance losses on a notional portfolio. 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.

The Helix 04 contract is first triggered when notional losses reach US$ 150.0 million. The second trigger is hit when notional losses reach US$ 175.0 million. It then pays out according to a sliding scale of notional losses up to US$ 275.0 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.

Converium estimates its gross loss for each of the recent hurricanes and typhoons to be less than the Helix 04 activation threshold of US$ 150.0 million for each such event and therefore Converium will not file a trigger event request in respect of these losses.

The expected annual cost of Helix 04 to Converium AG is approximately US$ 5.6 million. The annual charge to Converium is not impacted by the occurrence of a loss event that is protected by Helix 04, unlike the prior contract in respect of Trinom, where Converium was required to pay higher amounts for the remainder of the term of the contract. The Helix 04 counter-party contract is not treated as reinsurance and accordingly the charge is reflected through other (loss) income although the cost of the counter-party contract is amortized over the term of the contract in a manner similar to reinsurance.

12. Debt

Converium Holdings (North America) Inc. (“CHNA”) 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 2004, the interest payments regarding the 7.125% non-convertible, unsecured, unsubordinated Senior Notes of CHNA were funded (i) by corresponding dividends of CHNA with regards to the coupon payment of April 15, 2004; and (ii) by Converium AG with regards to the coupon payment of October 15, 2004, due to the dividend restrictions of CHNA (see Note 22).

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.

F-26

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Debt issuance costs and discounts were US$ 9.1 million and US$ 9.4 million at December 31, 2004 and 2003, respectively. Such costs are being amortized over the term of the related debt.

13. Income taxes

Table 13.1 below illustrates an overview of the current and deferred tax expense (benefit) for each tax jurisdiction of Converium.

Table 13.1
Income tax expense (benefit)
(US$ million)

For the years ended December 31	2004		2003		2002
Current
Switzerland		18.2		10.0		23.9
United States		59.3		–48.4		–
Germany		2.9		–2.3		0.2
Total current		80.4		–40.7		24.1
Deferred
Switzerland		32.5		26.5		–22.2
United States		207.9		63.9		–34.4
Germany		17.4		–10.4		–16.9
Total deferred		257.8		80.0		–73.5
Total income tax expense (benefit)		338.2		39.3		–49.4

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 (loss) income generated in the various territories in which Converium operates. Based on the expected income tax expense (benefit), reconciliation is made to the actual income tax expense (benefit).

Table 13.2 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 13.2
Expected and actual income tax expense (benefit)
(US$ million)

Year ended December 31	2004		2003		2002
(Loss) income before tax		–422.6		224.4		57.4
Statutory average tax rate		69.6%		7.0%		–24.9%
Expected income tax (benefit) expense		–294.0		15.7		–14.3
Increase (reduction) in taxes resulting from:
Dividends received deduction		–1.5		–3.8		–2.9
Non-taxable reinsurance contract		–		–		–4.9
Branch tax		–		2.1		0.7
Non-deductible expenses		–1.9		3.3		9.1
Tax losses not realizable		–		37.9		–
Tax loss carryforward		614.2		–13.6		–21.3
Changes in applicable tax rates		1.2		–2.8		–5.5
Deferred acquisition costs		–		–		–4.7
Currency translation adjustments		–		–		–6.7
Hedge Agreement with Converium Finance S.A., Luxembourg		–2.3		–		–
Prior year adjustments		–7.8		–		–
Goodwill take-down		32.9		–		–
Other		–2.6		0.5		1.1
Actual income tax expense (benefit)		338.2		39.3		–49.4
Effective tax rate		80.0%		17.5%		–86.1%

F-27

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

The statutory average tax rate of 69.6% is affected by the difference between statutory results relevant for tax calculations and the US GAAP pre-tax results. The primary difference is the handling of the impairment charges recorded in the fourth quarter related to investments in subsidiaries. The charges are reflected in the statutory results for tax calculations, however on a US GAAP basis these charges are eliminated during the consolidation process and are therefore excluded for tax calculation purposes.

Converium’s consolidated income tax expense for the year ended December 31, 2004 reflects an additional expense of US$ 269.8 million related to the establishment of a full valuation allowance against the net deferred income tax balances previously carried at CRNA. Converium has not established any additional deferred tax asset related to the losses sustained by CRNA. Additionally, Converium’s consolidated income tax expense for 2004 includes an expense of US$ 19.9 million related to the establishment of a valuation allowance against the net operating losses carried forward at Converium AG.

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 a result of a ruling Converium AG received from the Swiss tax authorities regarding a tax loss carried forward.

As required under SFAS 109, ‘‘Accounting for Income Taxes’’, Converium is required to assess if it is more likely than not that some or all of the net deferred tax assets will not be realized. In making this assessment, reference is made to, among other things, historical losses. Therefore, a full valuation allowance was established against CRNA’s net deferred tax assets to reflect the continued net loss position of CRNA. CRNA may offset future taxable income against the existing net operating losses carried forward, resulting in no US federal tax expense on such income until such time as the net operating losses are utilized or expire. In addition, Converium AG presents deferred taxes for timing differences only. Future positive income will offset against net operating losses carried forward and will not cause any income taxes except changes in timing differences. For CRNA and Converium AG positive income will offset against net operating losses carried forward until the net operating losses will expire.

As of December 31, 2004, Converium’s valuation allowance on deferred tax assets was US$ 711.9 million, comprising net operating losses carried forward (US$ 571.7 million), loss reserve discount (US$ 110.2 million) and other temporary differences, net (US$ 30.0 million). As of December 31, 2003, the valuation allowance was US$ 47.9 million, all of which related to net operating losses carried forward. As of December 31, 2004, Converium had total net operating losses carried forward of US$ 2,512.5 million available to offset future taxable income of certain branches and subsidiaries. The majority of these net operating losses carried forward relate to CRNA and Converium AG and expire in the years 2020 through 2024 and 2010 through 2011, respectively.

Converium will continue to monitor its tax position and reassess the need for a full valuation allowance on its net deferred tax assets on a periodic basis. Realization of the deferred tax asset related to net operating losses carried forward is dependent upon generating sufficient taxable income within specified future periods. The decision to place CRNA into run-off may limit the ability to generate taxable income to fully utilize its net operating loss carryforwards.

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.

F-28

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Converium’s deferred income tax assets and liabilities are reflected in table 13.3 below.

Table 13.3
Deferred income taxes

(US$ million)	2004		2003
Deferred income tax assets
Loss reserve discount		110.2		110.0
Unearned premium reserve deduction		17.6		36.3
Accruals not currently deductible		20.5		18.4
Partnership loss		2.6		5.5
Net operating loss carryforwards		590.6		175.4
Goodwill		8.1		11.0
Unrealized currency losses		21.4		–
Other		19.2		36.4
Total deferred income tax assets		790.2		393.0
Valuation allowance		–711.9		–47.9
Net deferred income tax assets		78.3		345.1
Deferred income tax liabilities
Loss and benefit reserves		–25.4		–31.9
Deferred policy acquisition costs		–75.8		–71.0
Unrealized appreciation of investments		–22.4		–9.3
Investments		–10.2		–12.0
Reinsurance contracts		–19.3		–17.6
Other		–4.1		–16.5
Total deferred income tax liabilities		–157.2		–158.3
Net deferred income tax assets		78.3		345.1
Net deferred income taxes as of December 31		–78.9		186.8

The current net income tax payable as of December 31, 2004 was US$ 16.4 million as compared to a current net income tax receivable of US$ 44.1 million at December 31, 2003. In 2003, Converium claimed a refund request for special estimated tax payments made for former years. Respectively, Converium shifted approximately US$ 58.0 million from deferred tax asset into current income tax receivable. In 2004, the Internal Revenue Service denied the refund and consequently, Converium decreased the current income tax receivable accordingly.

Converium’s net operating loss carryforwards by expiration date are as follows:

Table 13.4
Net operating loss carryforwards

			Deferred				Net deferred
	Net operating loss		income		Valuation		income
(US$ million)	carryforward		tax asset		allowance		tax asset
One year through five years		100.1		15.1		–15.1		0.0
Over five years		2,412.4		575.5		–556.6		18.9
Total as of December 31, 2004		2,512.5		590.6		–571.7		18.9

14. 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.

Personnel costs incurred for 2004, 2003 and 2002 were US$ 131.1 million, US$ 123.9 million and US$ 110.7 million, respectively. The 2004 amount includes US$ 15.7 million of costs related to the retention plans rolled out in September 2004 (see Note 15).

F-29

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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 8.1 million in 2004 and CHF 5.2 million in 2003.

Participants may purchase pension benefits at their own cost at any time within certain limits defined by the plan rules or pre-finance their pension benefits reductions in case of early retirement.

The principal actuarial weighted average assumptions used for calculating defined benefit plans are as follows:

Table 14.1
Weighted average

	2004			2003			2002
Discount rate		3.46	%		3.99	%		3.85	%
Expected long-term rate of return on assets		5.50	%		6.00	%		6.00	%
Future salary increases		2.00	%		2.00	%		2.16	%
Future pension increases		0.89	%		0.90	%		0.91	%

Table 14.2

(US$ million)	2004		2003		2002
Projected benefit obligation
Projected benefit obligation as of January 1		80.3		64.9		43.6
Service cost		7.4		7.6		5.0
Interest cost		3.2		2.6		2.1
Actuarial losses (gains)		10.1		–3.8		4.5
Foreign currency translation effects		9.3		8.8		9.8
Benefits paid		–0.9		0.2		–0.1
Projected benefit obligation as of December 31		109.4		80.3		64.9
Fair value of plan assets
Fair value of plan assets as of January 1		50.6		35.6		23.6
Actual return on plan assets		2.5		2.9		–0.9
Employee contributions		3.1		2.6		1.8
Employer contributions		7.1		4.4		5.9
Foreign currency translation effects		5.8		4.9		5.3
Benefits paid		–0.9		0.2		–0.1
Fair value of plan assets as of December 31		68.2		50.6		35.6
Funded status
Funded status		–41.2		–29.7		–29.3
Unrecognized transition obligation		–		–		2.8
Unrecognized net actuarial losses (gains)		18.9		6.6		8.2
Unrecognized prior service cost		–1.7		–1.7		–1.7
Additional plan liabilities		–7.7		–		–1.1
Accrued benefit liability		–31.7		–24.8		–21.1
Amounts recognized in the balance sheet
Accrued benefit liability		–31.7		–24.8		–21.1

F-30

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

The net periodic benefit expense in the income statement consists of the following components:

Table 14.3
Net periodic benefit expense

(US$ million)
For the years ended December 31	2004		2003		2002
Service cost		7.4		7.6		5.0
Interest cost		3.2		2.6		2.1
Expected return on plan assets		–3.1		–2.4		–1.7
Employee contributions		–3.1		–2.6		–1.8
Amortization of transition obligation		–		0.6		0.5
Amortization of actuarial (gains) losses		–		0.4		–
Amortization of past service cost		–0.2		–0.2		–0.2
Net periodic benefit expense		4.2		6.0		3.9

The movement in the accrued benefit liability was as follows:

Table 14.4
Accrued benefit liability

(US$ million)
Year ended December 31	2004		2003		2002
Balance at January 1		–24.8		–21.1		–18.6
Current year expense		–4.2		–6.0		–3.9
Contributions paid		7.1		4.4		5.9
Foreign currency translation effects		–2.1		–2.1		–3.4
Additional plan liabilities		–7.7		–		–1.1
Balance at December 31		–31.7		–24.8		–21.1

The expected future cash flows to be paid by Converium in respect of pension plans at December 31, 2004 were as follows:

Table 14.5
Expected future cash flows

(US$ million)
Employer contributions
2005 (estimate)	5.9
Expected future benefit payments
2005	3.1
2006	3.3
2007	3.5
2008	3.6
2009	3.8
2010–2014	21.5

The weighted average assets allocation of funded defined benefit plans at December 31, 2004 were as follows:

Table 14.6
Weighted average assets allocation of defined benefit plans

Year ended December 31	Long-term target			2004			2003
Debt securities		46%–70	%		50	%		51	%
Equity securities		19%–33	%		31	%		27	%
Real estate		14%–20	%		17	%		17	%
Cash and other investments		0%– 8	%		2	%		5	%
Total					100	%		100	%

CRNA sponsors various qualified defined contribution plans. Substantially all employees of CRNA 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

F-31

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

addition, various supplemental, non-qualified deferred compensation plans allow members of management to defer certain amounts of compensation and receive specified contributions. CRNA’s contributions under these plans amounted to US$ 2.5 million, US$ 2.5 million and US$ 2.8 million in 2004, 2003 and 2002, respectively.

15. 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

Converium operates a short-term incentive program (“Annual Incentive Plan” or “AIP”) for executives, management and certain employees. Awards are made in cash based on the accomplishment of both organizational and individual performance objectives. The compensation expense incurred in 2004, 2003 and 2002 in connection with these plans was US$ 2.0 million, US$ 11.7 million and US$ 7.4 million, respectively.

Employee retention plan

In September 2004, Converium adopted a retention plan for certain of its key employees in order to ensure the successful continuation of business operations at Converium AG and Converium Rückversicherung (Deutschland) AG and the orderly run-off of its North American operations. The retention bonus is paid to the eligible employees in cash in two or three equal installments in amounts up to the equivalent of such employees’ base salary. The last installment becomes due on January 31, 2006. The estimated cost of the program is approximately US$ 31.5 million, which will be expensed over the period October 1, 2004 through January 31, 2006. For the year ended December 31, 2004, US$ 15.7 million has been expensed based on the terms of this plan. In addition, severance amounts of US$ 6.0 million will be required to be paid to certain CRNA employees in the event of a change of control or certain other events.

(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.

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.

Annual Incentive Share Plan

Certain executives receive a minimum of 25% of their Annual Incentive Plan in the form of Converium shares. All employees may elect to receive up to 50% of their AIP in Converium shares. If these AIP shares are held for a three-year period, employees receive an additional share award equal to 25% of their AIP shares.

Table 15.1 summarizes the status of Converium’s share plans for 2004, 2003 and 2002.

Table 15.1	2004		2003		2002
Unvested shares at beginning of year		160,859		363,278		706,451
Shares granted		438,795		133,930		29,732
Shares vested		–30,288		–311,587		–299,214
Shares forfeited		–112,185		–24,762		–73,691
Unvested shares at end of year		457,181		160,859		363,278

Long-Term Incentive Plan (LTIP)

The LTIP is designed to align the interests of management closely with those of shareholders, and to encourage share ownership. LTIP awards are made to senior employees, and are awarded in a combination of 50% Converium shares and 50% options to purchase shares in Converium Holding AG. Shares vest ratably over three years. Options are issued with an exercise price equal to the market value of the shares or ADSs on the grant date. 25% of the options vest immediately on the grant date, and 25% vest each year thereafter or upon retirement. The options expire 10.5 years after the date of grant.

F-32

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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. Executive IPO Options are now fully vested and expire 10.5 years after the date of grant.

Table 15.2 summarizes the status of Converium’s outstanding stock options for 2004, 2003 and 2002.

Table 15.2	2004				2003				2002
			Weighted				Weighted				Weighted
			average				average				average
			exercise				exercise				exercise
	Options		price		Options		price		Options		price
Outstanding at beginning of year		1,728,744	CHF 71.17			1,115,424	CHF 79.28			732,329	CHF 82.00
Granted		1,238,640		17.75		699,555		58.14		442,514		74.66
Exercised		–39,806		68.64		–23,450		60.10		–3,574		78.85
Forfeited		–567,624		59.90		–62,785		74.31		–55,845		80.40
Outstanding at end of year		2,359,954		45.88		1,728,744		71.17		1,115,424		79.28
Options exercisable at end of year		1,311,491		61.38		901,933		75.74		423,509		80.47

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 15.3
Weighted average	2004		2003		2002
Risk-free rate		2.11%		1.51%		1.87%
Expected life	3 years		3 years		3 years
Expected volatility		31.74%		27.24%		31.27%
Dividend yield		2.00%		1.78%		0.80%
Fair value of options granted	US$	3.38	US$	7.43	US$	11.11

Table 15.4 summarizes information about stock options outstanding at December 31, 2004:

Table 15.4	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   8.64 – 25.56		958,765		10.4	CHF 9.72			252,494	CHF 9.96
CHF 56.05 – 62.50		734,017		9.0		59.44		413,604		59.30
CHF 82.00 – 89.10		667,172		7.4		82.93		645,393		82.83
CHF   8.64 – 89.10		2,359,954		9.1		45.88		1,311,491		61.38

(c) Compensation expense

The compensation expense charged to income under the share-based incentive plans was US$ 9.6 million, US$ 10.0 million and US$ 24.4 million in 2004, 2003 and 2002, respectively.

(d) Re-pricing of options

An adjustment to the exercise price of all options outstanding prior to the Rights Offering will be made in early 2005 in order to account for the dilution of the value of the options as a result of the Rights Offering. The reduction in exercise price maintains the same Black-Scholes value of the option before and after the Rights Offering and does not reflect any other decrease in the share price. The re-pricing of options will not have a material impact on the financial condition or results of operations.

F-33

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

16. 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, 2004, the Extraordinary General Meeting of the shareholders passed two resolutions to increase the 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 were entitled to receive dividends.

In addition Converium’s shareholders resolved, at the Extraordinary General Meeting held on September 28, 2004, to:

•   Reduce the share capital of the company from CHF 400,062,170 by 200,031,085 to CHF 200,031,085 by reducing the nom- inal value of CHF 10 per share by CHF 5 to CHF 5 per share;

•   Increase the share capital by CHF 533,416,225 through the issuance of 106,683,245 fully paid registered shares with a nominal value of CHF 5 each at an issue price of CHF 5 per share; and

•   Amend the Articles of Incorporation as a consequence of the reduction of the nominal value.

In October 2004, Converium’s share capital was increased by CHF 533,416,225 by issuing 106,683,245 shares at CHF 5 each. The additional shares were issued, and Converium’s corresponding capital increase (and reduction of the nominal value) were recorded, in the Commercial Register of the Canton of Zug, Switzerland on October 12, 2004. After the registration of the shares in the Commercial Register of the Canton of Zug, Converium’s issued, outstanding share capital was CHF 733,447,310, divided into 146,689,462 shares with a nominal value of CHF 5.

(b) Authorized share capital

At the Annual General Meeting on April 27, 2004, the shareholders resolved to create authorized share capital and amended the Articles of Incorporation, which provides that the Board of Directors is authorized, on or before April 27, 2006, to increase the share capital by the issuance of up to a maximum of four million fully paid-up registered shares each of CHF 10 nominal value amounting to a maximum of CHF 40 million.

Subsequent to the reduction of the nominal value of each of Converium’s shares from CHF 10 to CHF 5 as a result of the resolution by the shareholders at the EGM of September 28, 2004, Converium’s authorized capital is now CHF 20,000,000 with the Board being authorized to issue up to four million shares.

(c) Conditional share capital

At the Annual General Meeting on April 27, 2004, Converium Holding AG amended its Articles of Incorporation to state that the previously available conditional share capital for use in conjunction with the employee participation plans has been replaced by a conditional share capital for option rights and/or conversion rights for a number of four million shares or CHF 40,000,000 in nominal share capital.

Subsequent to the reduction of the nominal value of each of Converium’s shares in October 2004, its conditional capital is now for a number of four million shares of CHF 5 nominal value each, amounting to a maximum of CHF 20,000,000 pursuant to which up to four million shares can be issued upon exercise of conversion or option rights allotted in connection with bonds and other financial market instruments.

At December 31, 2004, none of the conditional share capital or registered shares have been exercised.

(d) Dividend restrictions, reductions in the registered shares’ nominal value, 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.

As of December 31, 2004, Converium Holding AG had 146,689,462 registered shares with a nominal value of CHF 5 each issued. Based on Swiss company law, Converium Holding AG is entitled to reduce the nominal value of its registered shares down to CHF 0.01 by a respective payment per share to its shareholders. 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

F-34

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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 CRNA, 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 has the authority to reclassify up to 100% of the current year surplus to retained earnings, thereby not allowing dividends to be paid (see Note 22).

17. 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 continues to administer the transferred business on behalf of ZIC and ZIB, which remain liable to the original cedents of the business. Additionally, Converium AG manages third-party retrocessions related to the business transferred. Converium bears the credit risk for uncollectible reinsurance balances excluding those related to the September 11th terrorist attacks. Converium AG has 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.

CRNA had an intra-Converium aggregate excess of loss reinsurance agreement in place since July 1, 1997 (the “1997 Aggregate Excess of Loss Agreement”). This agreement provided protection to CRNA 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 CRNA. In October 2001, the 1997 Aggregate Excess of Loss Agreement was amended as follows:

•   CRNA’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;

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Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

•   CRNA’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 7, 9, 11, 15, 18 and 21 for other transactions with Zurich Financial Services.

18. Related party transactions

GAUM

In 2003, Converium finalized an agreement to acquire a 25% stake in GAUM, a leading international commercial and general aviation underwriting agency, as a part of its strategy to strengthen its long-term position in the aviation and space line of business. At that same time, 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 under which it became a member of the aviation and aerospace pools run by GAUM and its subsidiary, Associated Aviation Underwriters Inc.

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 GAUM, which increased its overall stake 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 GBP 2.5 million (US$ 4.5 million). For the 2004 underwriting year, Converium has committed 27.25% of the overall pool’s capacity of the aviation risks managed by GAUM, compared to 25% for the 2003 underwriting year. Gross premiums assumed through the pools managed by GAUM were US$ 289.0 million, US$ 266.4 million and US$ 64.4 million for 2004, 2003 and 2002, respectively.

The pool members’ agreement with respect to GAUM provides that if a member of the pool has its financial strength rating downgraded below BBB+ by Standard & Poor’s Rating Service it may be served with a notice terminating its membership in the pool upon approval by the committee of representatives of the pool. Converium believes that no formal action was taken by the pool membership committee to serve a notice terminating its membership of Converium. However, the committee has discussed Converium’s downgrade and sought to take action to limit its rights to dispute the validity of any notice served on Converium. The continuation of Converium’s membership at its current rating was likely to be conditional upon its entering fronting arrangements acceptable to other pool members in a timely fashion and thereafter maintaining such arrangements. Converium entered into formal written fronting arrangements, preventing the termination of its membership in the pool. The fronting arrangements require Converium to post collateral to secure its reinsurance obligations under the fronting arrangements. If Converium’s membership were to be reduced to less than a 5% share, it would not be permitted to participate in future pool business and would have to collateralize by way of a letter of credit its obligations under the business written by the pool in its name prior to its termination. If Converium’s membership were terminated, it also may be required to sell its shares in GAUM at an amount less than its carrying value. See Notes 3 and 8 for additional information on GAUM.

MDU

Converium entered into a strategic alliance with the MDU that resulted in a 49.9% participation in MDUSL. MDUSL distributes medical malpractice insurance policies to the members of the MDU. 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 MDU beginning July 1, 2003. These insurance policies replaced policies formerly issued in the United Kingdom by Zurich Financial Service’s entities, the majority of which were reinsured by Converium. Gross premiums written from MDU were US$ 170.9 million, US$ 137.3 million and US$ 140.0 million for 2004, 2003 and 2002, respectively.

The MDU Shareholders’ Agreement provides that if Converium’s credit rating is lowered by more than seven points, from its initial “A+” rating, by a recognized credit ratings agency, the MDU may serve it with a Termination Notice. Within sixty days after service of such termination notice, MDU has the right to purchase Converium's 49.9% shareholding in MDU Services Ltd. at a price to be mutually agreed upon by the parties, or to be determined by a valuation expert. The recent ratings downgrades have not triggered the termination provisions of the MDU Shareholders’ Agreement. See Note 8 for additional information on MDU.

SATEC

Converium has a 48% participation in SATEC, a leading global space-underwriting agency based in Venice, Italy. Additionally, in 2002 Converium entered into a usufruct agreement with the two other owners of SATEC regarding some of their participation rights. Gross premiums assumed through the pool managed by SATEC were US$ 10.2 million, US$ 5.9 million and US$ 5.0 million for 2004, 2003 and 2002, respectively. Profit distributions paid from SATEC to Converium with regards to the participation and the usufruct were US$ 0.9 million, US$ 0.8 million and nil for 2004, 2003 and 2002, respectively. In 2004, we have recorded an impairment charge with regard to the usufruct agreement in the amount of US$ 2.4 million.

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Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

RISC Ventures

Converium has retained The RISConsulting Group LLC for certain consulting services, of which Derrell J. Hendrix, a member of the Converium AG Board of Directors, is Manager and Chief Executive Officer. In addition, Derrell J. Hendrix is a manager and owner of approximately 57% of the outstanding share capital of RISC Ventures LLC, a Delaware-based limited liability company created to manage and operate companies engaged in commercializing technologies and intellectual properties developed by The RISConsulting Group LLC and its affiliates. In April 2004, Converium AG invested US$ 2.0 million in RISC Ventures LLC for an approximate 17.5% ownership interest in the entity. For 2004, Converium paid total fees of US$ 250,000 to The RISConsulting Group LLC.

Managing Director

In order to enhance the effectiveness of strategic and operational decision-making and greater collaboration between the Board of Directors and the Global Executive Committee (“GEC”), Converium established the position of Managing Director. On September 10, 2004, Terry G. Clarke was appointed as Converium’s new Managing Director. The Managing Director serves on the Board and has oversight over the day-to-day management of Converium’s business. The Managing Director attends all meetings of the GEC and has veto power over decisions taken by the GEC. In addition to the Managing Director’s regular compensation as a member of the Board of Directors, Terry G. Clarke receives a remuneration of GBP 50,000 (US$ 91,620) per month plus reimbursement for customary expenses. For 2004, Converium paid Terry G. Clarke GBP 190,909 (US$ 349,822) related to this role. In February 2005, Terry G. Clarke assumed the role of Chief Executive Officer of Converium (see Note 26).

19. Supplemental cash flow disclosures

Table 19.1
Supplemental cash flow disclosures

(US$ million)	2004		2003		2002
Income taxes paid		–10.2		–2.7		–2.3
Interest expense paid		–33.1		–31.6		–16.4

20. 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 20.1 lists the estimated fair values and carrying values of Converium’s financial instruments as of December 31, 2004 and 2003.

Table 20.1
Fair value of financial instruments

	Total		Total		Total		Total
	fair		carrying		fair		carrying
(US$ million)	value		value		value		value
As of December 31	2004		2004		2003		2003
Fixed maturities		5,678.7		5,685.2		4,935.9		4,928.6
Equity securities		408.5		408.5		840.2		840.2
Other investments (excluding real estate)		133.5		133.5		43.3		43.3
Short-term investments		133.3		133.3		55.8		55.8
Funds Withheld Asset		1,305.1		1,305.1		1,530.6		1,530.6
Cash and cash equivalents		664.9		664.9		280.8		280.8
Debt		–330.6		–390.9		–428.6		–390.6

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Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

21. Commitments and contingencies

Letter of credit facility

In November 2004, Converium AG obtained a US$ 1.6 billion, three-year syndicated letter of credit facility (the “Syndicated Letter of Credit Facility”) from various banks. The facility provides Converium’s non-US operating companies with a US$ 1.5 billion capacity for issuing letters of credit and a US$ 100.0 million liquidity reserve. It replaces the existing US$ 900.0 million letter of credit facility that was signed in July 2003. As of December 31, 2004, Converium had outstanding letters of credit of US$ 955.7 million under the facility. Investments of US$ 1,060.8 million are pledged as collateral related to the Syndicated Letter of Credit Facility. Converium must maintain the following financial covenants in order to avoid default under the agreement: (i) consolidated total borrowings do not at any time exceed 35% of consolidated tangible net worth, which is defined as total shareholders’ equity less goodwill; and (ii) consolidated tangible net worth must remain greater than US$ 1,237.5 million at all times. Converium pays commission fees on outstanding letters of credit, which are distributed to the facility banks and can only be impacted by a change in the company’s credit rating. The maximum amount of this fee is .50%.

In addition to the Syndicated Letter of Credit Facility, other irrevocable letters of credit of US$ 639.1 million were outstanding at December 31, 2004 to secure certain assumed reinsurance contracts. Investments of US$ 704.7 million are pledged as collateral related to certain of these letters of credit.

As of December 31, 2004, Converium Rückversicherung (Deutschland) AG, Germany had an outstanding commitment of Euro 30.0 million (US$ 40.8 million) to fund an investment in a Morgan Stanley Real Estate Fund (the “Eurozone Office Fund”), a Fonds Commun de Placement under Luxembourg law. The manager can call this commitment at any time during the commitment period to fund working capital needs or the purchase of new investments. As of December 31, 2004 the capital called totaled Euro 6.7 million (US$ 9.1 million).

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$ 15.9 million and US$ 14.8 million for the years ended December 31, 2004, 2003 and 2002, respectively.

Table 21.1 lists minimum future payments under operating leases with terms in excess of one year.

Table 21.1

Minimum future payments under operating leases	Rental
(US$ million)	payments
2005		13.3
2006		13.3
2007		13.2
2008		13.1
2009		11.8
2010 and thereafter		20.9
Total		85.6

Converium AG leases office space from Zurich Financial Services. The lease term is fixed until 2011, with two renewal options for five-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.

CRNA 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, CRNA 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 CRNA’s default under the sublease that results in a default under the prime lease; GAHL, in turn, will indemnify CRNA 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 CRNA enforcing the guaranty. See Note 25 for additional information on guarantees. As a result of the announced run-off of CRNA, Converium is currently evaluating certain of its office leases in North America, and a plan for reduced office space is expected to be approved in 2005 (see Note 26).

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Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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:

Superior National Matters

On January 6 and January 7, 2005, CRNA and CINA, respectively, entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with the California Insurance Commissioner (the “Commissioner”) relating to the January 16, 2002 complaint that the Commissioner filed against a subsidiary of ZFS, Centre Insurance Company (“CIC”) and affiliates, as well as CRNA and CINA (see Note 26). The Commissioner had initiated this action in Superior Court of the State of California, County of Los Angeles, on behalf of the Superior National Insurance Companies in Liquidation (“SNICL”).

The complaint alleged several counts, including voidable preferences and fraudulent transfers, 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 appeared to arise out of CIC transactions, not CRNA or CINA transactions. As part of the transactions which effectively spunoff CRNA and CINA from ZFS, ZFS agreed to indemnify CRNA and CINA for liabilities arising out of or related to the assets not assumed by or transferred to CRNA and CINA in the separation from ZFS. The principal claim brought against CRNA appeared to arise from CRNA’s commutation of certain reinsurance obligations. In that connection, however, while the complaint did in fact reference the commutation, the payment involved was a commutation payment made by CRNA, not to CRNA. As best as could be discerned, the liquidator was apparently claiming that the amount paid by CRNA was inadequate consideration for the reinsurance obligations commuted and thus this commutation constituted a fraudulent transfer. All the claims, though, were never well defined and no discovery was ever undertaken to better elucidate them.

Neither CRNA nor CINA shall pay any amounts whatsoever in exchange for the full and final discharge of liabilities, as set forth in the Settlement Agreement, that the Commissioner has granted to both companies. Instead, CIC shall be making the full payment that will provide the complete release to CRNA and CINA, as well as all other parties in the complaint. At a hearing on February 17, 2005, the Settlement Agreement was approved by the court presiding over the liquidation of the estates of SNICL. As a result, CIC’s main performance under the settlement is now due 90 days from entry of the approval order. After that period has expired and CIC has performed, dismissals of the case are expected to be entered.

U.S. Life Insurance Company arbitration

The arbitration initiated on November 29, 1999 by U.S. Life Insurance Company (“U.S. Life”) against Superior National Insurance Company in Liquidation (“SNICIL”), CINA and CIC, which was previously reported, has been settled as between U.S. Life and CINA. The settlement in January 2005 followed a December 2004 decision of the arbitration panel to reject U.S. Life’s claim for rescission and to instead reform the reinsurance treaty provided by U.S. Life to a 90% quota share as opposed to a 100% quota share. Life and CINA agreed to settle the matter with a full and final commutation of the treaty in exchange for a commutation payment by U.S. Life (see Note 26).

All American Life Insurance Company arbitration

The arbitration initiated on December 23, 2002 by CRNA and CINA against All American Life Insurance Company (“All Ameri-can”), which was previously reported, has been settled. In May 2004, the parties to the dispute, which concerned a reinsurance treaty provided by All American, agreed to settle the matter with a full and final commutation of the treaty in exchange for a commutation payment by All American. Incurred losses of US$ 9.2 million were recorded in 2004 to reflect this commutation.

Continental Casualty Company arbitration

In December 2002, Continental Casualty Company (“Continental”) and CRNA each demanded arbitration from the other to resolve a dispute arising from a retrocessional contract pursuant to which Continental reinsured CRNA for 50% of certain accident & health exposures CRNA assumed from a third-party insurer. The dispute arose in October 2002 when Continental asserted that the third-party insurer had violated the reinsurance agreement with CRNA in such a way that might give rise to defenses under the reinsurance agreement.

Effective June 2004, Continental and CRNA entered into an Assignment of Rights, Limited Indemnity and Cooperation Agreement (the “Assignment Agreement”) pursuant to which the parties agreed to withdraw their respective demands for arbitration with prejudice. The Assignment Agreement enables Continental, with the cooperation of CRNA, to assert its defenses directly against the insurer and indemnifies CRNA for monetary liability or expenses it incurs resulting from CRNA’s cooperation or Continental’s assertion of its defenses. Following the signing of the Assignment Agreement, Continental, CRNA and the third-party insurer have entered into a series of commutation agreements related to the exposures. These commutations are subject to the approval of the liquidation court governing the insurer, which is currently pending.

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Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Great American Insurance Company arbitration

The arbitration initiated on July 30, 2004 by Great American Insurance Company (“GAIC”) against CRNA, challenging CRNA’s right to invoke a special termination or settlement clause under certain Automobile Residual Value Proportional Reinsurance Agreements (the “Reinsurance Agreements”) with GAIC and seeking resolution of a billing dispute related to the Reinsurance Agreements, which was previously reported, has been settled. In December 2004, the parties to the dispute agreed to settle the matter with a full and final commutation of the Reinsurance Agreements in exchange for a commutation payment by CRNA.

Canada Life

On December 21, 2001, The Canada Life Assurance Company, Toronto (“Canada Life”), brought an action against Converium Rückversicherung (Deutschland) AG (“Converium Germany”) in the US District Court of the Southern District of New York. Canada Life alleged that Converium Germany 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 Germany 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 US 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 US District Court of the Southern District of New York, Converium Germany sent Canada Life a request to arbitrate. Following the organizational meeting of the arbitrators on October 8, 2003, the discovery and deposition began. The hearing is expected to take place in the first quarter of 2005. Meanwhile, the arbitration panel ordered Converium Germany to post pre-award security in the form of a Letter of Credit in the amount of US$ 66.0 million, which Converium Germany has complied with.

Converium Germany has fully reserved this claim. However, arrangements entered into with Zurich Financial Services provide for the claim to be covered by the agreed-to cap for September 11th related losses provided to us by Zurich Financial Services in conjunction with Converium’s Initial Public Offering.

Current industry issues

To date, Converium is neither a defendant in the lawsuit that New York State Attorney General, Elliott Spitzer, filed against a leading US insurance broker on October 14, 2004, nor has Converium been contacted with respect to the lawsuit or any related investigation. There has been widespread speculation in the media regarding the potential impact and scope of the Spitzer investigation on the insurance industry. As the investigation appears to be in the preliminary phases it is difficult to predict whether it will be expanded to include other industry participants. However, CRNA has received subpoenas from each of the Securities and Exchange Commission and the New York Attorney General’s Office regarding a transaction with MBIA — for further information see Note 27 — Review of Certain of our Reinsurance Transactions.

Class action lawsuits

Commencing on October 4, 2004, seven securities class action lawsuits have been filed against Converium and certain of its officers and directors. The complaints are as follows: Meyer v. Converium Holding AG, et al., 04 CV 07897, which names Converium Holding AG, Dirk Lohmann and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and July 20, 2004; Criden v. Converium Holding AG, et al., 04 CV 8060, which names Converium Holding AG, Dirk Lohmann and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and July 20, 2004; Taylor v. Converium Holding AG, et al., 04 CV 8038, which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, Martin Kauer, Richard E. Smith and Frank Schaar as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004; Jakob v. Converium Holding AG, et al., which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, Martin Kauer, Richard E. Smith and Frank Schaar as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004; Maxfield v. Converium Holding AG, et al., 04-CV-08994, which names Converium Holding AG, Peter C. Colombo, Martin Kauer and Dirk Lohmann, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and September 2, 2004; Bassin v. Converium Holding AG, et al., 04 CV 08295, which names Converium Holding AG, Peter C. Colombo, Martin Kauer and Dirk Lohmann as defendants, and is purportedly brought as a class action on behalf of purchasers of our securities between December 11, 2001 and September 2, 2004 (see Note 26); and Rubin v. Converium Holding AG, et al., Index No. 04-117332, which names Converium Holding AG, Zurich Financial Services Group, Peter C. Colombo, Georg Mehl, George G. C. Parker, Derrell J. Hendrix, Jürgen Förterer, Terry G. Clarke, Anton K. Schnyder, Dirk Lohmann, and Martin Kauer as defendants, and is purportedly brought as a class action on behalf of persons who purchased our securities between December 11, 2001 and August 30, 2004.

F-40

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

The first five complaints, each of which was filed in the Southern District of New York, assert claims for violations of Section 10(b), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Securities Exchange Act of 1934, and allege, among other things, that, contrary to representations, we did not establish adequate loss reserves to cover claims by policyholders; that our announced reserve increases prior to July 20, 2004 were insufficient; and that, as a result of the foregoing, our earnings and assets were materially overstated. Rubin v. Converium Holding AG, et al., Index No. 04-117332, was filed in New York State Court, and makes similar allegations directed at the Company’s Registration Statement and Prospectus issued in connection with the IPO under sections 11, 12, and 15 of the Securities Act of 1933. Further, certain of the complaints allege violations of Securities and Exchange Commission reporting obligations and generally accepted accounting principles. In each case, plaintiffs are seeking unspecified compensatory damages, attorney’s fees and expert fees. It is possible that additional suits alleging similar claims may be filed in the future.

We intend to defend the remaining lawsuits vigorously. The actions are in the preliminary phases; thus, the timing and outcome of these matters are not currently predictable. An unfavorable outcome could have a material effect on our financial condition, results of operations and cash flows.

U.S. Securities and Exchange Commission investigation

In August 2004, CRNA received a request for voluntary production of documents and information from the enforcement staff of the U.S. Securities and Exchange Commission (the “Commission”). As a result of that request, Converium understands that the Commission is conducting an investigation to determine whether there have been violations of the US federal securities laws in connection with transactions in Converium’s securities by certain persons, including certain of its insiders, prior to Converium’s announcement on July 20, 2004 that its second quarter 2004 earnings would fall short of expectations due to higher than modeled US casualty loss emergence primarily related to the underwriting years 1997 to 2001.

CRNA has voluntarily responded to the Commission’s request, and intends to continue to cooperate with the Commission.

Investigation by the Swiss Federal Banking Commission

In November 2004, the Federal Banking Commission requested certain information in conjunction with the sequence of events in conjunction with Converium’s announcement on July 20, 2004 that its second quarter 2004 earnings would fall short of expectations due to higher than modeled US casualty loss emergence primarily related to the underwriting years 1997 to 2001. Converium fully complied with the respective request by providing all relevant information to the Commission.

22. Regulation

As a result of the developments in the latter part of 2004, various regulatory actions have occurred, the most significant of which are set forth below:

United States

As a result of the reserve strengthening Converium recorded in 2004 and the subsequent placement of its North American business into run-off, the Connecticut Insurance Department (the “Department”) has implemented additional financial monitoring of CRNA. CRNA has entered into a letter of understanding with the Department pursuant to which CRNA will be prevented from taking a number of actions without first obtaining the Department’s approval, including:

•   Making any material change in its management or operations;

•   Making any withdrawal of monies from its bank accounts, disbursements or payments outside the ordinary course of the business run-off;

•   Incurring any debt, obligation or liability for borrowed money not related directly to the ordinary course of the business run-off;

•   Writing, assuming or issuing any new insurance policies;

•   Making any dividend payment or other payment or distribution to or engaging in any transaction, or entering into any agreement directly or indirectly with its parent company, or any affiliated company;

•   Entering into any new material reinsurance agreement; and

•   Entering into any sales, purchases, exchanges, loans, extensions of credit or investments not in the ordinary course of its run-off business.

In addition, CRNA will be required to provide to the Department written reports on a monthly basis containing detailed information on all commutations of reinsurance treaties and related activities, including specific impact on CRNA’s statutory financial statements, as well as any additional reports that the Department reasonably determines are necessary to ascertain the financial condition of the Company. The letter of understanding does not preclude the Department from initiating any further actions that it deems in its discretion to be necessary for the protection of CRNA’s policyholders, reinsureds and the public.

The foregoing requirements will continue until March 15, 2005, at which time the Department will reassess the financial condition of CRNA.

F-41

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

The recent ratings downgrades as well as our decision to place CRNA into run-off have triggered “special funding” clauses in CRNA’s and CINA’s reinsurance and insurance contracts. These clauses require CRNA and CINA to provide collateral for their payment obligations under those contracts. In addition, state insurance regulators may request that CRNA and CINA make special deposits in their states or provide collateral for contracts issued to residents of their states. The approval of the Department is required before we provide such collateral. If the Department withholds its approval, we would be in default under contracts that have special funding clauses unless the other party to the contract has waived the requirement. In addition, state insurance regulators that requested special deposits or collateral could seek to revoke CRNA’s or CINA’s licenses or initiate proceedings to take possession of the property, business and affairs of CRNA or CINA in their respective states.

Switzerland

By letter dated September 27, 2004 the Federal Office of Private Insurance (“FOPI”), the insurance and reinsurance regulator in Switzerland, has requested that Converium AG provide notice on certain inter-group transactions between Converium AG and its subsidiaries including loans, guarantees, cost-sharing agreements, capital injections, and investments in subsidiaries. Furthermore the FOPI requested by letter dated October 14, 2004 certain additional information including Converium’s business strategy, planning, reserves, solvency and collateral issues. Converium is cooperating with the FOPI and is providing all required information and documentation.

In December 2004, per the FOPI’s request, Converium AG agreed to submit for approval the following inter-group transactions: inter-group loans and capital increases to subsidiaries exceeding US$ 100.0 million; guarantees exceeding US$ 10.0 million; transfer of portfolios or novations involving changes in reserves exceeding US$ 25.0 million, dividends to Converium Holding AG and all inter-group reinsurance transactions that are not at arm’s length. Absent consent of the FOPI, the inter-group transactions exceeding the thresholds could not be executed, which may in turn have an impact on the funding in conjunction with inter-group transactions.

Accounting impact of reserve strengthening and related impairment of goodwill and deferred taxes

For accounting purposes, Converium Holding AG and Converium AG are both required to perform an annual assessment of the carrying value of investments in affiliates as part of the annual statutory financial statement process. This annual impairment assessment is conducted in the fourth quarter of each calendar year when it is considered that the best financial information is available to perform this test. In order to assess the fair value of each investment, management utilizes a number of internationally recognized valuation techniques taking into account the fair value of the existing balance sheet, current projected business plans and credit rating and foreign exchange rate assumptions. Swiss law allows companies to value assets below their economic value in their local statutory accounts.

As a result of the reserve strengthening and related impairment of goodwill and deferred taxes, CHNA recorded an impairment charge of US$ 571.5 million in its US GAAP accounts with regards to its participation in CRNA. This impairment did not have a material impact on the consolidated financial position or results of operations. As of December 31, 2004 CHNA reported a value of US$ 331.0 million for its investment in CRNA in its US GAAP accounts.

In respect of Converium AG’s investment in CHNA, Converium AG recorded an impairment charge of US$ 802.4 million in its US GAAP accounts and of CHF 1,332.4 million in its local statutory accounts in the fourth quarter of 2004. These impairment charges did not have a material impact on the consolidated financial position or results of operations. As of December 31, 2004 Converium AG reported a value of US$ 133.7 million for its investment in CHNA in its US GAAP accounts.

Similarly, Converium Holding AG performed an annual impairment test on its investment in Converium AG as well as on the note receivable from CRNA as part of its Swiss annual statutory financial statement process, adopting the valuation principles outlined above. In the fourth quarter of 2004, Converium Holding AG recorded an impairment charge of CHF 1,332.4 million in its local statutory accounts with regards to its participation in Converium AG, respectively of CHF 170.6 million with regards to the note receivable from CRNA.

Germany

Solvency requirements

In late 2004, in order to meet newly established solvency requirements for reinsurance companies in Germany, Converium Rückversicherung (Deutschland) AG increased its capital on a local statutory basis by Euro 100.0 million (US$ 135.9 million). This was accomplished by means of a capital contribution from Converium AG in the amount of Euro 80.0 million (US$ 108.7 million). In addition, Converium AG granted Converium Rückversicherung (Deutschland) AG a subordinated loan in the amount of Euro 20.0 million (US$ 27.2 million) for a term of twenty years.

F-42

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Establishment of branch office

In November 2004, Converium AG established a branch office in Cologne, Germany. This move was made in response to the favorable legal regulatory environment in Germany as the rules regarding establishment of branch offices were slated to change as of January 1, 2005.

23. 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
	incorporation	shares held		Currency	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		733,447,310
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 IP Management Ltd*	Bermuda		100	US$		12,000
Converium Finance (Bermuda) Ltd*	Bermuda		100	US$		12,000

* Converium has incorporated two new companies effective as of December 17, 2004. The scope of these companies is to effectively manage Converium’s brand.

24. (Loss) earnings per share

Converium Holding AG purchased 368,463 shares and 377,650 shares during 2004 and 2003, respectively, related to share-based compensation plans.

The following table shows the average shares outstanding:

(in US$ million, except per share information)
For the years ended December 31	2004		2003		2002
Net (loss) income		–760.8		185.1		106.8
Average shares outstanding (millions)		63.4		39.8		39.9
Average diluted shares outstanding (millions)		64.1		40.3		40.5
Basic (loss) earnings per share		–12.00		2.33		1.34
Diluted (loss) earnings per share		–12.00		2.32		1.33

(Loss) earnings per share and average shares outstanding for 2004 reflect the addition of the 106,683,245 new shares issued in the Rights Offering that occurred in October 2004 (see Note 16). The (loss) earnings per share calculation is based on an adjusted number of average shares outstanding and the 2003 and 2002 amounts have been restated accordingly.

Diluted (loss) earnings per share is computed similar to basic earnings per share 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.

F-43

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

25. 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, 2004 and 2003, 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, 2004. 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, 2004

Holding AG

AG

Finance S.A.

Entities

Adjustments

Consolidated

Revenues

Net premiums written

–

2,629.8

–

923.2

–

3,553.0

Net premiums earned

–

2,534.2

–

1,150.9

–

3,685.1

Net investment income

13.4

189.4

13.4

122.1

–26.7

311.6

Net realized capital gains (losses)

–

12.6

–

33.9

–

46.5

Other income (loss)

23.5

–41.1

19.0

–4.0

–

–2.6

Total revenues

36.9

2,695.1

32.4

1,302.9

–26.7

4,040.6

Benefits, losses and expenses

Losses, loss adjustment expenses and life benefits

–

–1,968.3

–

–1,294.8

–

–3,263.1

Underwriting acquisition costs

–

–655.9

–

–186.6

–

–842.5

Other operating and administration expenses

–11.6

–103.2

–0.1

–103.0

–

–217.9

Interest expense

–10.6

–0.4

–16.5

–32.3

26.7

–33.1

Impairment of goodwill

–

–

–

–94.0

–

–94.0

Amortization of intangible assets

–

–9.9

–

–

–

–9.9

Restructuring costs

–

–0.2

–

–2.5

–

–2.7

Total benefits, losses and expenses

–22.2

–2,737.9

–16.6

–1,713.2

26.7

–4,463.2

Income (loss) before taxes

14.7

–42.8

15.8

–410.3

–

–422.6

Income tax benefit (expense)

2.5

–50.4

–0.1

–290.2

–

–338.2

Income (loss) before equity in (loss) income of subsidiaries

17.2

–93.2

15.7

–700.5

–

–760.8

Equity in (loss) income of subsidiaries

–778.0

–684.8

–

–

1,462.8

–

Net (loss) income

–760.8

–778.0

15.7

–700.5

1,462.8

–760.8

F-44

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Consolidating balance sheets
							Non-
(US$ million)	Converium		Converium		Converium		Guarantor		Consolidating
December 31, 2004	Holding AG		AG		Finance S.A.		Entities		Adjustments		Consolidated
Assets
Invested assets
Fixed maturities		–		2,956.6		14.8		2,713.8		–		5,685.2
Equity securities		–		255.8		–		152.7		–		408.5
Investment in subsidiaries		1,661.5		559.4		–		–		–2,220.9		–
Notes receivable		196.7		49.2		175.0		135.9		–556.8		–
Short-term and other investments		–		306.3		–		99.3		–		405.6
Total investments		1,858.2		4,127.3		189.8		3,101.7		–2,777.7		6,499.3
Funds Withheld Asset		–		1,305.1		–		–		–		1,305.1
Total invested assets		1,858.2		5,432.4		189.8		3,101.7		–2,777.7		7,804.4
Other assets
Cash and cash equivalents		2.1		329.2		4.2		329.4		–		664.9
Premiums receivable		–		1,890.4		–		285.3		2.3		2,178.0
Reinsurance assets		–		917.6		–		2,267.3		–1,613.6		1,571.3
Funds held by reinsureds		–		1,418.1		–		717.9		–414.7		1,721.3
Deferred policy acquisition costs		–		418.2		–		66.5		–		484.7
Deferred income taxes		–		13.0		–		65.3		–		78.3
Other assets		32.5		333.8		65.8		100.6		–93.0		439.7
Total assets		1,892.8		10,752.7		259.8		6,934.0		–4,896.7		14,942.6
Liabilities and equity
Liabilities
Losses and loss adjustment expenses, gross		–		5,870.6		–		4,038.1		–1,131.8		8,776.9
Unearned premiums, gross		–		1,058.9		–		533.6		–280.2		1,312.3
Future life benefits, gross		–		87.7		–		549.6		–91.5		545.8
Other reinsurance liabilities		–		1,382.6		–		105.4		–112.7		1,375.3
Funds held under reinsurance contracts		–		226.7		–		567.4		–414.8		379.3
Deferred income taxes		–		90.6		–		66.6		–		157.2
Accrued expenses and other liabilities		0.6		374.1		1.4		179.2		–270.6		284.7
Notes payable		172.0		–		–		202.2		–374.2		–
Debt		–		–		193.6		197.3		–		390.9
Total liabilities		172.6		9,091.2		195.0		6,439.4		–2,675.8		13,222.4
Equity
Common stock and additional paid-in capital		1,977.8		1,941.2		–		1,286.9		–3,228.1		1,977.8
Unearned stock compensation		–7.5		–		–		–		–		–7.5
Total accumulated
comprehensive income (loss)		304.1		277.7		9.4		56.0		–343.1		304.1
Retained (deficit) earnings		–554.2		–557.4		55.4		–848.3		1,350.3		–554.2
Total equity		1,720.2		1,661.5		64.8		494.6		–2,220.9		1,720.2
Total liabilities and equity		1,892.8		10,752.7		259.8		6,934.0		–4,896.7		14,942.6

F-45

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

Condensed consolidating

statements of cash flows

Non-

(US$ million)

Converium

Converium

Converium

Guarantor

Consolidating

Year ended December 31, 2004

Holding AG

AG

Finance S.A.

Entities

Adjustments

Consolidated

Cash provided by (used in) operating activities

41.6

634.4

2.1

–453.6

–

224.5

Cash flows from investing activities

Purchases of fixed maturities held-to-maturity

–

–214.9

–

–13.3

–

–228.2

Proceeds from sales and maturities of fixed maturities

–

936.3

–

3,179.7

–

4,116.0

Purchases of fixed maturities available-for-sale

–

–1,663.5

–

–2,756.7

–

–4,420.2

Proceeds from sales of equity securities

–

279.6

–

703.5

–

983.1

Purchases of equity securities

–

–61.6

–

–479.7

–

–541.3

Net increase in short-term investments

–

–20.4

–

–50.8

–

–71.2

Proceeds from sales of other assets

–

54.2

–

28.1

–

82.3

Purchase of other assets

–

–128.4

–

12.6

–

–115.8

Notes receivable

–46.7

–49.2

–

–135.9

231.8

–

Investment in subsidiaries

–355.1

–108.7

–

–

463.8

–

Net cash provided by (used in) investing activities

–401.8

–976.6

–

487.5

695.6

–195.3

Cash flows from financing activities

Capital contribution

–

402.9

–

108.7

–511.6

–

Notes payable

22.0

182.6

–

27.2

–231.8

–

Net purchases of common shares

–6.0

–

–

–

–

–6.0

Dividends to shareholders

–47.8

–47.8

–

–

47.8

–47.8

Proceeds from Rights Offering

428.4

–

–

–

–

428.4

Rights Offering issuance costs

–25.1

–

–

–

–

–25.1

Net cash provided by (used in) financing activities

371.5

537.7

–

135.9

–695.6

349.5

Effect of exchange rate changes on cash and cash equivalents

–10.4

11.8

–

4.0

–

5.4

Change in cash and cash equivalents

0.9

207.3

2.1

173.8

–

384.1

Cash and cash equivalents as of January 1

1.2

121.9

2.1

155.6

–

280.8

Cash and cash equivalents as of December 31

2.1

329.2

4.2

329.4

–

664.9

F-46

Converium Holding AG and Subsidiaries
Notes to the consolidated financial statements (continued)

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, loss adjustment expenses and life benefits		—		–1,588.9		—		–1,085.3		—		–2,674.2
Underwriting acquisition costs		—		–522.1		—		–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-47

Converium Holding AG and Subsidiaries
Notes to the consolidated 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		—		1,925.5		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 (deficit)		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-48

Converium Holding AG and Subsidiaries
Notes to the consolidated 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 notes 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-49

Converium Holding AG and Subsidiaries
Notes to the consolidated 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-50

Converium Holding AG and Subsidiaries
Notes to the consolidated 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

–

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-51

26. Subsequent events

Restructuring costs

As a result of the transition to a run-off entity in North America, a decision was made in January 2005 to vacate our primary office space in New York, New York and consolidate in our Stamford, Connecticut office space. We expect the effective date of the transfer to be July 1, 2005. Associated costs will be recorded as restructuring costs.

Settlement of Superior National Matters

On January 6 and January 7, 2005, CRNA and CINA, respectively, entered into the Settlement Agreement with the Commissioner relating to the January 16, 2002 complaint that the Commissioner filed against a subsidiary of ZFS, CIC and affiliates, as well as CRNA and CINA. The Commissioner had initiated this action in the Superior Court of the State of California, County of Los Angeles, on behalf of the SNICL.

Neither CRNA nor CINA shall pay any amounts whatsoever in exchange for the full and final discharge of liabilities, as set forth in the Settlement Agreement, that the Commissioner has granted to both companies. Instead, CIC shall be making the full payment that will provide the complete release to CRNA and CINA, as well as all other parties in the complaint. At a hearing on February 17, 2005, the Settlement Agreement was approved by the court presiding over the liquidation of the estates of SNICL. As a result, CIC’s main performance under the settlement is now due 90 days from entry of the approval order. After that period has expired and CIC has performed, dismissals of the case are expected to be entered (see Note 21).

Settlement of U.S. Life Insurance Company arbitration

The arbitration initiated on November 29, 1999 by U.S. Life against SNICIL, CINA and CIC, has been settled as between U.S. Life and CINA. The settlement in January 2005 followed a December 2004 decision of the arbitration panel to reject U.S. Life’s claim for rescission and to instead reform the reinsurance treaty provided by U.S. Life to a 90% quota share as opposed to a 100% quota share. U.S. Life and CINA agreed to settle the matter with a full and final commutation of the treaty in exchange for a commutation payment by U.S. Life (see Note 21).

Class action lawsuits

On January 21, 2005, Bassin v. Converium Holding AG, et al., 04 CV 08295, a class action lawsuit against Converium and certain officers and directors was voluntarily dismissed, without prejudice, by the plaintiff in that action (see Note 21).

Appointment of Chief Executive Officer

On February 23, 2005, the Board of Directors appointed Terry G. Clarke to the position of Chief Executive Officer of Converium. Terry G. Clarke will continue to be a member of the Board of Directors (see Note 18).

F-52

27. Subsequent Events (unaudited)

Winter Storm Erwin

Winter storm Erwin, which swept across Northern Europe in January 2005, resulted in net pre-tax losses for Converium in the amount of US$ 32.5 million, net of US$ 3.0 million in reinstatement premium.

Review of Certain of our Reinsurance Transactions

Ongoing investigations of the insurance and reinsurance industry and certain insurance and reinsurance products are being conducted by U.S. regulators and governmental authorities, including the Securities and Exchange Commission and the New York Attorney General.

On March 8, 2005, MBIA Inc. (“MBIA”) issued a press release stating that MBIA’s audit committee undertook an investigation to determine whether there was an oral agreement with MBIA under which MBIA would replace Axa Re Finance as a reinsurer to CRNA by no later than October 2005. The press release stated that it appears likely that such an agreement or understanding with Axa Re Finance was made in 1998. Thereafter, on April 19, 2005, CRNA received subpoenas from the U.S. Securities and Exchange Commission and the Office of the New York Attorney General seeking documents related to certain transactions between CRNA and MBIA.

In view of the industry investigations and the events relating to MBIA described above, we have engaged counsel to assist us in a review and analysis of certain of our reinsurance transactions, including the MBIA transactions. We are fully cooperating with the governmental authorities in connection with their investigation. The impact of our ongoing review and analysis and the ongoing regulatory investigations on us is uncertain, and there can be no assurance as to whether or not the outcome of such investigations will have a material impact on Converium.

Retrocessional Risk Management

As a result of its risk management monitoring process, Converium reached a decision in the first quarter of 2005 to commute the obligations of one of its retrocessionaire’s due to deterioration in that company’s rating and concerns about the future ownership and prospects of the company. As a result Converium commuted certain retrocession contracts with reinsurance recoverables in the amount of US$ 100.1 million for a commutation settlement of US$ 60.1 million, which generated a negative impact of US$ 40.0 million on the net results in the first quarter of 2005, US$ 38.7 million of which is in losses. This negative impact reflects the long-tail nature of the expected future claims payment patterns in respect of the line of business concerned.

Long-Term Incentive Plan

Effective in 2005, CRNA has established a long-term incentive plan for its senior employees needed for the run-off. The CRNA LTIP is based on CRNA’s performance against target plan statutory surplus levels over a 5-year period, 2005 through 2009. Awards are payable to participants in cash, in early 2010, after performance can be determined.

F-53

Converium Holding AG
Report of Independent Registered Public Accounting Firm
On the Financial Statement Schedules

To the Board of Directors of Converium Holding AG, Zug

Our audits of the consolidated financial statements referred to in our report dated March 4, 2005, except as to the subsequent events described in Note 27, as to which the date is June 30, 2005, 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 financial statements.

PricewaterhouseCoopers Ltd.

Andrew Hill            Martin Frei

Zurich, March 4, 2005

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, 2004	amortized cost		Fair value		balance sheet
	($ millions)
Fixed maturities:
Bonds held-to-maturity:
US government		584.3		573.7		584.3
Other government		266.1		270.3		266.1
Total fixed maturities held-to-maturity		850.4		844.0		850.4
Bonds available-for-sale:
US government		1,765.6		1,763.1		1,763.1
Other government		1,769.3		1,783.0		1,783.0
Public utilities		17.0		17.8		17.8
Other corporate debt securities		499.9		505.5		505.5
Unit trust		144.2		148.8		148.8
Mortgage and asset-backed securities		612.2		616.6		616.6
Total fixed maturities available for sale		4,808.2		4,834.8		4,834.8
Total fixed maturities		5,658.6		5,678.8		5,685.2
Equity securities:
Common stocks:
Public utilities		7.7		10.5		10.5
Banks, trusts, and insurance companies		37.1		47.3		47.3
Industrial, miscellaneous and all other		259.8		312.5		312.5
Unit trust		27.1		31.8		31.8
Non-redeemable preferred stocks		6.3		6.4		6.4
Total equity securities		338.0		408.5		408.5
Real estate		138.8		138.8		138.8
Policyholder, collateral and other loans		29.4		29.4		29.4
Other investments		101.6		104.1		104.1
Short-term investments		133.3		133.3		133.3
Total investments		6,399.7		6,492.9		6,499.3
Funds Withheld Asset		1,305.1		1,305.1		1,305.1
Total invested assets		7,704.8		7,798.0		7,804.4

S-2

Schedule II

Converium Holding AG
Statements of (loss) income

	Year ended December 31,
($ millions)	2004			2003			2002
Income
Net investment income		13.4			11.0			12.6
Other income (loss)		23.5			35.0			(0.5	)
Total revenues		36.9			46.0			12.1
Expenses
Other operating and administration expenses		(11.6	)		(8.6	)		20.7
Interest expense		(10.6	)		(10.5	)		(10.7	)
Total expenses		(22.2	)		(19.1	)		10.0
Income before taxes		14.7			26.9			22.1
Income tax benefit (expense)		2.5			(3.5	)		(2.2	)
Income before equity in income (loss) of subsidiaries		17.2			23.4			19.9
Equity in (loss) income of subsidiaries		(778.0	)		161.7			86.9
Net (loss) income		(760.8	)		185.1			106.8

See notes to our 2004 consolidated financial statements.

S-3

Converium Holding AG
Balance sheets

	December 31,
	2004			2003
Assets
Invested assets
Investment in subsidiaries		1,661.5			2,006.8
Notes receivable		196.7			150.0
Short-term and other investments		—			44.7
Total invested assets		1,858.2			2,201.5
Other assets
Cash and cash equivalents		2.1			1.2
Other assets		32.5			42.7
Total assets		1,892.8			2,245.4
Liabilities and equity
Liabilities
Accrued expenses and other liabilities		0.6			12.1
Notes payable		172.0			150.0
Total liabilities		172.6			162.1
Equity
Common stock		554.9			253.0
Additional paid-in capital		1,430.6			1,326.7
Treasury stock		(7.7	)		(10.0	)
Unearned stock compensation		(7.5	)		(6.1	)
Total accumulated other comprehensive income		304.1			261.4
Retained earnings		(554.8	)		258.3
Total equity		1,720.2			2,083.3
Total liabilities and equity		1,892.8			2,245.4

See notes to our 2004 consolidated financial statements.

S-4

Schedule II

Converium Holding AG
Statements of cash flows

	Year ended December 31,
($ millions)	2004			2003			2002
Cash flows from operating activities
Net income (loss) before equity in income (loss) of subsidiaries		17.2			23.4			19.9
Changes in other assets and liabilities		24.4			(20.1	)		(17.9	)
Cash provided by operating activities		41.6			3.3			2.0
Cash flows from investing activities
Issuance of note receivable		(46.7	)		—			—
Investment in Converium AG		(355.1	)		29.9			—
Net decrease (increase) in short-term investments		—			3.6			(3.6	)
Net cash (used in) provided by investing activities		(401.8	)		33.5			(3.6	)
Cash flows from financing activities
Issuance of note payable		22.0			—			—
Net purchases of common shares		(6.0	)		(17.3	)		(14.7	)
Dividends to shareholders		(47.8	)		(29.9	)		—
Proceeds from 2004 rights offering		428.4			—			—
2004 rights offering issuance costs		(25.1	)		—			—
Net cash provided by (used in) financing activities		371.5			(47.2	)		(14.7	)
Effect of exchange rate changes in cash and cash equivalents		(10.4	)		10.8			—
Change in cash and cash equivalents		0.9			0.4			(16.3	)
Cash and cash equivalents, beginning of period		1.2			0.8			17.1
Cash and cash equivalents, end of period		2.1			1.2			0.8

See notes to our 2004 consolidated financial statements.

S-5

Schedule IV

($ millions)	Gross		Ceded to other			Assumed from other				% of amount
Reinsurance	Amount		Companies			Companies		Net Amount		assumed to net
Insurance premiums and other considerations:
2004	$	490.9		($287.9	)	$	3,350.0	$	3,553.0		94.3	%
2003	$	561.4		($396.9	)	$	3,662.5	$	3,827.0		95.7	%
2002	$	88.0		($213.6	)	$	3,447.8	$	3,322.2		103.8	%

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.
National Association of Insurance Commissioners (“NAIC”)	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”.
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.
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.

G-2

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.
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.
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 investment income.
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.

G-3

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for the 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/ Terry G. Clarke
	Name:	Terry G. Clarke
	Title:	Chief Executive Officer, Converium Holding AG

By	/s/ Andreas Zdrenyk
	Name:	Andreas Zdrenyk
	Title:	Chief Financial Officer, Converium Holding AG

Date: June 30, 2005

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 October 12, 2004.
1.4	Bylaws of Converium Holding AG, revised April 11, 2005.
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 filed 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

Exhibit
Number	Description
	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) 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

Exhibit
Number	Description
	Company, Converium Holding AG and Converium AG dated December 3, 2001. *
4.24	Form of Converium Standard Stock Option Plan for Non-US Employees. *
4.25	Form of Converium Standard Stock Purchase Plan for Non-US Employees. *
4.26	Omnibus Share Plan for US Employees. *
4.27	Converium Employee Stock Purchase Plan for US 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. #
4.40	Agreement dated November 29, 2004, USD 1,600,000,000 Credit Facility for Converium AG, arranged by ABN AMRO Bank N.V., Barclay’s Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan.
4.41	Deed of Pledge, dated December 15, 2004, Converium Rückversicherung (Deutschland) AG as the Pledgor and ABN Amro Mellon Global Securities Services as the Account Bank and ABN Amro Bank N.V. as the Pledgee.
4.42	Deed of Pledge, dated December 15, 2004, Converium AG, Zürich, as the Pledgor, and ABN Amro Bank N.V. as the Pledgee and ABN Amro Mello Global Securities Services as the Account Bank.
4.43	Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Insurance (UK) Limited.

Exhibit
Number	Description
4.44	Guarantee, dated October 21, 2004 between Converium AG, Zürich as the Guarantor, and Converium Rückversicherung (Deutschland) AG.
4.45	Fronting and Administration Agreement relating to the Global Aerospace Underwriters Pool, dated January 7, 2005, between Global Aerospace Underwriting Managers Limited, Global Aerospace, Inc., Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München, National Indemnity Company and Converium AG.
7.1	Computation of ratio of earnings to fixed charges.
8.1	Subsidiaries of the Registrant.
12.1	302 Certification of Chief Executive Officer.
12.2	302 Certification of Chief Financial Officer.
13.1	906 Certification of Chief Executive Officer.
13.2	906 Certification of Chief Financial Officer.
14.1	Consent of PricewaterhouseCoopers Ltd, independent accountants.

*	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.
#	Incorporated by reference to the Company’s Annual Report on Form 20-F for the year ended December 31, 2003, filed on April 5, 2003.

EX-1.3

Exhibit 1.3

Articles of Incorporation of
Converium Holding AG

with registered office in Zug

Articles of Incorporation Converium Holding Ltd, Nov 08, 2001 — revised Oct 12, 2004 1/12

I. Name, Registered Office, Duration and Purpose

Art. 1 — Name, Registered Office and Duration

Under the name

Converium Holding AG

Converium Holding SA

Converium Holding Ltd.

there exists a corporation with registered office in Zug. The duration of the Company is unlimited.

Art. 2 — Purpose

The main purpose of the Company is to acquire, hold and to manage participations. Furthermore, it may, in Switzerland and abroad, carry out finance and management transactions and render related services of any kind and set up branches and subsidiaries in Switzerland and abroad.

The Company may acquire, hold and sell real estate in Switzerland and abroad.

The Company may grant, sell and acquire licenses and intellectual property rights.

The Company may do any other business and take any steps that seem to be suitable to support the purpose of the Company or that are in a context with the purpose of the Company.

Articles of Incorporation Converium Holding Ltd, Nov 08, 2001 — revised Oct 12, 2004 2/12

II. Share Capital

Art. 3 — Share Capital

The share capital of the Company amounts to CHF 733,447,310 and is divided into 146,689,462 registered shares with a par value of CHF 5 each. Each share is fully paid up.

Art. 3a — Contingent Share Capital for Option Rights and/or Conversion Rights

The share capital will be increased by the issue up to 4,000,000 fully paid-up registered shares each of CHF 5 nominal value amounting to a maximum of CHF 20,000,000 by exercising option and/or conversion rights which were granted on a stand-alone basis or in connection with bond issues or other debt financing of the Company or any of its subsidiaries. The subscription right of the shareholders with respect to these shares is excluded.

The placing of the option and/or conversion rights may be made either by the Company or any of its subsidiaries or through one or more banks which subscribe for these rights as trustees. The Board of Directors is authorized to exclude the advance subscription right of the shareholders if the option and/or conversion rights are used in connection with the financing of a take-over of a business, parts of a business or participations. In this case the structure, the term, the amount of the bond issuer or other debt financing, if any, as well as the terms and conditions of the option and/or conversion rights are to be determined by the Board of Directors on the basis of the market conditions prevailing at the time of the issue of the rights. Option and/or conversion rights shall be exercisable for a maximum period of 10 years.

Art. 3b — Authorized Share Capital

The Board of Directors is authorized, on or before April 27, 2006, to increase the share capital by the issue up to a maximum of 4,000,000 fully paid-up registered shares each of CHF 5 nominal value amounting to a maximum of CHF 20,000,000. An increase in partial amounts is permitted. The date of issue of new shares, their issue price, the type of payment, the date of the entitlement to dividends and the details of a contribution in kind or an acquisition of assets, if any, will be determined by the Board of Directors.

The new shares are to be placed with the existing shareholders. The placing can be made through one or more banks, which subscribe for the shares as trustees. Furthermore, the Board of Directors is authorized to exclude the subscription rights of the shareholders and to allot them to third parties in case the new shares are used for a take-over of a business, parts of a business or participations or for

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 3/12

the financing of such transactions or for the enlargement of the shareholder base in connection with the listing of shares on a stock exchange. Shares in respect of which subscription rights have been allotted, but which were not exercised, are at the disposal of the Board of Directors who shall use them in the interest of the Company. The increase by conversion of freely disposable capital surplus in accordance with Art. 652d of the Swiss Code of Obligations is permitted.

Art. 4 — Membership Rights, Book-entry Shares, Conversion

The share capital is neither represented by a global certificate nor by other certificates, individual shares or documented in any other form. The shareholders are not entitled to demand the issue of any share certificate.

The membership rights are transferred by way of assignment. The same shall apply to the establishment of a usufructuary. Such an assignment shall not be valid unless notified to the Company. If shares are kept in book-entry form by a bank on behalf of a shareholder, such shares may be transferred through such bank only and may only be pledged to such bank by way of a written pledge agreement. A notification of the Company is not required.

Registered Shares may be converted into bearer shares and bearer shares may be converted into registered shares at any time by an amendment of the Articles of Incorporation resolved upon by the General Meeting of Shareholders. Furthermore, shares may be combined into shares of a greater nominal value or divided into shares of a smaller nominal value by an amendment of the Articles of Incorporation.

Art. 5 — Share Register

The Company shall maintain a share register showing the name, first name, residence, address and nationality (in case of legal entities the registered office) of the holders and usufructuaries of the shares. The Company will recognize shareholders and usufructuaries of shares only if they are registered in the share register. The Company accepts only one representative per share.

Upon request, acquirers of shares are registered in the share register as shareholders with the right to vote provided they declare explicitly to have acquired the shares in their own name and for their own account. The Board of Directors is authorized to grant exemptions from this provision in connection with the trading of shares on foreign markets; e.g. the registration of nominees in connection with the establishment of an ADR-program.

The Board of Directors is authorized to register such nominees as shareholders with voting rights up to a maximum of 5% of the nominal share capital of the Company. Over this limit of 5% the Board of Directors is authorized to register nominees as shareholders with voting rights only if the respective nominee discloses the name, address and the share holdings of the persons for their account he holds 0.5% or more of the nominal share capital of the Company. The Board of Directors shall enter into

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 4/12

agreements with such nominees with regard to disclosure requirements, the representation of such shares, and the exercise of the respective voting rights.

After having heard the party concerned, the Company may cancel entries in the share register in case these entries result from incorrect information of the acquirer. The acquirer must be informed immediately about the cancellation of the registration.

III. Organization of the Company

Art. 6 — Corporate Bodies

The Corporate Bodies of the Company are:

A.	The General Meeting of Shareholders
B.	The Board of Directors
C.	The Auditors

A. The General Meeting of Shareholders

Art. 7 — Competencies

The General Meeting of Shareholders is the supreme body of the Company.

The following powers shall be vested exclusively to the General Meeting of Shareholders:

a)	to adopt and to amend the Articles of Incorporation;
b)	to elect and to dismiss the members of the Board of Directors and the auditors, as well as the additional auditors in accordance with this Article 20;
c)	to approve the annual report, the consolidated financial statements and the annual financial statements as well as to decide on the allocation of the balance sheet profit, in particular with regard to dividends and to sharing of profits by the directors;
d)	to discharge the members of the Board of Directors and the persons entrusted with the management;
e)	to pass resolutions concerning matters which by law or by the Articles of Incorporation are reserved to the authority of the General Meeting of Shareholders.

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 5/12

Art. 8 — Ordinary and Extraordinary General Meetings of Shareholders

The ordinary General Meeting of Shareholders shall be held each year within six months after the close of the business year of the Company. It shall take place at the registered office of the Company or at any other place in Switzerland or abroad as determined by the corporate body convening the meeting.

Extraordinary General Meetings of Shareholders shall be convened if deemed necessary by the Board of Directors or the auditors, upon resolution of a General Meeting of Shareholders or upon written request by one or more shareholders, holding in the aggregate not less than one tenth of the share capital, to the Board of Directors specifying the items of the agenda and the motions.

Art. 9 — Convening of General Meetings of Shareholders

The General Meeting of Shareholders shall be convened by the Board of Directors or, if necessary, by the auditors.

The General Meeting of Shareholders shall be convened at least twenty days before the date of the meeting in accordance with Article 25 of the Articles of Incorporation.

The notice of a meeting shall state the place and time of the meeting, the items on the agenda and the motions of the Board of Directors and of the shareholders who requested the convening of a General Meeting of Shareholders. In case of elections the names of the nominated candidates shall be specified.

No resolution shall be passed at a General Meeting of Shareholders on matters for which no notice as aforesaid was given. This shall not apply to the resolution to convene an Extraordinary General Meeting of Shareholders and to initiate a special audit. Motions within the limits of the items on the agenda and negotiations without passing a resolution do not require such an announcement.

Not later than twenty days before the Ordinary General Meeting of Shareholders the business report and the report of the auditors shall be made available for inspection by the shareholders at the registered office of the Company. This shall be announced in the invitation for the General Meeting of Shareholders.

Art. 10 — Agenda

One or more shareholders whose combined share holdings represent an aggregate nominal amount of at least CHF 1 million may demand that an item be included in the agenda of a General Meeting of Shareholders. Such a demand must be made in writing not less than 45 days before the meeting and shall specify the items and the motions of such a shareholder.

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 6/12

Art. 11 — Chairperson, Scrutineers

The President of the Board of Directors, or the Vice-President or any other member of the Board of Directors takes the chair in General Meetings of Shareholders. In case of absence of any member of the Board of Directors the General Meeting of Shareholders elects the Chairperson.

The Chairperson shall appoint the scrutineers and the secretary who do not need not be shareholders of the Company.

Art. 12 — Voting Rights, Rules of Procedure and Representation

In the General Meeting of Shareholders each share entitles to one vote. Only the shareholders registered in the share register as shareholders with voting rights on a cut-off day fixed by the Board of Directors before the General Meeting of Shareholders are authorized to take part in the General Meeting of Shareholders and to vote. The shares are not dividable.

The Board of Directors shall provide for the rules regarding the participation and the representation at the General Meeting of Shareholders as well as the determination of voting rights.

A shareholder may be represented by his legal representative, another person who need not be a shareholder of the Company, authorized in writing, by corporate bodies, by independent proxies or by depositaries.

Art. 13 — Resolutions

Unless provided for differently in the law or in the Articles of Incorporation, the General Meeting of Shareholders passes resolutions and holds elections with the majority of votes cast, excluding abstentions and void and blank votes. If no election has taken place at the first ballot and if there is more than one candidate, the Chairperson shall order a second ballot in which the candidate with the most votes shall be elected.

If the capability exists to vote on resolutions and elections electronically at the General Meeting of Shareholders it shall be done so. Otherwise, resolutions and elections shall be voted on a show of hands, unless the Chairperson orders or the General Meeting of Shareholders, by request of shareholders representing in the aggregate a share capital of at least CHF 1 million, resolves on a secret ballot.

The Chairperson may at any time order to repeat an election or a resolution taken on a show of hands with a written ballot, if he has doubts on the results of the vote or the resolution. In this case, the preceding election or resolution taken on a show of hands is deemed not to have occurred.

The approval of both at least two thirds of votes represented and the absolute majority of the nominal values of the shares represented is required for resolutions of the General Meeting of Shareholders on:

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 7/12

1.	an alteration of the purpose of the Company;
2.	the creation of super-voting shares;
3.	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;
4.	an authorized or contingent increase of share capital;
5.	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;
6.	a restriction or exclusion of the subscription right or advance subscription right;
7.	a change of the Company’s registered office;
8.	the dissolution of the Company without liquidation.

Art. 14 — Minutes

The Board of Directors is responsible for keeping the minutes concerning the represented shares in the General Meeting of Shareholders as well as any motions, statements to the minutes and resolutions of the shareholders. The minutes shall be signed by the Chairperson and the secretary.

B. The Board of Directors

Art. 15 — Constitution, Term of Office

The Board of Directors shall consist of a minimum of four and a maximum of nine members.

The Board of Directors shall constitute itself. The Board of Directors shall appoint its President, one or two Vice-Presidents, if any, and the secretary who does not need to be a member of the Board of Directors.

The Board of Directors shall determine the remuneration of its members.

The members of the Board of Directors shall be elected for a term of office of not more than three years; they are re-eligible. A year in the meaning of this provision is the period between two Ordinary General Meetings of Shareholders. In case of an election of a substitute, the new member of the Board of Directors finishes the term of office of its predecessor.

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 8/12

Art. 16 — Powers of the Board of Directors

The Board of Directors is responsible for the ultimate direction of the Company. The Board of Directors represents the Company and manages the affairs of the Company that are not allotted to any other corporate body by law, by the Articles of Incorporation or by regulations.

The Board of Directors has in particular the following non-transferable and inalienable duties:

1.	the ultimate direction of the Company and the issuance of the necessary instructions;
2.	the determination of the organization;
3.	the determination of the principles of accounting, financial control and financial planning;
4.	the appointment and removal of the persons entrusted with the management and the representation of the Company;
5.	the ultimate supervision of the persons entrusted with the management of the Company, especially in view of their compliance with the law, the Articles of Incorporation, regulations and instructions;
6.	the preparation of the business report and the General Meetings of Shareholders and the implementation of its resolutions;
7.	the notification of the judge in case of over-indebtedness;
8.	the issue of option rights and conversion rights in respect of shares of the Company, the increase of the share capital out of authorized capital as well as resolutions concerning capital increases and respective amendments to the Articles of Incorporation;
9.	the examination of the professional skills of qualified auditors.

For the rest, the Board of Directors may, by adoption of Organizational By-laws, delegate the management of the Company within the limits of the law to an individual member of the Board of Directors, to a group of members of the Board of Directors or to a third party.

Art. 17 — Signing Authority

The Board of Directors determines those of its members as well as those third parties who shall have signing authority for the Company. The Board of Directors shall further determine the manner in which such persons may sign on behalf of the Company.

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 9/12

Art. 18 — Convocation of Meetings

The President or any of the Vice-Presidents of the Board of Directors shall call meetings of the Board as often as circumstances call for or if a member so requires and specifies the reasons. The convening shall take place within two weeks. The convocation shall be made not less than ten days before the meeting is held in writing (or by telefax or e-mail if the sender can be identified as the relevant member of the Board of Directors) and by announcing the agenda.

Art. 19 — Resolutions

In order to pass resolutions, the majority of the members of the Board of Directors must be present. Telephone conferences and video conferences are permitted if the participants can be identified unequivocally and clearly. No quorum of present members shall be necessary for resolutions of the Board of Directors providing for the confirmation of capital increases or for the amendment of the Articles of Incorporation in connection with capital increases.

The resolutions and elections by the Board of Directors require a majority of the votes cast. The Chairperson shall have a casting vote.

Resolutions may be adopted by way of circular letter, including telegram, telefax and e-mail (if the sender can be identified as the relevant member of the Board of Directors), provided that no member requests a verbal discussion. In case of circular resolutions, the absolute majority of all votes is required.

The negotiations and the resolutions of the Board of Directors shall be kept in the minutes, which shall be signed by the Chairperson and the secretary.

C. Auditors and Group Auditors

Art. 20 — Term, Powers and Duties

The auditors and the Group auditors shall be elected by the General Meeting of Shareholders for a term of one year; they shall have the powers and duties vested in them by law.

The General Meeting of Shareholders may elect one or more further auditors who shall carry out the reviews to be made in connection with increases of the share capital (Art. 652f, Art. 653f and Art. 653i of the Swiss Code of Obligations).

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 10/12

IV. Business Year, Annual Financial Statement, Consolidated Financial Statement and Allocation of Profit

Art. 21 — Business Year

The Board of Directors shall determine the business year.

Art. 22 — Annual Financial Statement, Consolidated Financial Statement

The annual financial statement, consisting of the profit and loss statement, balance sheet and annex, and the consolidated financial statement shall be established in accordance with the provisions of the Swiss Code of Obligations, particularly Art. 662 et seq., and with generally accepted commercial principles and principles of the business segment.

Art. 23 — Allocation of Profit

Subject to the provisions on the allocation of profit provided for in the law, especially Art. 671 et seq. of the Swiss Code of Obligations, the General Meeting of Shareholders decides on the allocation of profit.

The General Meeting of Shareholders is authorized to create capital reserves other than the legally required reserves that shall be used to fulfil the Company’s purpose.

V. Dissolution and Liquidation

Art. 24

The General Meeting of Shareholders may at any time decide the dissolution and liquidation of the Company in accordance with the relevant provisions of the law and the Articles of Incorporation.

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 11/12

VI. Communications

Art. 25

Notifications of the Company to shareholders and to third parties shall be made by one publication in the Swiss Official Gazette of Commerce. The Board of Directors may determine additional means of communication.

Other communications to shareholders can be made in writing if the Company knows the relevant addresses.

VII. Contributions in Kind

Art. 26

In connection with the capital increase of the Company dated September 24, 2001, and according to the contribution in kind agreement dated September 24, 2001, the Company assumes as a contribution in kind (a) 1,000,000 fully paid registered shares of Converium AG, Zug, representing an aggregate value of CHF 12,000,000, and (b) 100 fully paid shares of Converium Holdings (North America) Inc, Delaware, U.S.A., representing an aggregate value of USD 1. In consideration for the contribution in kind, Zurich Financial Services, Zurich, c/o Zurich Insurance Company, Mythenquai 2, 8002 Zürich, shall receive 1,200,000 newly issued registered shares at a par value of CHF 10 each. The amount of the issue price exceeding the aggregate par value of the new shares of CHF 1.60 (corresponding to USD 1) shall be kept by the Company as capital surplus.

Art. 27

In connection with the capital increase of the Company dated September 24, 2001, the Company assumes as a contribution in kind a note, dated September 21, 2001, of Zurich Insurance Company, Mythenquai 2, 8002 Zurich, in the aggregate amount of CHF 900,000,000. In consideration for the contribution in kind, Zurich Financial Services, Mythenquai 2, 8002 Zurich, shall receive 38,790,000 newly issued registered shares at a par value of CHF 10. The amount of the issue price exceeding the aggregate par value of the new shares of CHF 512,100,000 shall be kept by the Company as capital surplus. The Company intends to contribute this note to Converium AG in the course of an increase of the share capital of Converium AG as a contribution in kind against issue of 39,000,000 new registered shares in Converium AG at a par value of CHF 10 each at a maximum issue price of CHF 900,000,000.

Zug, October 12, 2004

Statuten Converium Holding AG 08. Nov. 2001 — Revidiert 12. Okt. 2004 12/12

EX-1.4

Exhibit 1.4

Organizational By-laws
of Converium Holding AG

By-laws Converium Holding Ltd — revised April 11, 2005 Page 1 of 27

Table of Contents

	Basis and Overview			4
1.		Board of Directors		4
	1.1		Main Duties and Responsibilities	4
	1.2		Appointments and Dismissals	6
	1.3		Approvals	6
	1.4		Delegation of Duties and Responsibilities	7
	1.5		Meetings and Resolutions of the Board of Directors	7
	1.6		Constitution and Signing Authorities	8
	1.7		Information and Reporting, Confidentiality	9
	1.8		Remuneration	9
2.		Committees of the Board of Directors		10
	2.1		General	10
	2.2		Nomination Committee	11
	2.3		Remuneration Committee	11
	2.4		Finance Committee	12
	2.5		Audit Committee	12
3.		Chairman and Vice-Chairman of the Board of Directors		13
	3.1		Appointment	13
	3.2		Duties and Responsibilities	14
	3.3		Urgent Resolutions	14
4.		(deleted)5		14
5.		Global Executive Committee (GEC)		14
	5.1		Members	14
	•		Chief Executive Officer (“CEO”),	14
	•		Executive Vice-President Standard Property & Casualty Reinsurance (“Executive Vice-President Standard P&C Reinsurance”),	14
	•		Executive Vice-President Specialty Lines (“Executive Vice-President Specialty Lines”),	14
	•		Executive Vice-President Life & Health (“Executive Vice-President Life & Health”),	14
	•		Executive Vice-President responsible for underwriting controlling and retention management (“Chief Technical Officer”),	15
	•		Chief Actuary & Risk Officer (“Chief Risk Officer”),	15

	•		Chief Financial Officer (“CFO”), and	15
	•		General Counsel (“General Legal Counsel”)	15
	5.2		Main Duties and Responsibilities	15
	5.3		Approvals and Decisions	17
	5.4		Meetings	19
	5.5		Quorum, Voting, Abstention from Voting, Minutes, Reporting	19
6.		Chief Executive Officer (CEO)		20
	6.1		Main Duties and Responsibilities	20
	6.2		Approvals and Decisions	21
	6.3		Reporting, Delegation	22
7.		Business Segments		22
	7.1		Organization	22
	7.2		Duties and Responsibilities	23
	7.3		Reporting	24
	7.4		Management Principles (Structures)	24
8.		Run-Off Segment		25
	8.1		Organization	25
	8.2		Main Duties and Responsibilities	25
	8.3		Reporting	25
9.		Corporate Center		26
	9.1		Organization	26
	9.2		Duties and Responsibilities	26
	9.3		Reporting	26
10.		Internal Audit		27
	10.1		Organization	27
	10.2		Duties and Responsibilities	27
	27		Reporting	27
11.		Adoption and Amendment		27

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Basis and Overview

Converium Holding AG (the “Company”) is the parent holding company of the Converium group of companies (“Converium”). In this capacity, it is responsible for performing the duties of management, organization and financing not only in respect of itself but also in respect of all companies directly or indirectly controlled by it (the “Converium Companies”). In exercising this function, the Company’s corporate bodies shall not only adopt decisions which are binding on the Company itself but shall also define under the present Organizational By-laws standards for Converium Companies, at all times respecting the legally prescribed rights of said Converium Companies’ corporate bodies in respect of their independence and powers.

The Company builds on strong corporate governance. The Board of Directors is committed to comply with Swiss and international corporate governance policies and standards.¹

The board of directors of Converium Holding AG (the “Board of Directors”) has issued these Organizational By-laws based on Article 716b of the Swiss Code of Obligations (“CO”) and Article 16 of the Articles of Incorporation of the Company.

The Organizational By-laws set out the competencies, duties and responsibilities of the Board of Directors, the Committees of the Board of Directors (the “Committees of the Board of Directors”), the Chairman of the Board of Directors (the “Chairman”), the Vice-Chairman of the Board of Directors (the “Vice-Chairman”)⁵, Converium’s Global Executive Committee (the “Global Executive Committee”), the Chief Executive Officer of Converium (the “CEO”) as well as Converium’s global Business Segments (the “Business Segments”), the Converium Corporate Center (the “Corporate Center”), including Converium’s Internal Audit (the “Internal Audit”), each of them a “Functional Level"⁴.

The competencies, duties and responsibilities of each Functional Level are subject to the competencies, duties and responsibilities of the other Functional Levels described in these Organizational By-laws.

1 Board of Directors

1.1 Main Duties and Responsibilities

1.1.1	Strategic direction and configuration of the business of Converium, including but not limited to:
1.1.1.1	Decision on the strategy, the execution of the strategy as outlined in the strategic business plan and the strategic planning.
1.1.1.2	Decision on Converium’s underwriting principles.
1.1.1.3	Establishment of new lines of business activities outside the reinsurance business, discontinuation of lines of business activities outside the reinsurance business.
1.1.1.4	Approval of Converium’s strategic business plan.1
1.1.2	Principles of the organization of the Company and of Converium, including but not limited to the following items:
1.1.2.1	Decision on the major aspects of the corporate structure of the Company and of Converium.

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1.1.2.2	Determination of the principles of corporate governance and of Converium’s code of business conduct and ethics.1
1.1.2.3	Decision on the principles of compensation, incentive schemes and bonus payments for the employees.
1.1.2.4	Decision on the overall compensation of the CEO.5
1.1.2.5	Creation and elimination of Functional Levels.
1.1.2.6	Change of company names and business logos other than changes to the Company name and business logo of Converium.
1.1.2.7	Transfer of the business domiciles of the Company, Converium AG, Converium Reinsurance (North America) Inc. and Converium Rückversicherung (Deutschland) AG and Converium Insurance (UK) Ltd or any other Converium Company whose formation requires the approval of the Board of Directors (1.3.1.1).1
1.1.2.8	Appointment, dismissal and supervision of the Global Executive Committee.
1.1.3	Principles of financial planning and control, including but not limited to the following items:
1.1.3.1	Determination of the accounting standards and approval of material changes to the accounting principles.
1.1.3.2	Approval of Converium’s financial plans and administration expense budget and forecast.1
1.1.3.3	Determination of Converium’s risk management policy, reserve policy, investment policy, treasury policy, solvency and liquidity planning.
1.1.3.4	Approval of the strategic asset allocation of Converium’s investment portfolio.
1.1.3.5	Determination of Converium’s tax planning policy.
1.1.3.6	Determination of the allocation of any Converium expenses to be charged to the Corporate Center.1, 4
1.1.3.7	Carrying out capital increases of the Company, subject to a decision by the shareholders’ meeting, and use of contingent and/or authorized share capital of the Company and any capital increases in subsidiaries in excess of USD 20 million.
1.1.3.8	Determination of Converium’s year-end results and reserve policy and determination of the Company’s year-end results and dividend policy, subject to a decision by the shareholders’ meeting.
1.1.3.9	Listing and de-listing of the Company on a stock exchange.
1.1.4	Determination of the principles of internal audit.
1.1.5	Additional duties which are non-transferable and inalienable by mandatory law (Article 716a para. 1 CO):
1.1.5.1	Preparation of the business report (Art. 663d CO) as well as of the annual shareholders’ meeting (Art. 698 et seq. CO) and implementation of its resolutions.
1.1.5.2	Notification of the judge in case of over-indebtedness of the Company (Arts. 725-725a CO).
1.1.5.3	Instruction of a specially qualified auditor to examine, after the conclusion of each business year, whether the issue of new shares within the frame of a conditional capital increase has been made in conformity with the law and with the Articles of Incorporation and, if required, with the prospectus (Art 653f CO).
1.1.5.4	(A) Establishment, upon receipt of the examination referred to in the preceding paragraph, in the form of a notarized deed of (i) the number, par value and type of the newly issued shares, (ii) the preferential rights of individual classes of shares and (iii) of the amount of the share capital at the end of the

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	business year, (B) amendment of the Articles of Incorporation and (C) filing of the amendment of the Articles of Incorporation with the Commercial Register not later than three months after the conclusion of the relevant business year (Arts. 653g and 653h CO).
1.1.5.5	Examination of the professional skills of the specially qualified auditors where their appointment is provided for by the law.
1.1.5.6	Passing of resolutions regarding the subsequent payment of capital with respect to non-fully paid-in shares.
1.1.5.7	The Board of Directors may assign the preparation and the implementation of its resolutions as well as the supervision of individual business transactions to committees, individual members of the Board of Directors, to the Global Executive Committee, to the CEO or to the management of the Company or of any Converium Company. It shall provide for adequate reporting to the Board of Directors.

1.2 Appointments and Dismissals

The Board of Directors shall make the appointments and dismissals of the following functions:

1.2.1	Members of the Committees of the Board of Directors and their chairpersons.
1.2.2	Chairman and Vice-Chairman of the Board of Directors.
1.2.3	Global Executive Committee.
1.2.4	Head of Run-Off Segment.5
1.2.5	External auditors based on the recommendation of the Audit Committee, subject to approval by the shareholders’ meeting.1
1.2.6	Board members shall be eligible for a maximum of 4 terms of office, unless extended by the Board of directors beyond the 4 terms.4

1.3	Approvals
1.3.1	The following transactions and actions require the final approval of the Board of Directors in order to become effective:
1.3.1.1	Formation of any insurance/reinsurance company, merger, full or partial acquisition or sale or other divestiture of a company or of another participation involving the Company or any Converium Company, including the entering into a joint venture.1
1.3.1.2	Other than as provided for in the preceding paragraph, full or partial acquisition or sale or other divestiture of a business (other than intra-Converium).
1.3.1.3	Any transaction involving a portfolio transfer by a Converium Company (understood to be a transfer of the original liabilities and obligations to the original policyholders) transferring a substantial part of a Business Segment’s portfolio to a third party or the establishment of new lines of business or discontinuation of existing lines of business representing a substantial part of a Business Segment’s business (such part representing, in either case, more than 25% of the portfolio of the relevant Business Segment).
1.3.1.4	Investments by the Company or any Converium Company not made at arms’ length market conditions.

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1.3.1.5	Entering into contracts or contractual arrangements with unusual terms or which may have a material impact upon the strategic position of the Company or Converium.
1.3.1.6	Acquisition, disposal, hypothecation of real estate unless such acquisition, disposal or hypothecation is based upon prior general approval by the Board of Directors.
1.3.1.7	Other than in connection with reinsurance arrangements of any type, issuing or guaranteeing public bonds, whether or not listed on a stock exchange, through a guarantee, keep well agreement or similar arrangement.1
1.3.1.8	Other than in connection with reinsurance arrangements of any type or inter-company loans as defined in the Treasury Policy, taking up loans, and entering into similar transactions exceeding the amount of USD10 millions per transaction or series of transactions.5
1.3.1.9	Other than in connection with reinsurance arrangements of any type, granting loans, guarantees and entering into similar transactions exceeding the amount of USD10 millions per transaction.
1.3.1.10	Expenses and capital expenditures beyond the approved budget exceeding the amount of USD10 millions per transaction.
1.3.1.11	Entering into law-suits and settlements (a) if the case involved is likely to have a major impact on the reputation of Converium or (b) if the case involved is outside the ordinary course of the reinsurance business and the amount involved exceeds USD10 millions per case.

1.4 Delegation of Duties and Responsibilities

1.4.1 In all respects other than those set forth in Sections 1.1 - 1.3, the Board of Directors hereby fully delegates the management of the Company and of Converium to the CEO, subject to the powers and duties delegated to the Committees of the Board of Directors, the Chairman and the Vice-Chairman⁵, the Global Executive Committee, the Business Segments and the Corporate Center, all as set forth in these Organizational By-laws.⁴

1.5 Meetings and Resolutions of the Board of Directors

1.5.1	Meetings, Convocation and Agenda
1.5.1.1	The meetings of the Board of Directors are called by the Chairman or the Vice-Chairman, or, if one of them is prevented from doing so, by another member of the Board of Directors. Meetings of the Board of Directors may also be held by way of a telephone conference or a video conference.
1.5.1.2	The Board of Directors shall meet as often as circumstances call for, at least four times a year. Moreover, a meeting of the Board of Directors shall immediately be called upon the request of any of its members. Such a request (by letter, telephone, telefax, telex or e-mail) should be addressed to the Chairman or the Vice-Chairman by indicating the items to be submitted to the Board of Directors.1
	Additionally, the members of the Board shall meet at regularly scheduled sessions without management.1
1.5.1.3	Meetings shall be called with ten days’ written or telefax or e-mail notice (if the sender can be identified as the relevant member of the Board of Directors) specifying the agenda. The Chairman or the Vice-Chairman sets the agenda for the meeting of the Board of Directors.

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1.5.1.4	If a member of the Board of Directors wishes to put an item on the agenda, such member needs to notify the Chairman or the Vice-Chairman at least five days in advance of the date of the meeting. All members of the Board of Directors have to be notified immediately of amendments to the agenda by the Chairman or the Vice-Chairman or the Secretary of the Board of Directors.
1.5.1.5	If all members of the Board of Directors agree or are present and no objection is raised, the meeting may be held without observing the aforementioned formal requirements. At such a meeting, discussions may be held and resolutions passed on all business matters within the scope of authority of the Board of Directors.
1.5.1.6	Absent members of the Board of Directors may not be represented.
1.5.1.7	The Chairman or the Vice-Chairman or, if either of them is prevented from doing so, another member of the Board of Directors to be designated by the members present, shall preside at the meeting.4, 5
1.5.1.8	Other individuals may be invited to meetings of the Board of Directors to discuss specific agenda items.
1.5.2	Quorum, Voting, Abstention from Voting, Minutes.
1.5.2.1	The Board of Directors constitutes a quorum if the majority of its members is present. To pass resolutions requiring the establishment of a notarized deed, confirming increases in share capital and regarding the changes of the Articles of Incorporation entailed thereby, only one member of the Board of Directors needs to be present.
1.5.2.2	As far as these Organizational By-laws do not provide otherwise, the Board of Directors passes its resolutions by simple majority of votes cast, the member presiding over the meeting having a casting vote.
1.5.2.3	In the event of a vote on matters liable to give rise to a conflict of interest, the member involved in such conflict shall abstain from any discussions and from voting on the subject matter giving raise to such conflict.
1.5.2.4	Resolutions may be adopted by way of circular letter, including telefax and e-mail if the sender can be identified as the relevant member of the Board of Directors. Circular resolutions may also take the form of a meeting (including telephone conference or video conference) and a voting in the form of a circular letter (including telefax and e-mail) for those members of the Board of Directors who did not participate in the meeting. Each member of the Board of Directors may, however, request within ten days from the receipt of the respective motion that an item be discussed and a resolution thereon be taken at a meeting of the Board of Directors. Circular resolutions are passed by simple majority of all votes of the Board of Directors.4
1.5.2.5	The Board of Directors shall keep minutes. The minutes shall be signed by the member presiding over the relevant meeting as well as by the secretary of the meeting. The minutes must be approved by the Board of Directors at its next meeting.

1.6 Constitution and Signing Authorities

1.6.1	The Board of Directors constitutes itself. In particular, it appoints its Chairman and its Vice-Chairman. The Board of Directors also appoints a secretary (the “Secretary”) who does not need to be a member of the Board of Directors.
1.6.2	The signing authority of the members of the Board of Directors shall be determined by the Board of Directors. Its respective decisions are to be entered into the commercial register.

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1.7 Information and Reporting, Confidentiality

1.7.1	Each member of the Board of Directors will receive appropriate information with respect to any matter to be considered by the Board of Directors which will include for financial reporting purposes quarterly an appropriate reporting package including a consolidated balance sheet and a profit and loss account of the Company and its Business Segments.
1.7.2	At each of its meetings, the Board of Directors must be informed, by way of a formal report, by the CEO and the Executive Vice-Presidents of the Business Segments about the course of the business of the Segments and the activity of the Global Executive Committee. In case of important business incidents the Board of Directors shall be informed without delay.1, 4, 5
1.7.3	Apart from the meetings and the periodical information by the CEO, any member of the Board of Directors may request from the Chairman or the Vice-Chairman information concerning the course of the business and, with the authorization of the Chairman or the Vice-Chairman, also information concerning specific matters of the business.4, 5
1.7.4	To the extent necessary for the fulfillment of a duty, any member of the Board of Directors may apply to the Chairman or the Vice-Chairman to be shown the books and the files of the Company and of Converium. If the Chairman or the Vice-Chairman declines a request for information, the Board of Directors shall decide on the request.
1.7.5	The members of the Board of Directors, the Secretary and any further persons invited to attend meetings of the Board of Directors shall treat confidential all information on facts which come to their attention in the execution of their office and which are not otherwise public knowledge. All persons shall remain under the obligation to observe confidentiality even after termination of their mandates/employment.
1.7.6	When withdrawing from the respective function, a member of the Board of Directors or the Secretary must return all documents in any form which concern the affairs of the Company and Converium to the Chairman or the Vice-Chairman or the Secretary by no later than the end of their term of office.

1.8 Remuneration

1.8.1	The Board of Directors decides on the remuneration for its members according to their demand and responsibility and based on the proposals of the Remuneration Committee.
1.8.2	Expenses and disbursements shall be compensated in addition to this remuneration in accordance with the applicable expense guidelines of the Company. Extraordinary work beyond the normal activities of members of the Board of Directors shall be compensated in addition thereto according to customary rates.1
1.8.3	The remuneration of any employee of a Converium Company who agreed to serve as member of the board of directors of a Converium Company is considered a part of the normal compensation of such employee except if the by-laws of a Converium Company state otherwise.1

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2. Committees of the Board of Directors

2.1 General

2.1.1	Appointment, Meetings
2.1.1.1	The members of the Committees of the Board of Directors and their chairpersons shall be appointed by the Board of Directors. Each chairperson shall designate his deputy from among the members of the respective Committee of the Board of Directors.
2.1.1.2	Meetings of the Committees of the Board of Directors shall be chaired by the respective chairperson or deputy. The Committees of the Board of Directors shall meet as and when the need arises or if a member thereof so requests.
2.1.1.3	Each Committee of the Board of Directors may decide to invite persons, from time to time or on a regular basis, not being regular members of that Committee of the Board of Directors, to attend meetings of such Committee of the Board of Directors and to be involved in any project work of that Committee of the Board of Directors.
2.1.2	Quorum, Voting, Abstention from Voting, Minutes, Reporting
2.1.2.1	As far as these Organizational By-laws do not provide otherwise, a Committee of the Board of Directors constitutes a quorum if the majority of its members is present and resolutions are by simple majority of votes cast, the member presiding over the meeting having a casting vote.
2.1.2.2	In the event of a vote on matters liable to give rise to a conflict of interest, the member involved in such conflict shall abstain from voting on the subject matter giving raise to such conflict and abstain from any discussions if personally involved in the subject matter.
2.1.2.3	Resolutions may be adopted by way of circular letter, including telefax and e-mail if the sender can be identified as the relevant member of the respective Committee of the Board of Directors. Each member of a Committee of the Board of Directors may, however, request within ten days from the receipt of the respective motion that an item be discussed and a resolution thereon be taken at a meeting of the relevant Committee of the Board of Directors. Circular resolutions are passed by simple majority of all votes of the respective Committee of the Board of Directors.
2.1.2.4	Absent members of a Committee of the Board of Directors may not be represented.
2.1.2.5	The secretary appointed by the respective Committee of the Board of Directors shall keep the minutes of the meetings of that Committee of the Board of Directors.
2.1.2.6	The Committees of the Board of Directors report on a regular basis to the Board of Directors.

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2.2 Nomination Committee

2.2.1	The Nomination Committee shall consist of any number of members of the Board of Directors, as defined by the Board of Directors from time to time, but at least a minimum of three members.
2.2.2	The Nomination Committee shall appoint and dismiss the following persons:1
2.2.2.1	General Legal Counsel if not a member of the Global Executive Committee.5
2.2.2.2	Head of Internal Audit.
2.2.2.3	Outside directors in Converium Companies unless such appointment or dismissal is required by regulatory law or order, in which case such appointment or dismissal is the responsibility of the CEO.2
2.2.3	The Nomination Committee shall assess and submit to the Board of Directors for approval its proposal for the appointment of the following persons:
2.2.3.1	Members of the Board of Directors, of the Committees of the Board of Directors and of their chairpersons.
2.2.3.2	Chairman and Vice-Chairman of the Board of Directors.
2.2.3.3	Members of the Global Executive Committee.
2.2.3.4	Head of Run-Off Segment.5
2.2.4	The Nomination Committee shall define and implement procedures for the following activities:1
2.2.4.1	Annual self-evaluation of the performance of the Board of Directors, and its committees.1
2.2.4.2	Annual statement of independence of the Board of Directors, disclosure of any conflict of interests and any agreements concluded with the Company or any of its subsidiaries.1
2.2.4.3	Orientation program for new Board Members.1

2.3 Remuneration Committee

2.3.1	The Remuneration Committee shall consist of any number of members of the Board of Directors, as defined by the Board of Directors from time to time, but at least a minimum of three members.
2.3.2	The Remuneration Committee shall assess and decide upon the following items:
2.3.2.1	Overall compensation of each of the members of the Global Executive Committee, other than the CEO.
2.3.2.2	Overall compensation of the Head of Internal Audit.1
2.3.3	The Remuneration Committee shall assess and submit to the Board of Directors for approval its proposal for the following items:
2.3.3.1	Overall compensation to be received by each of the members of the Board of Directors.
2.3.3.2	Principle of compensation, of the incentive schemes and on bonus payments for the employees.1, 4
2.3.3.3	(deleted)5
2.3.3.4	Overall compensation of the CEO.

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2.4 Finance Committee

2.4.1	The Finance Committee shall consist of any number of members of the Board of Directors, as defined by the Board of Directors from time to time, but at least a minimum of three members.
2.4.2	The Finance Committee shall decide the following items:
2.4.2.1	Approve external providers for asset management services on behalf of Converium and main banks of Converium.
2.4.2.2	Any capital increases in subsidiaries between USD 5 Mio and USD 20 Mio.1
2.4.3	The Finance Committee shall assess and submit to the Board of Directors for approval its proposal for the following items:
2.4.3.1	The accounting standards framework to be applied by the Company and the selection of the material options allowed by such framework as well as any change of the accounting standards framework or the respective material options.
2.4.3.2	Yearly Converium’s budget and financial plans.1
2.4.3.3	Converium’s investment policy, treasury policy and solvency and liquidity planning.1
2.4.3.4	Strategic asset allocation of Converium’s investment portfolio.
2.4.3.5	Converium’s tax planning policy.
2.4.3.6	Determine the allocation of any Converium expenses to be charged to the Corporate Center.
2.4.3.7	Carrying out of capital increases of the Company and use of contingent and/or authorized share capital of the Company.
2.4.3.8	(deleted)5
2.4.3.9	Listing and de-listing of the Company on a stock exchange.

2.5 Audit Committee

2.5.1	The Audit Committee shall consist of the Chairman of the Board of Directors and the respective Chairman of each of the Finance, the Nomination and the Remuneration Committee. Only independent 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.
	A majority of the members has to be financially literate.1
2.5.2	The Audit Committee shall carry out the following functions and submit to the Board of Directors regular reports on its activities and findings:
2.5.3	Financial Reporting:
2.5.3.1	Recommend the appointment and dismissal of the External Auditors to the Board of Directors and overview the External Auditors.1
2.5.3.2	Cooperation with the internal and external auditors in order to identifying any possible deficiencies in the internal control mechanisms of Converium.
2.5.3.3	Review of significant accounting and reporting issues and assess their impact upon Converium’s financial statements.

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2.5.4	Semi-annual and annual financial statements and any other quarterly financial statements, where the Audit Committee reports to the Finance Committee:1
2.5.4.1	Review of any financial statements and determine whether they are complete and consistent with the information known to the members of the Board of Directors and assess whether such statements reflect the appropriate accounting principles.
2.5.4.2	Gaining an independent understanding of Converium’s involvement in complex and/or unusual transactions with a major impact upon its financial, market position or its position towards regulatory bodies.
2.5.4.3	Review of the scope and general extent of the internal and external audit, including its cost effectiveness.
2.5.4.4	Review of the independence and objectivity of the external auditors.
2.5.4.5	Review of the nature and extent of non-audit services provided by the external auditors.
2.5.4.6	Approve quarterly and half-year results (except 4th quarter).3
2.5.5	Converium’s year-end results and reserve policy and for the Company’s year-end results and dividend policy.5
2.5.6	Communication of financial results:
2.5.6.1	Being briefed on how the Company’s management is developing preliminary external announcements and interim financial information.
2.5.6.2	Assessing the fairness of such preliminary and interim statements on the basis of Converium’s applicable accounting principles.
2.5.7	Risk Management1
2.5.7.1	Liaising with the risk management functions in identifying and reviewing Converium’s areas of greatest financial risk and their efficient management and supervision of the framework for Converium’s auditing process.1
2.5.7.2	Assess and submit to the Board of Directors for approval Converium’s Risk Management Policy.1
2.5.7.3	Review and approve the yearly risk management report, Converium’s risk assessment catalogue and action plans.1
2.5.7.4	Establish procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (b) confidential, anonymous submissions by employees of concerns regarding questionable accounting and auditing matters or information regarding violation of securities or any other applicable laws.1

3. Chairman and Vice-Chairman of the Board of Directors

3.1 Appointment

The Chairman and the Vice-Chairman are appointed by the Board of Directors.

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3.2 Duties and Responsibilities

3.2.1	In addition to his function as a member of the Board of Directors, the powers and duties of the Chairman are in particular the following:
3.2.1.1	Organization and preparation of the meetings and resolutions of the shareholders as well as calling, organization and preparation of the meetings and the resolutions of the Board of Directors.
3.2.1.2	Presiding over the shareholders’ meetings as well as over the meetings of the Board of Directors.
3.2.1.3	Immediate information of the Board of Directors on all incidents, questions and developments of extraordinary importance for the Company and for Converium.
3.2.1.4	Appropriate information of the Board of Directors on reports, proposals, information and other communication received from the CEO.
3.2.1.5	Ensuring the close cooperation between the Board of Directors and the Committees of the Board of Directors.
3.2.1.6	Representation of the overall interests of Converium towards the authorities, business organizations and other third parties, in conjunction with the CEO.
3.2.2	The Chairman is at any time entitled, but not obliged, to attend meetings of any Committee of the Board of Directors in an advisory function, and to inspect the files of the Committees of the Board of Directors.
3.2.3	The Vice-Chairman shall support the Chairman in his functions and may, in the absence of the Chairman or if otherwise deemed useful, temporarily assume the functions of the Chairman.

3.3 Urgent Resolutions

If the urgency of a matter does not allow the convening of a meeting of the Board of Directors in presence or by way of a telephone conference or a video conference, the resolutions listed in Section 1.3 may be taken by the Chairman or in the absence of the Chairman or if otherwise deemed useful, by the Vice-Chairman.

4. (deleted)⁵

5. Global Executive Committee (GEC)

5.1 Members

The Global Executive Committee shall consist of the following members representing the Company and/or Converium:

• Chief Executive Officer (“CEO”),

• Executive Vice-President Standard Property & Casualty Reinsurance (“Executive Vice-President Standard P&C Reinsurance”),

• Executive Vice-President Specialty Lines (“Executive Vice-President Specialty Lines”),

• Executive Vice-President Life & Health (“Executive Vice-President Life & Health”),

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• Executive Vice-President responsible for underwriting controlling and retention management (“Chief Technical Officer”),

• Chief Actuary & Risk Officer (“Chief Risk Officer”),

• Chief Financial Officer (“CFO”), and

• General Counsel (“General Legal Counsel”)

who are appointed by the Board of Directors.

Each of the CFO, the Chief Risk Officer and the General Legal Counsel shall also be an Executive Vice-President (“Executive Vice-President”).

5.2 Main Duties and Responsibilities

5.2.1	The Global Executive Committee is responsible for the management of the Company and Converium, in accordance with these Organizational By-laws, in particular it shall be confined by the powers and duties of the Board of Directors, the Committees of the Board of Directors, the Chairman and the Vice-Chairman, the Business Segments and the Corporate Center.4, 5
5.2.2	The following shall be the main duties and responsibilities of the members of the GEC with respect to the Company and/or Converium as the case may be:
5.2.2.1	Chief Executive Officer5

— Responsibility for the overall management

— CEO Office

— Global Human Resources & Succession Planning

— Corporate Communication and Investor Relations

— Corporate Development

— Strategic planning of reinsurance business including market cycle management

— Responsibility for the Run-Off Segment

5.2.2.2 Executive Vice-President Standard Property & Casualty Reinsurance

— Managing assigned lines of business

— Responsibility for the Segment income including reserves set in accordance with Converium’s reserve policy and operational cash flows of Standard Property & Casualty Reinsurance

— Responsibility for assigned clients

— Responsibility for all business generated in assigned geographical markets, including responsibility for profit and loss and operational cash flows for the respective clients

— Responsibility for statutory and regulatory issues concerning any assigned legal entities

5.2.2.3 Executive Vice-President Specialty Lines

— Managing assigned lines of business

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— Responsibility for the Segment income including reserves set in accordance with Converium’s reserve policy and operational cash flows of Specialty Lines

— Responsibility for assigned clients

— Responsibilities for all business generated in assigned geographical markets, including responsibility for profit and loss and operational cash flows for the respective clients

— Responsibility for statutory and regulatory issues concerning any assigned legal entities

5.2.2.4 Executive Vice-President Life & Health

— Managing assigned lines of business

— Responsibility for the Segment income including reserves set in accordance with Converium’s reserve policy and operational cash flows of Life & Health

— Responsibility for assigned clients

— Responsibility for all business generated in assigned geographical markets, including responsibility for profit and loss and operational cash flows for the respective clients

— Responsibility for statutory and regulatory issues concerning any assigned legal entities

5.2.2.5 Chief Technical Officer⁵

— Responsibility for all of Converium’s underwriting controlling and audit

— Run-off and commutations not part of the Run-Off Segment

— Global claims management

5.2.2.6 Chief Risk Officer⁵

— Responsibility for all actuarial support and services functions for Converium’s life and non-life business; and the tasks of Chief or Appointed Actuary where appropriate, including responsibility for the following

— Pricing

— Reserving

— Risk Modeling/Asset Liability Management (ALM)

— Risk Management

— Capital Allocation

— Planning, budgeting and execution of global retention management strategy including retrocessions and Global Risk Pooling

5.2.2.7 Chief Financial Officer

— Financial Controlling

— Financial Accounting, incl. Consolidation

— Reinsurance Accounting

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— Investment & Treasury

— Information Technology (IT)

— Tax

5.2.2.8 General Legal Counsel

— Board of Directors and Company Secretary

— GEC legal affairs

— Corporate Governance

— General and corporate Legal

— Regulatory matters

— Share Register

— Transactional Legal & Contracts

5.2.3 Subject to the powers and authorities as defined in these Organizational By-Laws the Global Executive Committee may change any of these duties and responsibilities as shall become necessary from time to time.

5.3 Approvals and Decisions

5.3.1	The following transactions and actions require the final approval of the Global Executive Committee in order to become effective:
5.3.1.1	Strategic Planning and Business Development

a)	Strategic planning submitted by the Business Segments, the Chief Technical Officer, the Chief Risk Officer and the CFO and submission of the strategic planning as well as Converium’s overall global strategy to the Board of Directors for approval.
b)	Portfolio transfer or establishment of new lines of business or discontinuation of existing lines of business not subject to the approval of the Board of Directors as per paragraph 1.3.1.3.
c)	Geographical expansion into new regions, withdrawal from regions.
d)	Opening and closing of branch offices and representative offices.

5.3.1.2 Underwriting

a) Underwriting guidelines submitted by the Chief Technical Officer.

5.3.1.3 Pricing and Reserving

a)	Pricing guidelines, methodologies and profitability thresholds to be applied in pricing as submitted by the Chief Risk Officer.
b)	Risk measures, safety level and the corresponding Risk Based Capital allocation according to the risk model submitted by the Chief Risk Officer.
c)	Reserving guidelines, methodologies and reporting standards to be applied as submitted by the Chief Risk Officer.

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5.3.1.4 Finance

a)	Other than in connection with reinsurance arrangements of any type, taking up loans and entering into similar transactions exceeding the amount of USD2.5 millions but not more than USD10 millions per transaction or series of transactions.
b)	Other than in connection with reinsurance arrangements of any type, granting loans, guarantees and entering into similar transactions exceeding the amount of USD2.5 millions but not USD10 millions per transaction or series of transactions.
c)	Expenses and capital expenditures beyond the approved budget exceeding the amount of USD2.5 millions but not USD10 millions per transaction or series of transactions.
d)	Change of the accounting policies or principles (other than with respect to changes which are within the competence of the Board of Directors).
e)	External providers for asset management services, and mandates to external asset managers to manage assets on behalf of Converium out of the list of providers approved by the Board of Directors.
f)	Appointment and dismissal of main banks of Converium as per the list of banks approved by the Board of Directors.
g)	Acquisition or disposal of direct alternative investments within the approved strategic asset allocation. Alternative investments include private equity and hedge funds, as well as cat bonds, commodities and equity tranches of collateralized bond portfolios.
h)	Securities lending and any confirmation thereof, which shall be performed at least once a year, as per the approved strategic asset allocation.
i)	Review of statutory financial accounts of the main legal entities of Converium.

5.3.1.5 Business Organization

a) Approval of the organizational structures of the Business Segments as well as the offices led by the CEO, Chief Technical Officer, Chief Risk Officer, CFO and the General Legal Counsel.

5.3.1.6 Risk Retention

a)	Strategy and budget for the global retention management including retrocessions and Global Risk Pooling.
b)	Issuing or guaranteeing public bonds in connection with reinsurance arrangements of any type, whether or not listed on a stock exchange, through a guarantee, keep well arrangement or similar arrangement.

5.3.1.7 Human Resources

a)	Appointment of or prior authorization of appointment of any corporate function required by legal and/or regulatory requirements, such as corporate actuary, chief financial, risk or compliance officers.
b)	Appointments and dismissals or promotions of any of the GEC members’ direct reporting management staff.
c)	Global and Segment (incl. Corporate Center) human resources strategy, including for the Services Layer and the Business Support Layer.
d)	Global promotion policy.

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e) Principles of and budget for global training and development programs.

5.3.1.8 Marketing and Communication Strategy

a) Converium’s Investor Relations (IR) and its marketing and communication strategies.

5.3.1.9 Legal and Governance

a)	Long-term lease, leasing, consultant, co-operation and agency agreements exceeding the amount of USD 10 millions per transaction or series of transactions.
b)	Entering into law-suits and settlements (a) if the case involved is within the ordinary course of the reinsurance business and the amount involved is more than USD2.5 millions per case or (b) if the case involved is outside the ordinary course of the reinsurance business and the amount involved is not more than USD10 millions per case (in each case other than with respect to cases which are likely to have a major impact on the reputation of Converium which are within the competence of the Board of Directors).
c)	Decision on the exercise of voting rights in shareholders’ meetings of the Converium Companies and joint ventures of Converium which are key subsidiaries or key joint ventures.

5.3.1.10 Global IT strategy

a) Converium’s global IT strategy as well as any key deliverables for its implementation.

5.3.1.11 Matters requiring approval by Board of Directors or its Committees

a) Preparation of any matters which require the approval of the Board of Directors or any of the Committees of the Board of Directors in accordance with Converium’s Organizational By-laws (such as quarterly, semi-annual and annual financial accounts, budget, investment, compensation matters and succession plans etc.).

5.4 Meetings

5.4.1

Meetings of the Global Executive Committee shall be chaired by the CEO, in his absence by the CFO or any other member of the Global Executive Committee appointed by the CEO. The Global Executive Committee shall meet monthly or more frequently if and when the need arises or if a member thereof so requests. Meetings of the Global Executive Committee may also be held by way of a telephone conference or a video conference.

5.4.2

The Global Executive Committee5 may decide to invite other persons, from time to time or on a regular basis, not being regular members of the Global Executive Committee, to attend meetings of the Global Executive Committee and to be involved in any project work of the Global Executive Committee.4

5.5 Quorum, Voting, Abstention from Voting, Minutes, Reporting

5.5.1	As far as these Organizational By-laws do not provide otherwise, the Global Executive Committee constitutes a quorum if the majority of its members is present and resolutions are by simple majority of votes cast, the member presiding over the meeting having a casting vote.5
5.5.2	In the event of a vote on matters liable to give rise to a conflict of interest, the member involved in such conflict shall abstain from any discussions and from voting on the subject matter giving raise to such conflict and abstain from any discussions if personally involved in the subject matter.

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5.5.3	Resolutions may be adopted by way of circular letter, including telefax and e-mail if the sender can be identified as the relevant member of the Global Executive Committee. Each member of the Global Executive Committee may, however, request as soon as possible from the receipt of the respective motion that an item be discussed and a resolution thereon be taken at a meeting of the Global Executive Committee. Circular resolutions are passed by simple majority of all votes of the Global Executive Committee.
5.5.4	Absent members of the Global Executive Committee may not be represented.
5.5.5	The secretary appointed by the Global Executive Committee shall keep the minutes of the meetings of the Global Executive Committee.
5.5.6	The Global Executive Committee reports on a regular basis to the Board of Directors.
5.5.7	(deleted)5

6. Chief Executive Officer (CEO)

6.1 Main Duties and Responsibilities

6.1.1	The CEO is responsible for the management of the Company and Converium, in accordance with these Organizational By-laws, in particular he shall be confined by the powers and duties of the Board of Directors, the Committees of the Board of Directors, the Chairman and the Vice-Chairman5, the Global Executive Committee, the Business Segments and the Corporate Center.4
6.1.2	The management responsibilities of the CEO include, in particular, the following items:
6.1.2.1	Conducting and management of the entire operational activities of the Company and of Converium and imposition of the measures which the organization of the Company and the Converium Companies require.
6.1.2.2	Execution of the resolutions taken by the Board of Directors and by the Global Executive Committee.
6.1.2.3	Issuance of the necessary instructions to and supervision of the Business Segments, the members of the management and the other employees.
6.1.2.4	Organization of and presiding at the meetings of the Global Executive Committee.
6.1.2.5	Representation of the overall interests of Converium towards the authorities, business organizations and other third parties, in conjunction with the Chairman.
6.1.2.6	Establishing and presiding a Disclosure Committee with responsibility for considering the materiality of information and determining disclosure obligations on a timely basis. The Disclosure Committee reports to the Audit Committee. It creates a charter that defines its purpose, role, responsibilities and authority. This charter has to be approved by the Audit Committee.5
6.1.2.7	Representation of Converium towards employees and their organizations as well as the pension funds.
6.1.2.8	Regular reporting to5 the Board of Directors and immediate information of5 the Board of Directors of all incidents, questions and developments of extraordinary importance for the Company and for Converium.4

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6.1.2.9	Quarterly submission to the Board of Directors of an appropriate reporting package including consolidated balance sheets and profit and loss accounts.
6.1.2.10	Submission to the Board of Directors of a yearly Converium business plan and a yearly Converium budget for the upcoming year by the end of the fourth quarter of each business year.
6.1.2.11	Preparation and continuous control of the budgets as compared to the actual figures.
6.1.2.12	Submission to5 the Board of Directors of proposals regarding the objectives and the principles of Converium’s human resources policy, which include, but are not limited to, strategies on salaries and incentives, employee participation, training and internal communication and personnel planning.4
6.1.2.13	Submission to5 the Board of Directors of proposals regarding the long-term policy and strategy with regard to management, development and organizational structure of the Company and of Converium.4
6.1.2.14	Informing the Global Executive Committee5 and the Board of Directors without delay of any irregularities or inadequacies concerning the management of Converium or individual members thereof.
6.1.2.15	Submission of proposals to5 the Board of Directors or the Global Executive Committee concerning items, which are within their duties and responsibilities or subject to their approval or decision as provided for in these Organizational By-laws.4

6.2 Approvals and Decisions

6.2.1	The following transactions and actions require the final approval of the CEO in order to become effective:
6.2.1.1	Other than in connection with reinsurance arrangements of any type, taking up loans and entering into similar transactions up to an amount of USD2.5 millions per transaction or series of transactions.
6.2.1.2	Other than in connection with reinsurance arrangements of any type, granting loans, guarantees and entering into similar transactions up to an amount of USD2.5 millions per transaction or series of transactions.
6.2.1.3	Expenses and capital expenditures beyond the approved budget exceeding the amount of USD1 million but not more than USD2.5 millions per transaction or series of transactions.
6.2.1.4	Long-term lease, leasing, consultant, co-operation and agency agreements exceeding the amount of USD1 million but not more than USD10 millions per transaction.
6.2.1.5	Entering into law-suits and settlements if the case involved is within the ordinary course of business and if the amount involved is more than USD1 million but not more than USD2.5 millions per case (in each case other than with respect to cases which are likely to have a major impact on the reputation of Converium which are within the competence of the Board of Directors).
6.2.1.6	Appointment of any employee with a base salary in excess of USD350,000 per year.
6.2.1.7	Taking of all necessary action in view of the ad hoc publicity requirements vis-à-vis the SWX Swiss Exchange or any other relevant stock exchange.
6.2.1.8	Appointment and dismissal of the members of the board of directors (or any equivalent administrative and/or supervisory bodies) of the Converium Companies provided such appointment or dismissal is required by any supervisory law or order2, or the members of the board of directors of the strategic participations as well as the heads of the Corporate Center (other than the members of the Global Executive Committee and the Head of Internal Audit).

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6.2.1.9 Decision on the exercise of voting rights in shareholders’ meetings of the Converium Companies and joint ventures of Converium other than key subsidiaries and joint ventures.

6.3 Reporting, Delegation

6.3.1	The CEO reports on a regular basis to5 the Board of Directors, in accordance with the instructions issued by the Board of Directors.4
6.3.2	Unless provided for differently in these Organizational By-laws, the CEO shall submit reports, proposals, information and other communication addressed to the Board of Directors to the Chairman and the Vice-Chairman.5
6.3.3	The CEO may delegate some of its powers and duties set forth herein, or assign the preparation and the implementation of any of its obligations, to the management of Converium, or to any member thereof, or to any other subordinates. In such event, the CEO shall provide for adequate instructions, supervision, reporting and controlling of those persons.

7. Business Segments

7.1 Organization

7.1.1 The business activities of Converium shall be organized in three global Business Segments consisting of

a)	Standard Property & Casualty Reinsurance
b)	Specialty Lines
c)	Life & Health Reinsurance

Additionally, the organization shall comprise the Run-Off Segment which shall ensure an effective and orderly run-off of business written by the US operations.⁵ (cf. para 7) and the Corporate Center (cf. para. 8), which shall provide services to Converium and the Company The Business Segments shall be supported in their activities by the following functions:

7.1.2

The Business Support Layer which shall comprise actuarial and risk modeling services, strategic planning and cycle management, Asset Liability Management (ALM), capital/risk based capital allocation, Retrocessions and Global Risk Pooling (GRP), claims services, transactional legal services, underwriting controlling services and as well as any other services necessary from time to time in the management of the business of the respective Business Segment.

7.1.3

The Services Layer which shall comprise financial functions, information technology (IT), human resources services, general and corporate legal services as well as any other services necessary from time to time in the management of the business of the respective Business Segment.

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7.2 Duties and Responsibilities

7.2.1	The management responsibility for the respective functions of the Business Support Layer and the Services Layer shall be with the respective GEC member, i.e. the CEO, the CFO, the Chief Risk Officer, the Chief Technical Officer and the General Legal Counsel to whom such function is allocated.
7.2.2	The Executive Vice-Presidents for the Business Segments and the Chief Technical Officer, as the case may be, are responsible for the management of the assigned Business Segment and/or the assigned geographical areas and/or assigned legal entity, in accordance with these Organizational By-laws, in particular they shall be confined by the powers and duties of the Board of Directors, the Committees of the Board of Directors, the Chairman and the Vice-Chairman5, the Global Executive Committee, the CEO and the Services Layer and the Business Support Layer.4
7.2.3	The Executive Vice-Presidents for the Business Segments and the Chief Technical Officer establish a process in order to ensure that in all legal entities and markets consistent underwriting principles for all lines of business are applied and business is transacted in a manner commensurate with Converium’s overall interests.5
7.2.4	Subject to the instructions issued from time to time by the CEO, the Executive Vice-Presidents for the Business Segments and the Chief Technical Officer, as well as the CFO, the Chief Risk Officer and the General Legal Counsel, as the case may be, have the following main duties, responsibilities and competencies with respect to their assigned Business Segment and/or the assigned areas of responsibility and/or assigned legal entity:4
7.2.4.1	Provide strategic guidance and management to and execute Converium’s strategy in the assigned Business Segment and assigned geographical area.4
7.2.4.2	Responsibility for the assigned Business Segment’s financial results, the segment income, including reserves set in accordance with Converium’s reserve policy and operational cash flows.
7.2.4.3	Building a diversified and balanced portfolio of risks in the assigned geographical area of responsibility.
7.2.4.4	Ensure availability and prudent management of all necessary financial, technical, human and other resources for the assigned area of responsibility.
7.2.4.5	Ensure availability and application of all necessary underwriting guidelines, standards and principles as well as any other relevant regulations and guidelines.
7.2.4.6	Ensure application of all relevant pricing and reserving guidelines, standards and principles.
7.2.4.7	Preparation of the strategic planning and submission of the strategic planning to the Global Executive Committee for review.
7.2.4.8	Appointments and dismissals or promotions of any staff for the assigned Business Segment, unless reserved to any other corporate body of Converium.
7.2.4.9	Represent any assigned Converium Company in respect of all local statutory matters such as regulatory, tax, corporate legal and administrative matters and managing all administrative matters of any assigned Converium Company, provided such function is not reserved to any other corporate body by law or otherwise.
7.2.4.10	Expenses and capital expenditures beyond the approved budget of the respective Business Segment up to an amount of USD1 million per transaction or series of transactions.

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7.2.4.11	Long-term lease, leasing, consultant, co-operation and agency agreements up to an amount of USD1 million per transaction or series of transactions.
7.2.4.12	Upon prior approval by the General Legal Counsel, entering into law-suits and settlements if the case involved is within the ordinary course of business and if the amount involved is not more than USD1 million per case (in each case other than with respect to cases which are likely to have a major impact on the reputation of Converium which are within the competence of the Board of Directors).

7.3 Reporting

The Executive Vice-Presidents for the Segments, the Chief Technical Officer, the Chief Risk Officer, the CFO and the General Legal Counsel report on a regular basis to the CEO⁵ in accordance with the instructions issued by the CEO.⁵

7.4 Management Principles (Structures)

7.4.1 Each Business Segment and for the Corporate Center the offices led by the CEO, the Chief Technical Officer, the Chief Risk Officer, the CFO and the General Legal Counsel shall define their management structure, to be approved by the Global Executive Committee, based upon Converium’s organizational principles, and Converium’s business and customer strategy as well as any other guiding management and corporate governance principles.

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8. Run-Off Segment⁵

8.1 Organization

Converium’s Run-Off Segment shall comprise its US operations and shall ensure an orderly and efficient run-off of the business written by the US operations. This segment is managed by the Head of Run-Off Segment who is appointed by the Board of Directors.

8.2 Main Duties and Responsibilities

8.2.1	The Head of the Run-Off Segment is responsible for the management of the run-off business written by US operations and any other assigned operations in accordance with these Organizational By-laws, in particular he shall be confined by the powers and duties of the Board of Directors, the Committees of the Board of Directors, the Chairman and the Vice-Chairman and the Chief Executive Officer. When taking resolutions and implementing a run-off strategy the Head of the Run-Off Segment takes into consideration the overall interest of Converium.
	The Head of the Run-Off Segment shall submit proposals with respect to transactions and actions that require the final approval of the Board of Directors in order to become effective, directly, without involvement of the Global Executive Committee, to the Board of Directors.
8.2.2	The duties and responsibilities of the Head of the Run-Off Segment include, in particular the following items:
8.2.2.1	Conducting and management of the entire Run-Off Segment of Converium and imposition of the measures which the organization of the Run-Off Segment require
8.2.2.2	Execution of the resolutions taken by the Board of Directors with respect to the Run-Off Segment
8.2.2.3	Responsibility for the income of the Run-Off Segment including reserves set in accordance with Converium’s policy and operational cash flows
8.2.2.4	Responsibility for statutory and regulatory issues concerning any assigned legal entities
8.2.2.5	Regular reporting to the Board of Directors and immediate information of the Board of Directors of all incidents, questions and developments of extraordinary importance for the Company and for Converium
8.2.2.6	Quarterly submission to the Board of Directors (via the CEO) of an appropriate reporting package including [consolidated balance sheets and profit and loss accounts]
8.2.2.7	Submission to the Board of Directors of a yearly business plan and a yearly budget for the Run-Off Segment for the upcoming year by the end of the fourth quarter of each business year.

8.3 Reporting

The Head of the Run-Off Segment reports on a regular basis to the CEO or directly to the Board of Directors in accordance with the instructions issued by the CEO.

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9. Corporate Center

9.1 Organization

9.1.1	Converium’s Corporate Center shall comprise the following Functional Levels, which shall be responsible for the respective functions globally and which shall procure services to the Company and/or the Business Segments and/or any Converium Companies:
9.1.1.1	Offices of the members of the Global Executive Committee
9.1.1.2	Global Human Resources
9.1.1.3	Corporate Communication and Investor Relations
9.1.1.4	Corporate Development
9.1.1.5	Global Risk Management
9.1.1.6	Global Consolidation
9.1.1.7	Global Investment and Treasury
9.1.1.8	Global Tax
9.1.1.9	General Legal Counsel, incl. Share Register and Administration of the Company
9.1.1.10	Internal Audit (which, however, has a direct reporting line to the Audit Committee)
9.1.1.11	Any other global function designated by the Global Executive Committee from time to time
9.1.2	The Corporate Center shall be under the responsibility of the CEO.
9.1.3	The heads of the Functional Levels, other than the members of the Global Executive Committee and the Head of Internal Audit shall be appointed by the CEO5, upon proposal by the responsible member of the Global Executive Committee to whom such Functional Level is allocated. The Head of Internal Audit shall be appointed by the Nomination Committee and any member of the Global Executive Committee by the Board of Directors.4

9.2 Duties and Responsibilities

The heads of the Functional Levels shall have the duties and responsibilities defined by the CEO⁵ or the responsible GEC members to whom such Functional Level is allocated, from time to time, subject to the provisions of these By-laws.⁴

9.3 Reporting

The heads of the Functional Levels report on a regular basis to the CEO⁵ or the designated member of the Global Executive Committee to whom such Functional Level is allocated, in accordance with the instructions issued by the CEO⁵ or the respective member of the Global Executive Committee.

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10. Internal Audit

10.1 Organization

The Head of Internal Audit shall be appointed by the Nomination Committee.

10.2 Duties and Responsibilities

Internal Audit shall have the duties and responsibilities defined by the Audit Committee from time to time.

10.3 Reporting

The Head of Internal Audit report on a regular basis to the Audit Committee, in accordance with the instructions issued by the Audit Committee.

11. Adoption and Amendment

These Organizational By-laws were adopted by the Board of Directors on 16 November 2001. They include revisions adopted by the Board of Directors on October 25, 2002, February 5, 2003, September 23, 2003, February 13, 2004, September 7, 2004 and April 11, 2005.⁵

Amendments and additions to these Organizational By-laws must be resolved upon by the Board of Directors.

Every three years, or if necessary earlier, these Organizational By-laws are to be reviewed and, if necessary, revised by the Board of Directors.

Zug, April 11, 2005⁵

[Chairman] [Secretary]

1	Amendments as per BOD meeting dd. Oct. 25, 2002
2	Amendments as per BOD meeting dd. Feb. 5, 2003
3	Amendment as per BOD meeting dd. February 13, 2004 (previously responsibility of Finance Committee)
4	Amendment as per BOD meeting dd. September 7, 2004
5	Amendment as per BOD meeting dd. April 11, 2005

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EX-4.40

Exhibit 4.40

CONFORMED COPY

AGREEMENT

DATED 29TH NOVEMBER, 2004

US$1,600,000,000

CREDIT FACILITY

For

CONVERIUM AG, ZURICH
arranged by

ABN AMRO BANK N.V.

BARCLAYS CAPITAL

BNP PARIBAS

COMMERZBANK AKTIENGESELLSCHAFT

CREDIT SUISSE FIRST BOSTON

and

J.P.MORGAN PLC

ALLEN & OVERY LLP
LONDON

CONTENTS

Clause	Page
1.     Interpretation		1
2.     Facility		14
3.     Purpose		16
4.     Conditions Precedent		16
5.     Utilisation — Letters of Credit		17
6.     Utilisation — Loans		20
7.     Letters of Credit		21
8.     Optional Currencies		26
9.     Repayment		29
10.     Prepayment and Cancellation		29
11.     Interest		32
12.     Terms		33
13.     Market Disruption		33
14.     Taxes		34
15.     Increased Costs		36
16.     Mitigation		37
17.     Payments		38
18.     Guarantee and Indemnity		40
19.     Representations		42
20.     Information Covenants		47
21.     Financial Covenant		49
22.     General Covenants		50
23.     Default		58
24.     Security		62
25.     The Administrative Parties		64
26.     Evidence and Calculations		68
27.     Fees		68
28.     Indemnities and Break Costs		69
29.     Expenses		70
30.     Amendments and Waivers		71
31.     Changes to the Parties		72
32.     Disclosure of Information		76
33.     Set-off		77
34.     Pro Rata Sharing		77
35.     Severability		79
36.     Counterparts		79
37.     Notices		79
38.     Language		81
39.     Governing law		81
40.     Enforcement		81

Schedule	Page
1.     Original Lenders		83
2.     Conditions Precedent Documents		84
3.     Form of Request		87
4.     Calculation of the Mandatory Cost		88
5.     Form of Transfer Certificate		90
6.     Form of Compliance Certificate		91
7.     Form of Accession Agreement		92
8.     Form of Resignation Request		93
9.     Forms of Letter of Credit		94
10.     Minimum Criteria for Confirming Bank Agreement		99
11.     Schedule of Existing Letters of Credit		100
12.     Applicable Margin/LC Commission		104
Signatories		105

THIS AGREEMENT is dated 29th November, 2004

BETWEEN:

(1)	CONVERIUM AG, ZURICH (registered number CH-170.3.024.826-2) (the Company);
(2)	CONVERIUM RÜCKVERSICHERUNG (DEUTSCHLAND) AG (Converium Deutschland);
(3)	CONVERIUM INSURANCE (UK) LIMITED (registered number 4580111) (Converium UK);
(4)	ABN AMRO BANK N.V., BARCLAYS CAPITAL, BNP PARIBAS, COMMERZBANK AKTIENGESELLSCHAFT, CREDIT SUISSE FIRST BOSTON AND J.P. MORGAN PLC as arrangers (in this capacity the Mandated Lead Arrangers);
(5)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Lenders) as original lenders (the Original Lenders);
(6)	ABN AMRO BANK N.V., as facility agent (in this capacity the Facility Agent); and
(7)	ABN AMRO BANK N.V. as fronting bank (in this capacity the Fronting Bank).

IT IS AGREED as follows:

1.	INTERPRETATION
1.1	Definitions
	In this Agreement:
	Acceptably Rated Institution means either a financial institution which has (or the long term unsecured and unsubordinated debt of which has) any two of the credit ratings set out in paragraphs (a) to (c) below or a financial institution with a guarantor guaranteeing that financial institution’s obligations under this Agreement in full and that guarantor has (or its long term unsecured and unsubordinated debt has) any two of the credit ratings set out in paragraphs (a) to (c) below:

(a)	a credit rating of not lower than BBB assigned to it by S&P;
(b)	a credit rating of not lower than Baa2 assigned to it by Moody’s; or
(c)	a credit rating of not lower than BBB assigned to it by Fitch Ratings.

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, the Facility Agent or the Fronting Bank.

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Affected Lender has the meaning given to it in Clause 5.5 (Loss of NAIC approval or resignation).

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 Collateral, 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;
(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 an Original Borrower or an Additional Borrower.

Break Costs means the amount (if any) which a Lender is entitled to receive under Clause 28.3 (Break Costs) as compensation if any part of a Loan or overdue amount is repaid or prepaid.

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.

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Commitment means a Tranche A Commitment, a Tranche B Commitment or both as the context so requires.

Company Custodian Account means each of the following accounts of the Company with the Custodian:

(a)	account number CVZF0001002;
(b)	account number CVZF0006002;
(c)	account number CVZF0008002;
(d)	account number CVZF0540072;
(e)	account number CVZF5008522; and
(f)	account number CVZ0011002,

the accounts referred to in paragraphs (a) to (e) above being the Existing Company Custodian Accounts.

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 or the Fronting Bank under a Confirming Bank Agreement entered into by it with that Lender or Fronting Bank.

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 approved by the Company (acting reasonably), and which is entered into by the Facility Agent, the relevant Lender or Fronting Bank and a Confirming Bank.

Converium Deutschland Accounts means Converium Deutschland’s account with the Custodian number CVDF2003902 and CVDF2003002.

Converium Group means Holding and its Subsidiaries.

Credit means a Loan or a Letter of Credit.

Custodian means ABN AMRO Mellon Securities Services B.V.

Custodian Account means each Company Custodian Account and each Converium Deutschland Account.

Custodian Account Pledge means a security agreement between the Company and the Facility Agent and a security agreement between Converium Deutschland and the Facility Agent, delivered under Schedule 2 (Conditions Precedent Documents) relating to the Company’s and Converium Deutschland’s rights against the Custodian with respect to each Custodian Account and the securities standing to the credit of each Custodian Account.

Default means:

(a) an Event of Default; or

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(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 Securities means any bonds or debt securities denominated in either US Dollars, euro or sterling which have been issued or guaranteed by a sovereign government from within zone A of the OECD and which have a credit rating of AA by S&P or Aa2 by Moody’s (or, where there is a credit rating in respect of those obligations from each such rating agency, a credit rating of AA and Aa2 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).

Evergreen Letter of Credit means a Letter of Credit which is, by its terms, automatically renewed or extended on its expiry date unless cancelled.

Existing Facility means the US$900,000,000 Credit Facility dated 24th July, 2003 between, amongst others, the Company, the Lenders (as defined therein) and ABN AMRO Bank N.V. as facility agent.

Existing Letter of Credit means a Non Fronted Existing Letter of Credit or a Fronted Existing Letter of Credit or both as the context so requires.

Facility means a credit facility made available under this Agreement as more fully described in Clause 2.1 (Facilities).

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)).

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.

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Final Maturity Date means the date which is three years after the date of this Agreement or, if that is not a Business Day, the immediately preceding Business Day.

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.

Fronted Existing Letter of Credit means each letter of credit identified as such in the Schedule of Existing Letters of Credit.

GAAP means generally accepted accounting principles in the U.S.A.

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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 Schedule 12 (Applicable Margin/LC Commission).

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, a Single Lender Letter of Credit, an Existing Letter of Credit or all of them, 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.

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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 the rate determined in accordance with Schedule 12 (Applicable Margin/LC Commission).

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:

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(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.

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.

Non-Fronted Existing Letters of Credit means each letter of credit identified as such in the Schedule of Existing Letters of Credit.

Obligor means a Borrower or the Company.

Original Borrower means the Company, Converium Deutschland and Converium UK.

Original Financial Statements means the audited consolidated financial statements of Holding for the year ended 31st December, 2003.

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.

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Permitted Reorganisation means an amalgamation, demerger, merger or reorganisation (a Reorganisation) between members of the Group which would not reasonably be expected to result in 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 a Facility, the proportion which its Commitment with respect to that Facility bears to the Total Commitments for that Facility; 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 the aggregate of its Commitments bears to the Total Commitments on that date; or
(iii)	if the Total Commitments have been cancelled, the proportion which the aggregate of its Commitments bore to the Total Commitments immediately before being cancelled.

Rate Fixing Day means:

(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.

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.

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Repeating Representations means the representations which are deemed to be repeated under Clause 19.20 (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 Collateral in respect of a Credit means:

(a)

Eligible Securities denominated in the same currency as that Credit with a market value (as determined by the Facility Agent (acting reasonably)) of at least 111 per cent. of the outstanding amount of that Credit (or any part of that amount for which those Eligible Securities are taken into account);

(b)

Eligible Securities denominated in a currency other than the currency of that Credit with a market value (as determined by the Facility Agent (acting reasonably)) of at least 115 per cent. of the outstanding amount of that Credit (or any part of that amount for which those Eligible Securities are taken into account) notionally converted into the currency of those Eligible Securities at the relevant Agent’s Spot Rate of Exchange on any day the Required Collateral is calculated or is required to be delivered,

and for the purposes of this definition:

(i)	where a determination is made of whether there is Required Collateral in the Custodian Accounts in respect of a Credit borrowed or to be borrowed by a Borrower other than Converium Deutschland, the Eligible Securities in the Converium Deutschland Account shall be ignored; and
(ii)	prior to the date on which the Facility Agent has received confirmation from the facility agent with respect to the Existing Facility that the security taken with respect to the Existing Company Custodian Accounts has been discharged, the Eligible Securities in the Existing Company Custodian Accounts shall be ignored.

Schedule of Existing Letters of Credit means a completed schedule substantially in the form of Schedule 11 (Schedule of Existing Letters of Credit).

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 Document means:

(a) each Custodian Account Pledge; and

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(b) any security agreement entered into by an Obligor and the Facility Agent or a Lender in connection with 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 Part 2 of Schedule 9Part 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.

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.

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)	by reference to which interest 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 (for these purposes, the expiry date of an Evergreen Letter of Credit is the date on which it will first expire if a notice of renewal is given).

Total Commitments means the Tranche A Total Commitments, the Tranche B Total Commitments or both as the context so requires.

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Tranche A has the meaning given it in Clause 2.1 (Facilities).

Tranche A Commitment means:

(a)	for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading Tranche A Commitments and the amount of any other Tranche A Commitment it acquires; and
(b)	for any other Lender, the amount of any Tranche A Commitment it acquires,

Tranche A Total Commitments means the aggregate of the Tranche A Commitments of all the Lenders.

Tranche B has the meaning given it in Clause 2.1 (Facilities).

Tranche B Commitment means:

(a)	for an Original Lender, the amount set opposite its name in Schedule 1 (Original Parties) under the heading Tranche B Commitments and the amount of any other Tranche B Commitment it acquires; and
(b)	for any other Lender, the amount of any Tranche B Commitment it acquires.

	Tranche B Total Commitments means the aggregate of the Tranche B Commitments of all the Lenders.
	Commitment means a Tranche A Commitment, a Tranche B Commitment or both as the context so requires.
	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;

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(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, 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

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(iii) notwithstanding subparagraph (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.

(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	Facilities
	Subject to the terms of this Agreement, the Lenders make available to the Borrowers:

(a)	a letter of credit facility in an aggregate amount equal to the Tranche A Total Commitments (the Tranche A Facility); and
(b)	a revolving credit facility in an aggregate amount equal to the Tranche B Total Commitments (the Tranche B 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;

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(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.

	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.

2.5 Facility limits

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A Lender shall not be obliged to issue or participate in any Credit if as a result a Lender’s share in the outstanding Credits, aggregated with its share in the Existing Letters of Credit under the Existing Facility would exceed its Commitment.

3.	PURPOSE
3.1	Letters of Credit
	Each Letter of Credit may only be issued for the general corporate purposes of the Group, provided that aggregate principal amount of outstanding Letters of Credit issued for purposes other than the collateralisation of claims arising under transactions which constitute, for the purpose of the laws or regulations to which the Group is subject in any Approved Jurisdiction, reinsurance business shall not at any time exceed an amount equal to 10 per cent, of the then Tranche A Total Commitments.
3.2	Loans
	Each Loan may only be used for the general corporate purposes of the Group (including, without limitation, the payment of amounts due from the Borrowers under Clause 7.4 (Indemnities)).
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;
(b)	no Default is outstanding or would result from the Credit; and
(c)	the Facility Agent is satisfied that Required Collateral is standing to the credit of the Custodian Accounts in respect of the requested Credit and all other Credits which are then outstanding.

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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;
(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$10,000 or such other amount as the Facility Agent and the Company may agree; or
(ii)	not more than 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 a 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)	31st December, 2007 (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.

Other than in relation to a Request for the Fronted Existing Letters of Credit, only one Letter of Credit (or one LC Series) may be requested in a Request.

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5.3	Renewals
	The Facility Agent will not cancel, or give a notice of non renewal in relation to an Evergreen 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 31st December, 2007.

5.4	Issue of Letter of Credit
(a)	Save with respect to the Fronted Existing Letters of Credit and 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 (subject to subparagraph (ii) below) 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$250,000,000 (or its equivalent).
(d)	The first Request delivered by the Borrower must relate to the Fronted Existing Letters of Credit. Other than in the case of the first Request, 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 each Lender’s share of that Letter of Credit; and

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(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 the relevant LC Series.
(f)	The amount of each Lender’s share in a Fronted Existing Letter of Credit will be its Pro Rata Share on the proposed Utilisation Date.
(g)	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 outstanding Letters of Credit (including, for the avoidance of doubt and without limitation, any Letters of Credit in respect of which cash cover or Required Collateral has been provided) would exceed its Tranche A Commitment; or
(ii)	the outstanding Letters of Credit (including, for the avoidance of doubt and without limitation, any Letters of Credit in respect of which cash cover or Required Collateral has been provided) would exceed the Tranche A Total Commitment.

(h) If the conditions set out in this Agreement have been met:

(i)	in the case of a Multiple Lender Letter of Credit, the Facility Agent must issue the Letter of Credit on behalf of the Lenders severally in their Pro Rata Shares on the Utilisation Date;
(ii)	in the case of Single Lender Letters of Credit, the Facility Agent must issue a Letter of Credit on behalf of each Lender in the amount determined in accordance with paragraph (e); or
(iii)	in the case of an Fronted Existing Letter of Credit, on the Utilisation Date:

(A)	the Fronted Existing Letter of Credit will be treated for all purposes as having been issued under this Agreement; and
(B)	each Lender which is also a participant in the Existing Facility shall be discharged from their indemnity obligations to the Fronting Bank thereunder with respect to the Fronted Existing Letters of Credit.

(i) 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.

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5.5	Loss of NAIC approval or resignation
(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 obligations of an Affected Lender 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 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).
(e)	An Affected Party’s obligation under paragraph (c), (d) or (e) 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)	The Fronting Bank undertakes to promptly apply each year to renew its status as an NAIC Approved Bank.

6.	UTILISATION — LOANS
6.1	Giving of Requests
(a)	A Borrower may borrow a Loan by giving to the Facility Agent a duly completed Request.

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(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) one Business Day before the Rate Fixing Day for the proposed borrowing.
(c)	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)	the Utilisation Date is a Business Day falling within the Availability Period;
(b)	the amount of the Loan requested is:

(i)	a minimum of US$10,000,000 or its equivalent in accordance with Clause 8 (Optional Currencies) and an integral multiple of US$5,000,000 (or its equivalent in accordance with Clause 8 to the nearest 1,000,000 units of the relevant currency); or
(ii)	the maximum undrawn amount available under the Facility on the proposed Utilisation date; or
(iii)	such other amount as the Facility Agent may agree; and

(c) the proposed Term and currency complies with this Agreement.

	Only one Loan may be requested in a Request.
6.3	Advance of Loan
(a)	The Facility Agent must promptly notify each Lender of the details of each Loan and the amount of its share in that Loan.
(b)	The amount of each Lender’s share of the Loan 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 Loans would exceed its Tranche B Commitment; or
(ii)	the Loans would exceed the Tranche B Total Commitments.

(d) If the conditions set out in this Agreement have been met, each Lender must make its share in the Loan available to the Facility Agent for the relevant Borrower through its Facility Office on the Utilisation Date.

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;

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(ii)	the maximum amount payable under the Letter of Credit is reduced in accordance with its terms;
(iii)	(in the case of a Multiple Lender Letter of Credit or a Single Letter of Credit) the Facility Agent is satisfied that no Lender has any further liability under that Letter of Credit; or
(iv)	(in the case of a Fronting Existing Letter of Credit) the Fronting Bank is satisfied that it has no further liability under that Letter of Credit.

	The amount by which a Letter of Credit is repaid or prepaid under subparagraphs (i) and (ii) above is the amount of the relevant cash cover or reduction.
(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 Securities 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	Fees in respect of Letters of Credit
(a)	Each Borrower must pay to the Facility Agent for each Lender commission computed at the rate of the LC Commission 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 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 will be distributed by the Facility

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	Agent according to each Lender’s Pro Rata Share in each Letter of Credit, adjusted to reflect any assignment or transfer to or by that Lender.
(b)	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 five Business Days of the Facility Agent notifying the Company of the amount due.
(c)	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, the Fronting Bank and the Facility Agent to pay any claim made or purported to be made under a Letter of Credit requested by that Borrower 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)	(i)	The Fronting Bank must promptly notify the Facility Agent (which will promptly notify the relevant Borrower) of its receipt of a claim and of the amount of and date for payment.
	(ii)	In the case of a Multiple Lender Letter of Credit or a Single Lender Letter of Credit, the Facility Agent shall promptly notify each Lender participating in that Multiple Lender Letter of Credit or the relevant Lender in that 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 a Multiple Lender Letter of Credit) the amount of each Lender’s 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 Utilisation Date of the relevant Letter of Credit. Subject to paragraph (c) below, each such Lender must pay its share in the claim (or the amount of the claim in the case of a Single Lender Letter of Credit) to the Facility Agent through its Facility Office on the claim payment date for payment by the Facility Agent of the claim.

(c)	Each Borrower must immediately on demand pay to the Facility Agent for the relevant Lenders or the Fronting Bank (as applicable) an amount equal to the amount of any claim.
(d)	Each Borrower acknowledges that:

(i)	none of the Lenders, the Facility Agent or the Fronting Bank is obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and
(ii)	the Facility Agent and each Lender and the Fronting Bank 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.

(e) 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

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(ii) any incapacity of, or limitation on the powers of, any person signing a claim or other document.

(f)	References in this Subclause to a Lender or the Fronting Bank 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 or the Fronting Bank 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
(a)	Without prejudice to Clause 7.3(c) a Borrower must immediately on demand indemnify each Lender and the Fronting Bank against any loss or liability which the Lender or the Fronting Bank incurs under or in connection with:

(i)	any Letter of Credit requested by that Borrower; and
(ii)	any claim,

	except to the extent that the loss or liability is directly caused by the gross negligence or wilful misconduct of the Lender or the Fronting Bank.
(b)	Without prejudice to Clause 7.3(c), each Lender must immediately on demand indemnify the Fronting Bank against its share of any loss or liability which the Fronting Bank incurs under or in connection with any Letter of Credit or any claim except to the extent that the Borrowers have reimbursed the Fronting Bank in respect of that loss or liability or that loss or liability is caused by the gross negligence or wilful misconduct of the Fronting Bank.
(c)	A Lender’s share of the liability or loss referred to in subparagraph (b) above will be its Pro Rata Share of the relevant Letter of Credit on the Utilisation Date.
(d)	The relevant Borrower must immediately on demand reimburse any Lender for any payment it makes to the Fronting Bank under this Subclause.
(e)	The obligations of each Lender under this Clause are continuing obligations and will extend to the ultimate balance of all sums payable by that Lender under or in connection with any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.
(f)	The obligations of any Lender 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 other person). This includes:

(i)	any time or waiver granted to, or composition with, any person;
(ii)	any release of any person under the terms of any composition or arrangement;
(iii)	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;
(iv)	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;

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(v)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any person;
(vi)	any amendment (however fundamental) of a Finance Document, any Letter of Credit or any other document or security; or
(vii)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security.

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.
7.6	Acceptably Rated Institutions
(a)	If any Lender becomes aware that it is not an Acceptably Rated Institution, it must promptly notify the Facility Agent. The Facility Agent shall promptly notify the Fronting Banks accordingly.
(b)	At any time while a Lender is not an Acceptably Rated Institution, it must within 10 Business Days of demand by the Fronting Bank ensure that there are provided, to the Fronting Bank, Lender Security or Lender LCs in an aggregate amount which, in respect of each currency in which a Fronting Existing Letter of Credit is outstanding, is not less than the Lender’s contingent obligations to the Fronting Bank under Clause 7.4 (Indemnities) in respect of all outstanding Fronted Existing Letters of Credit denominated in that currency.

(c)	(i)	If a Lender becomes aware that the issuer of a Lender LC (an Unacceptable Issuer) issued at the request of that Lender is not an Acceptably Rated Institution, it must promptly notify the Facility Agent and the Fronting Bank.
	(ii)	Within 10 Business Days of request by the Fronting Bank which is the beneficiary of a Lender LC issued by an Unacceptable Issuer, the relevant Lender must provide to the Fronting Bank replacement Lender LCs or Lender Security in an aggregate amount not less than the aggregate amount of Lender LCs issued to the Fronting Bank by that Unacceptable Issuer.

(d) The Fronting Bank must, promptly upon request by the relevant Lender, release any Lender Security and/or Lender LC provided by that Lender:

(i)	if the Lender becomes an Acceptably Rated Institution; or
(ii)	if and to the extent that the aggregate amount of the Lender Security and/or Lender LCs provided by that Lender to the Fronting Bank exceeds, in respect of any currency, the Lender’s contingent obligations to the Fronting Bank under Clause 7.4 (Indemnities) in respect of all outstanding Fronted Existing Letters of Credit denominated in that currency.

(e) Lender Security is provided by a Lender to the Fronting Bank if:

(i) the Lender deposits with the Fronting Bank cash denominated in US Dollars, euro and/or the currency of any other country being a current member of the European Union; and

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(ii) the Lender enters into a security document in respect of those assets:

(A)	in favour of the Fronting Bank;
(B)	securing the obligations of the Lender to the Fronting Bank under Clause 7.4 (Indemnities); and
(C)	in a form acceptable to the Fronting Bank (acting reasonably).

(f) A Lender LC is provided by a Lender to the Fronting Bank if a letter of credit is issued:

(i)	by an Acceptably Rated Institution;
(ii)	in favour of the Fronting Bank;
(iii)	which can be drawn by the Fronting Bank to meet the obligations of the Lender to the Fronting Bank under Clause 7.4 (Indemnities); and
(iv)	in a form acceptable to the Fronting Bank (acting reasonably).

	The value of a Lender LC is the maximum principal amount which may be drawn under the Lender LC.
(g)	If the Fronting Bank holds Lender Security it shall pay interest on any cash held at a reasonable commercial rate. Any interest or other income arising on or in respect of any Lender Security shall be for the account of the Lender providing that Lender Security and, if received by the Fronting Bank, shall be paid promptly by the Fronting Bank to the relevant Lender.
(h)	The Fronting Bank may only make demand under a Lender LC if the relevant Lender has failed to comply with its obligations to the Fronting Bank under Clause 7.4 (Indemnities).

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;
(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.

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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)	The amount of a Loan requested in an Optional Currency must comply with Clause 6.2 (Completion of Requests).
(d)	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.

(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:

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(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 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.
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.

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(b) Each Borrower must, if requested by the Facility Agent within five 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
	Each Borrower must repay each Letter of Credit issued on its behalf in full on the earlier of its Maturity Date and 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.

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

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	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 — run-off
(a)	The Total Commitments will be cancelled in full promptly upon the Group going into run-off.
(b)	Following a cancellation under paragraph (a):

(i)	the Obligors shall repay each Credit borrowed by it on its then applicable Maturity Date; and
(ii)	no further Credits may be borrowed (provided that Evergreen Letters of Credit will be allowed to renew subject to Clause 5.3 (Renewals)).

(c)	For the purpose of this Subclause, the Group goes in to run-off if (in the opinion of the Majority Lenders (acting reasonably)) it substantially ceases to write or accept reinsurance business.
(d)	The Company must promptly notify the Facility Agent of any decision by the Company which would result in the Group going in to run-off.
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 Commitments of each Lender will be automatically cancelled at the close of business on the last day of the Availability Period.

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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 Tranche A Total Commitments and/or the Tranche B Total Commitments in whole or in part.
(b)	Partial cancellation of 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 relevant 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.
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.

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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
(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.

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12.	TERMS
12.1	Selection
(a)	Each Loan has one Term. Each Term for a Loan will start on its Utilisation Date.
(b)	A Borrower must select the Term for a Loan in the relevant Request.
(c)	Subject to the following provisions of this Clause, each Term for a Loan will be one two or three months’ 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.

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;

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(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).
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.

(i)	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.
(ii)	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.
(iii)	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.

(c) 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

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	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.
(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.

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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 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.

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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.

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.

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(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:

(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.

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(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.
(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:

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(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 subparagraphs (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:

(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

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	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
(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.

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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 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.

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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
(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

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(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,

	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 means all 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 did not omit as at its date any information which, if disclosed, would make the Information 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 any of the

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        Information was delivered which, if disclosed, would make that Information 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.
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.

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19.18	Custodian Accounts
	The Custodian Accounts and all securities standing to the credit of the Custodian Accounts are free from any Security Interest (other than a Security Interest under the Security Documents or, prior to the date on which the Facility Agent has received confirmation from the facility agent with respect to the Existing Facility that the security taken with respect to the Existing Company Custodian Accounts has been discharged, a Security Interest in relation to the Existing Facility).
19.19	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;
(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.

19.20	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.

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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.
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.

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(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
(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.

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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 10 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:

(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.
20.9	Know your customer requirements
	Each Obligor must promptly on the request of any Finance Party supply to that Finance Party any documentation or other evidence which is reasonably requested by that Finance Party (whether for itself, on behalf of any Finance Party or any prospective new Lender) to enable a Finance Party or prospective new Lender to carry out and be satisfied with the results of all applicable know your customer requirements.

21.	FINANCIAL COVENANT
21.1	Definitions
	In this Clause:

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	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.
21.4	Consolidated Tangible Net Worth
	The Company must ensure that Consolidated Tangible Net Worth is not at any time less than US$1,237,500,000.

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.

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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 in relation to the Existing Facility or constituted by the Security Documents;
(ii)	Security Interests existing on the date of this Agreement securing indebtedness of not more than US$300,000,000 (or its equivalent) in aggregate 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 six 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;
(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;

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(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 lodged, filed or created pursuant to an order of a court or tribunal of competent jurisdiction whether on first instance or appeal 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 (A) the Security Interest was existing at the time of the merger, (B) the Security Interest was not created in contemplation of the merger, (C) the principal amount secured by the Security Interest is not increased after the merger, and (D) 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 (A) 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 (B) the principal amount secured does not exceed 100 per cent. of the value of that asset, and (C) 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;
(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 over cash or marketable securities securing a reimbursement obligation with respect to a letter of credit which is issued (A) in favour of a ceding company to secure the obligations to that ceding company of an Obligor or a Material

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	Subsidiary under a contract of reinsurance to which it is a party where the delivery of that letter of credit satisfies a regulatory requirement or (B) in conjunction with insurance or reinsurance contracts written through the London Market (Lloyd’s business, London Market North America business;
(xix)	any Security Interest renewing or replacing those referred to in the preceding paragraphs of this subparagraph (b) provided (A) 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 (B) the Security Interest is over the same assets; and
(xx)	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 subparagraphs and the aggregate principal amount of transactions permitted under paragraph (c) below) does not at any time exceed 30 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),

provided that notwithstanding paragraphs (ii) to (xx) above, no member of the Group shall create or allow to be outstanding any Security Interest on or in relation to the Custodian Accounts other than in favour of the Finance Parties (or, in relation to the Existing Company Custodian Accounts, prior to the date on which the Facility Agent has received confirmation from the facility agent with respect to the Existing Facility that the security taken with respect to the Existing Company Custodian Accounts has been discharged, in favour of the Finance Parties (as defined in the Existing Facility)).

(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)(xx) above) does not exceed 30 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.

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(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;
(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 subparagraphs provided that the aggregate of the higher of the market value or consideration receivable in respect of all disposals permitted by this subparagraph (vi) occurring in any financial year of the Company does not exceed 10 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)	In addition to paragraph (b), paragraph (a) does not apply to a disposal by the Company on arms’ length terms of Converium Reinsurance (North America) Inc.
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);

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(iv)	a loan made by a member of the Group under the terms of any Insurance Arrangement;
(v)	any Eligible Securities; 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.

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, 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

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(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.
22.15	Required Collateral
(a)	The Company shall ensure that at all times:

(i)

there is Required Collateral standing to the credit of the Custodian Accounts in respect of all the outstanding Credits; and

(ii)

the Facility Agent is authorised to operate and has signing rights with respect to the Custodian Accounts and the Custodian is authorised to provide to the Facility Agent all information with respect to the Custodian Accounts and the securities standing to the credit of the Custodian Accounts as it would be authorised or obliged to provide to its customers under applicable law or the terms on which the Custodian Accounts are maintained.

(b) Without prejudice to paragraph (a)(i) above:

(i)

for so long as any Credit is outstanding, the Facility Agent shall at monthly intervals calculate the then value of the Eligible Securities standing to the Credit of the Custodian Accounts (the Security). For these purposes the Facility Agent shall notionally convert (in whole or in part) relevant Credits denominated in currencies other than US Dollars, sterling or euro into the currencies in which the Security is then denominated at the appropriate Agent’s Spot Rate of Exchange on the day the valuation is made; and

(ii)

if at any time (whether as a result of the calculation referred to in paragraph (i) above or otherwise) the Facility Agent notifies the Company that the value of the Eligible Securities standing to the credit of the Custodian Accounts at that time does not comply with the requirements of paragraph (a)(i) above, the Company must within five Business Days of such notification (at the option of the Company) either:

(A)	provide such Eligible Securities as the Facility Agent shall direct; or
(B)	prepay the Credits in such an amount as the Facility Agent shall direct,

	in each case so as to ensure that those requirements are fulfilled.
(c)	Subject to the terms of each Custodian Account Pledge, the Company or (as applicable) Converium Deutschland shall be entitled to withdraw from the Custodian Accounts Eligible Securities provided that:

(i)	it gives not less than one Business Day’s prior notice to the Facility Agent of the details of the withdrawal and the Eligible Securities concerned;
(ii)	the requirements of paragraph (a)(i) will be fulfilled upon and immediately after such withdrawal is made; and
(iii)	no Event of Default is outstanding at the time such withdrawal is made,

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	and provided the Facility Agent is satisfied that the requirements of paragraph (ii) is met and is not aware that any Event of Default is outstanding, the Lenders agree that the Facility Agent may permit the Company to make withdrawals from the Custodian Accounts.
(d)	The Company shall provide to the Facility Agent such information with respect to the Custodian Accounts and the Security as the Facility Agent shall from time to time request.
(e)	The operation of the Custodian Accounts shall be at the cost of the Company or (as applicable) Converium Deutschland.
(f)	The Company:

(i)	must at all times comply with its obligations to the Custodian with respect to the maintenance and operation of the Custodian Accounts;
(ii)	must pay all amounts due to the Custodian in connection with the Custodian Accounts when due;
(iii)	must not do anything which would result in the Custodian being able to exercise any right of set off or blocking rights in relation to the Custodian Accounts; and
(iv)	must not change the Custodian or move the Custodian Accounts to another custodian without the prior written consent of the Facility Agent (acting on the instructions of the Majority Lenders).

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.

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(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;
(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.
22.17	Centre of Main Interests
	No Obligor will cause or allow its registered office or Centre of Main Interests to be in or maintain an Establishment in any jurisdiction other than its jurisdiction of incorporation. For these purposes:

(a)	Centre of Main Interests means a “centre of main interest” for the purposes of Council Regulation (EC) No 1346/2000 of 29th May, 2000; and
(b)	Establishment means, in relation to an Obligor, any place of operations where that Obligor carries on non-transitory economic activity with human means and goods.

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:

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(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 Collateral) 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 10 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 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 10 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

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(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
(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,

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	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;
(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.

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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.
23.14	Acceleration
(a)	If an Event of Default described in Clause 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.

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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 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.

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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.
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;

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(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.
(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

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	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 or, monitor the value of any securities standing to the credit of the Custodian Accounts. 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.
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.

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(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.
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.

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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 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.
26.2	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.

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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.
27.3	Commitment fee
(a)	The Company must pay a commitment fee computed at the rate of:

(i)	35 per cent. of the LC Commission per annum on the unutilised or undrawn, uncancelled amount of each Lender’s Tranche A Commitment; and
(ii)	35 per cent. of the Margin per annum on the unutilised or undrawn, uncancelled amount of each Lender’s Tranche B 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.

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

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(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.

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:

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(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.

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 Finance Party 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.

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(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:

(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) and (c) 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 rights and obligations in respect of any outstanding Single Lender Letter of Credit or Multiple Lender Letter of Credit.
(b)	The consent of the Fronting Bank is required for any assignment or transfer by a Lender of its rights and obligations in respect of any outstanding Fronted Existing Letter of Credit . The consent of the Fronting Bank to an assignment or transfer must not be unreasonably withheld or delayed. The Fronting Bank will be deemed to have given its consent five Business Days after the Lender has requested it unless consent is expressly refused by the Fronting Bank within that time.
(c)	At the date it becomes a Party, either:

(i)	the New Lender must be a Bank and an NAIC Approved Bank with a Facility Office in New York; 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.

(d) A transfer of obligations will be effective only if either:

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(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.

(e)	A Lender may not assign or transfer any of its participation in Tranche A (as defined in Clause 2.1 (Facilities)) unless at the same time it assigns and transfers its participation in Tranche B (as defined in Clause 2.1) pro rata and vice versa.
(f)	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.
(g)	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.
(h)	A Lender may not enter into a participation or subparticipation in connection with this Agreement with a person that is not a Bank.
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.

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(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).
(f)	No assignment or transfer under this Clause will be effective until the Facility Agent has completed all know your customer requirements relating to any person that it is required to carry out in relation to such assignment or transfer. The Facility Agent is not obliged to execute a Transfer Certificate until it has completed all know your customer requirements to its satisfaction.
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 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(g), nothing in this Agreement shall restrict the right of any Lender to enter into any form of subparticipation 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:

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(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 2 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 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.

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(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 subparagraph (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.

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)	to another Finance Party including, in the case of paragraph (i), information that was not supplied to it in connection with the Finance Documents;
(ii)	which is publicly available, other than as a result of a breach by that Finance Party of this Clause;
(iii)	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;

(iv)	in connection with any legal or arbitration proceedings;
(v)	if required to do so under any law or regulation;
(vi)	to a governmental, banking, taxation or other regulatory authority;
(vii)	to its professional advisers;
(viii)	to the extent allowed under paragraph (b) below;

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(ix)	to another Obligor; or
(x)	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 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).

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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:

(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

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	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:

(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.

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(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:	agencyeurope@uk.abnamro.com
Attention:	Mark Satchel/Lee Donnithorne.

(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.

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(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
(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.

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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.

40.4	Waiver of trial by jury
	EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH ANY FINANCE DOCUMENT OR ANY TRANSACTION CONTEMPLATED BY ANY FINANCE DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 1

ORIGINAL LENDERS

	Commitments		Commitments
	US$		US$
Name of Original Lender	Tranche A		Tranche B
ABN AMRO Bank N.V.		250,000,000		16,666,670
Barclays Bank PLC		250,000,000		16,666,666
BNP Paribas		250,000,000		16,666,666
Commerzbank Aktiengesellschaft		250,000,000		16,666,666
Credit Suisse First Boston		250,000,000		16,666,666
JPMorgan Chase Bank N.A.		250,000,000		16,666,666
Total Commitments	US$	1,500,000,000	US$	100,000,000

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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 1 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.

Security

1.	Evidence that each Custodian Account has been opened.
2.	A copy of each Custodian Account Pledge Agreement.
3.	A copy of the custodian agreement relating to the Custodian Accounts between the Company, Converium Deutschland and the Custodian

Legal opinions

1.	A legal opinion of Allen & Overy LLP, London, legal advisers to the Mandated Lead Arrangers and the Facility Agent as to English law, addressed to the Finance Parties.
2.	A legal opinion of Allen & Overy LLP, legal advisers to the Mandated Lead Arrangers and the Facility Agent as to Dutch law, addressed to the Finance Parties.

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3.	A legal opinion of Allen & Overy LLP, legal advisers to the Mandated Lead Arrangers and the Facility Agent as to German law, addressed to the Finance Parties.
4.	A legal opinion of Schellenberg Wittmer, legal advisers to the Mandated Lead Arrangers and the Facility Agent as to Swiss law, 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.
3.	Evidence that Consolidated Tangible Net Worth (as defined in Clause 21 (Financial Covenants) is at least US$1,600,000,000.
4.	A letter of cancellation in full in respect of the Existing Facility.
5.	Information required by any Finance Party for the purposes of any money laundering regulations.
6.	The Schedule of Existing Letters of Credit.
7.	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.

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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.

86

SCHEDULE 3

FORM OF REQUEST

To:	ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent
From:	[                              ]
Date:	[                              ]

CONVERIUM AG, ZURICH – US$1,600000,000 Credit Agreement

dated 26th November, 2004 (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/Fronting Bank Letter 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

87

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)+E x 0.01	per cent. per annum
100 - (A+C)
for any other Loan:
E x 0.01	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.

88

(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.

89

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$1,600,000,000 Credit Agreement
dated 26th November, 2004 (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:

90

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$1,600,000,000 Credit Agreement
dated 26th November, 2004 (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. ([          ] 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 Securities 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:

91

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$1,600,000,000 Credit Agreement
dated 26th November, 2004 (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:

92

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$1,600,000,000 Credit Agreement
dated 26th November, 2004 (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:

93

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 favour 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.

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 Issuing Bank to pay an amount due from it under this letter of credit) shall be the percentage of the

⁺ Delete as applicable

94

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 [30/60] 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

Part A

Issuing Bank Percentage Share

Total 100%

Part B

Issuing Bank Confirming Bank

96

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.

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.

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,

⁺ Delete as applicable

97

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 [30/60] 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)

98

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 Party 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 Party.
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 Party 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 Party 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.

99

SCHEDULE 11

SCHEDULE OF EXISTING LETTERS OF CREDIT

PART 1

FRONTED EXISTING LETTERS OF CREDIT

			Issue
L/C Number	Issuing Bank	Amount	Date	Beneficiary

100 10 May 2005

			Issue
L/C Number	Issuing Bank	Amount	Date	Beneficiary

101 10 May 2005

			Issue
L/C Number	Issuing Bank	Amount	Date	Beneficiary

102 10 May 2005

			Issue
L/C Number	Issuing Bank	Amount	Date	Beneficiary

PART 2

NON FRONTED EXISTING LETTERS OF CREDIT

			Issue
L/C Number	Issuing Bank	Amount	Date	Beneficiary

103 10 May 2005

SCHEDULE 12

APPLICABLE MARGIN/LC COMMISSION

1. The Margin and the LC Commission are each determined by reference to the financial strength rating published in relation to the Company by S&P (the S&P Rating), such that when the S&P Rating is that set out in Column 1 of the table below, the Margin and LC Commission shall be the rate set out next to that S&P Rating in Column 2.

Column 1	Column 2
S&P Rating	Margin/LC Commission (per cent. per annum)
BBB+ or higher		0.15
BBB		0.25
BBB-		0.35
BB+ or lower		0.50

2.	If there is no S&P Rating, the Margin and LC Commission shall be 0.50 per cent. per annum.
3.	Any change in the Margin and LC Commission under this Schedule shall take effect (including for the purposes of Clause 27.3 (Commitment fee)) from (and including) the date which is five days after the relevant change in the S&P Rating.
4.	The Company must immediately upon becoming aware of the same, notify the Facility Agent of any change in the S&P Rating together with details of the new S&P Rating. The Facility Agent will notify the Lenders of any change in the Margin and LC Commission resulting from a change in the S&P Rating so notified by the Company.

104 10 May 2005

SIGNATORIES

Company

CONVERIUM AG, ZURICH

By:          SERGE CADELLI          CHRISTIAN FELDERER

Original Borrowers

CONVERIUM RÜCKVERSICHERUNG (DEUTSCHLAND) AG

By:          FRANK SCHAAR          EWALD STEPHAN

CONVERIUM INSURANCE (UK) LTD.

By:          ALAN GRANT          MALCOLM NEWMAN

Mandated Lead Arrangers

ABN AMRO BANK N.V.

By:          PETER ELLEMANN          DAVID NOWDEN

BARCLAYS CAPITAL

By:          JEFF GARNER

BNP PARIBAS

By:          SIMON ALLOCCA          MARK WATERS

COMMERZBANK AKTIENGESELLSCHAFT

By:          AXEL RICHEBAECHER          MARTINA BOLLER

CREDIT SUISSE FIRST BOSTON

By:          C. KRAMER          U. SCHWARZENBERGER

105 10 May 2005

J.P. MORGAN PLC

By:          CHRISTOPH AUER

Original Lenders

ABN AMRO BANK N.V.

By:          MANFRED LIEBCHEN          ERIK VON FALKENSTEIN

BARCLAYS BANK PLC

By:          JEFF GARNER

BNP PARIBAS

By:          SIMON ALLOCCA          MARK WATERS

COMMERZBANK AKTIENGESELLSCHAFT

By:          AXEL RICHEBAECHER          MARTINA BOLLER

CREDIT SUISSE FIRST BOSTON

By:          C. KRAMER          U. SCHWARZENBERGER

JPMORGAN CHASE BANK N.A.

By:          ROBERT MERRETT

Facility Agent

ABN AMRO BANK N.V.

By:          PETER ELLEMANN          IRENA KORNEROVA

106 10 May 2005

Fronting Bank

ABN AMRO BANK N.V.

By:          MANFRED LIEBCHEN          ERIK VON FALKENSTEIN

107 10 May 2005

EX-4.41

Exhibit 4.41

Execution copy

DEED OF PLEDGE

DATED 15 DECEMBER 2004

CONVERIUM RÜCKVERSICHERUNG (DEUTSCHLAND) AG
as the Pledgor

AND

ABN AMRO BANK N.V.
as the Pledgee

AND

ABN AMRO MELLON GLOBAL SECURITIES SERVICES B.V.
as the Account Bank

ALLEN & OVERY LLP
AMSTERDAM

DEED OF PLEDGE

THIS DEED OF PLEDGE is entered into on 26 November 2004 by and between:

(1)	CONVERIUM RÜCKVERSICHERUNG (DEUTSCHLAND) AG (the Pledgor or the Company);
(2)	ABN AMRO BANK N.V., acting in its capacity as Facility Agent under the Credit Facility (as defined below) (the Pledgee or ABN AMRO); and
(3)	ABN AMRO MELLON GLOBAL SECURITIES SERVICES B.V. a private company with limited liability organised under the laws of the Netherlands, acting for itself and as agent for ABN AMRO Mellon Global Custody B.V. (the Account Bank or AAMGSS).

BACKGROUND:

(i)	The Pledgor and the Pledgee are both parties to the Credit Facility (as defined below);
(ii)	The Pledgor and the Pledgee have agreed that the Pledgor grants a first ranking right of pledge over the Collateral (as defined below) to secure the obligations of the Company to pay the amounts due to ABN AMRO under the Credit Facility and the Parallel Debt (both as defined below);

IT IS AGREED as follows:

1.	DEFINITIONS
1.1	Definitions and Parallel Debt
	In this Agreement:
	“Assets” means Assets as such term is defined in the Custody Agreement (as defined below);
	“Business Day” means a day upon which banks are open for business in the Netherlands and upon which transfers of securities subject to the Giro System Act can be effected by banks that are admitted institutions under the Giro System Act;

2

“Cash Account” means Cash Account(s) as such term is defined in the Custody Agreement (as defined below) particulars of which are set out in Annex B;

“Collateral” means all of the Pledgor’s present and future:

(a) rights to and interests in the Securities that the Pledgor holds in or through the Securities Account;

(b) rights to and interests in each Securities Account (as defined below) and Cash Account;

(c) rights to and interests against:

—  ABN AMRO Mellon Global Securities Services B.V.; and

—  ABN AMRO Mellon Global Custody B.V.

under or pursuant to each Securities Account;

(d) rights against any Subcustodian (as defined in the Custody Agreement) under or pursuant to each Securities Account;

(e) rights against Mellon Bank N.A. and any rights or interests in any accounts in the Pledgor’s name in Mellon Bank N.A. and any securities standing to the credit of that account; and

(f) rights in other Assets (as defined in the Custody Agreement) under or pursuant to each Securities Account.

“Credit Facility” means the USD 1,600,000,000 Credit Facility dated 26 November, 2004 for Converium AG, Zurich arranged by ABN AMRO Bank N.V., Barclays Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan Plc (as amended and restated from time to time);

“Custody Agreement” means the agreement originally entered into on March 25, 2002 between ABN AMRO Bank N.V. and Converium A.G. which was transferred by ABN AMRO Bank N.V. to ABN AMRO Mellon Global Securities Services B.V. pursuant to a Transfer of Custody Contract dated December 5, 2002 by and between ABN AMRO Bank N.V., ABN AMRO Mellon Global Securities Services B.V. and Converium A.G. pursuant to which Custody Agreement Converium (Rückversicherung) Deutschland AG has opened certain securities

3

	accounts in the books of ABN AMRO Mellon Global Securities Services B.V. which are subject to the terms and conditions of the Custody Agreement;
	“Event of Default” means the Company being in default (in verzuim) with regard to any of the Secured Obligations (as defined below);
	“Equivalent Securities” means securities of an identical type, nominal value, description and amount to particular Securities and such term shall include the certificates and other documents of or evidencing title and transfer in respect of the foregoing (as appropriate);
	“Facility Agent” means Facility Agent as further set out in the Credit Facility;
	“Giro System Act” means the Wet giraal effectenverkeer of the Netherlands;
	“Parallel Debt” means the parallel debt as defined in Clause 1.2 hereof;
	“Right of Pledge” means the first ranking right of pledge created pursuant to Clause 2.1 of this Agreement;
	“Secured Obligations” means all obligations of the Pledgor to pay an amount of money under the Finance Documents including all obligations of the Pledgor to the Pledgee to pay any amount due under any Finance Document and any amount due with respect to the Parallel Debt (as defined below);
	“Securities” means Securities as such term is defined in the Custody Agreement; and
	“Securities Account” means each Securities Account of the Company as such term is defined in the Custody Agreement, particulars of which are specified in Annex B hereto.
	Unless the context requires otherwise, capitalised terms used herein, and not specifically defined herein, shall have the same meaning as in the Credit Facility.
1.2	Parallel Debt
	The Company hereby irrevocably and unconditionally undertakes to pay the Pledgee amounts equal to any amounts owing by it from time to time to any Party under the Credit Facility (including but not limited to all Finance Parties (as

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	defined in the Credit Facility)) as and when the same fall due for payment thereunder, so that the Pledgee shall be the obligee of such covenant to pay and shall be entitled to claim performance thereof in its own name and not as agent acting on behalf of the relevant Party or Parties under the Credit Facility. The Company and the Pledgee acknowledge that for this purpose such obligations of the Company are several and are separate and independent from, and without prejudice to, the identical obligations which it has to the Parties under the Credit Facility, provided that this shall not, at the same time, result in the Company incurring an aggregate obligation to any of the Parties under the Credit Facility and the Pledgee which is greater than the obligation to any such Party under the Credit Facility. To this end and without prejudice to the foregoing, it is agreed that (i) the amounts due and payable by the Company under this Clause 1.2 (the Parallel Debt) shall be decreased to the extent that the Company has paid any amounts to the Parties under the Credit Facility or any of them in respect of the amount due under the Credit Facility and vice versa and (ii) the Parallel Debt shall not exceed the aggregate of the corresponding obligations which the Company has to any of the the Parties under the Credit Facility, under such Credit Facility.
	Nothing in this Clause shall in any way negate, affect or increase the obligations of the Company to any of the Parties under the Credit Facility in respect of the amounts due under such Credit Facility. For the purpose of this Clause the Pledgee acts in its own name and on behalf of itself and not as agent or representative of any other party hereto or the Credit Facility and any security granted to the Pledgee to secure the Parallel Debt is granted to the Pledgee in its capacity as creditor of the Parallel Debt and solely for the purpose referred to above.
2.	PLEDGE
2.1	Creation of Right of Pledge
	As security for the Secured Obligations, the Pledgor hereby grants to the Pledgee a first ranking right of pledge (eerste recht van pand) in the Collateral (the Right of Pledge), and the Pledgee hereby accepts such Right of Pledge.
	The Account Bank will register the Right of Pledge in relation to the Securities in its administration in the manner contemplated by Section 20 of the Giro System Act. The Account Bank acting for itself and as agent for ABN AMRO Mellon Global Custody B.V., acknowledges receipt of notice of the Right of Pledge created by this deed.

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2.2	Scope of Right of Pledge
(a)	The Right of Pledge encompasses all rights which the Pledgor now has or may acquire at any time in the future pertaining to the Collateral, including — inter alia — rights to receive interests and other distributions, rights to receive other payments that may from time to time become due and payable under the Securities or any of them.
(b)	The Right of Pledge is one and indivisible (één en ondeelbaar) and shall not be affected by one or more but not all of the Secured Obligations being discharged, amended or supplemented.
2.3	Voting rights power of attorney
	Until the occurrence of an Event of Default, and notice thereof having been given to the Pledgor, the Pledgor shall retain the rights to vote, if any, attached to the Securities. The Pledgor agrees that it shall not exercise its voting rights in any manner which will prejudice the rights of the Pledgee hereunder or which will or may reasonably be expected to adversely affect the value of the Securities.
3.	REPRESENTATIONS AND WARRANTIES
3.1	Representations and warranties
	The Pledgor makes the representations and warranties set out in this Clause 3 to the Pledgee and upon which the Pledgee relies:
3.2	Collateral
(a)	The Securities shall (unless otherwise agreed to in advance in writing by the Pledgee) be securities of the same type, denomination and description as the Securities specified in Annex A.
(b)	Unless this Deed of Pledge explicitly states otherwise, the Collateral has not been and will not be, encumbered with any attachment (beslag) or any right in rem (zakelijk recht) other than for the benefit of the Pledgee and the Pledgor is authorised and able to grant a first ranking right of pledge to the Pledgee in the Collateral, and the legal relationship pursuant to which the Pledgor acquired ownership to the Collateral is not subject to nullification (vernietiging) or

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	rescission (ontbinding) or any defect that might result in rescission or avoidance thereof.
(c)	Save (i) as created under this pledge and (ii) for the security over the Existing Company Custodian Accounts in relation to the Existing Facility no Security Interests exist over or in relation to the Collateral.
(d)	The Securities Accounts have been opened in the books of the Account Bank subject to the terms and conditions of and pursuant to the Custody Agreement and the terms and conditions of such Custody Agreement apply to the relationship between the Company and the Account Bank. The Account Bank explicitly confirms that this representation and warranty is true and correct in all respects.
4.	UNDERTAKINGS BY THE PLEDGOR
4.1	Duration
	The undertakings in this Clause 4 remain in force from the date of this Agreement until the termination of the Right of Pledge in accordance with Clause 7.
4.2	Assistance and further assurance
	Upon the reasonable request of the Pledgee the Pledgor shall immediately render all assistance in order to enable the Pledgee to exercise its rights under this Agreement in respect of the Collateral. The Pledgor shall upon the reasonable request of the Pledgee take all such actions and execute all such additional documents which are necessary or desirable for the purpose of creating, maintaining or perfecting the Right of Pledge or exercising the Pledgee’s rights under this Agreement.
4.3	No disposals or encumbrances

(i)

The Pledgor shall not, without the prior written consent of the Pledgee, sell, dispose of, transfer, pledge, encumber or make any withdrawal from any Securities Account in any other manner, the Collateral until the termination of the Right of Pledge in accordance with Clause 7.

(ii)

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	The prior written consent of the Pledgee for a disposal of the Collateral or withdrawal from a Securities Account shall not be unreasonably withheld under paragraph (i) if the same is done in accordance with, and meets the requirements of, Clause 22.15(c) of the Credit Facility (as determined by the Pledgee).
4.4	No adverse actions
	The Pledgor shall refrain from any action which results in or may reasonably be expected to result in a reduction of the value of the Collateral or which may impair the enforceability of the Right of Pledge.
4.5	Information
	The Pledgor shall at the Pledgee’s reasonable request as soon as practicable provide the Pledgee with copies of any and all bank statements pertaining to the Securities and the Securities Account and the Cash Account and any other Collateral and all information and supporting documentation relating to the Securities and the Securities Account and the Cash Account and any other Collateral. The Pledgor shall forthwith inform the Pledgee of any attachment (beslag) on any of the Collateral and of any other encumbrance, pledge, lien, transfer or other disposal of any of the Collateral.
5.	UNDERTAKINGS BY THE ACCOUNT BANK
5.1	Duration
	The undertakings in this Clause 5 remain in force from the date of this Agreement until the termination of the Right of Pledge in accordance with Clause 7.
5.2	Maintenance of registration
	The Account Bank shall maintain the registration of the Right of Pledge in its administration until the Right of Pledge has been terminated.
5.3	Waiver

(a)

The Account Bank hereby, effective for the duration of the Right of Pledge, waives (doet afstand van) any right of pledge which it may have or in the future

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may obtain in respect of the Collateral pursuant to its general banking conditions or otherwise.

(b)

	ABN AMRO Bank N.V., hereby, effective for the duration of the Right of Pledge, waives (doet afstand van) any right of pledge which it may have or in the future may obtain in respect of the Collateral pursuant to its general banking conditions or otherwise. This waiver does not include any rights of pledge that ABN AMRO Bank N.V. derives from this Agreement. For the purpose of this subclause 5.3(b), ABN AMRO Bank N.V. is not acting in its capacity as Facility Agent but in its own capacity.
	The above waivers are only given to the extent required to enable the Pledgee under this Agreement to obtain and exercise the rights as contemplated by this Agreement.
5.4	Instructions from Pledgee
	The Account Bank shall comply with the terms of any written notice or instructions given by the Pledgee in accordance with the terms of this Agreement in any way relating to the Securities or the Securities Account or any other Collateral. The Account Bank may comply with such notice or instruction without the Pledgor’s approval being required. The Account Bank is under no obligation to make any inquiry as to the validity of such notice or instruction, but if and to the extent that the Account Bank reasonably believes that such written notice or instructions are not or may not be in compliance with the terms of this Agreement or applicable law, the Account Bank may require the Pledgee to provide it with a legal opinion of external legal counsel acceptable to the Account Bank confirming that such written notice or instructions are so in compliance.
	Notwithstanding the above and in accordance with section 3:246 paragraph 4 of the Dutch Civil Code, the Pledgee herewith authorises the Account Bank to continue to accept instructions from the Company as long as these instructions are in compliance with section 4.3 hereof. Such authorisation may be revoked by the Pledgee by sending a written notice to that extent to the Account Bank at any time it sees fit.

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6.	RIGHTS OF THE PLEDGEE
6.1	Foreclosure
	Upon the occurrence of an Event of Default, the Pledgee has the right to exercise all rights and powers which the Pledgee has under Dutch law as holder of a first right of pledge in the Collateral, including without limitation the right to sell the Collateral or any part thereof in accordance with Section 22 of the Giro System Act.
6.2	Application of proceeds
	Upon payment out of the proceeds of all costs referred to in Clause 6.5 which are still due, the Pledgee shall apply the net proceeds of the sale of the Collateral against the Secured Obligations.
6.3	No notice required
	The Pledgee will not be bound to give notice pursuant to Sections 3:249 or 3:252 of the Dutch Civil Code in respect of any sale permitted by Clause 6.1 hereof.
6.4	No request by the Pledgor
	The Pledgor shall not be entitled to file a request with the president of the district court for the sale of any of the Collateral in a manner which deviates from the sale as referred to in Section 22 of the Giro System Act or Section 3:251, paragraph 1, of the Dutch Civil Code.
6.5	Costs
	All reasonable costs which may arise from or may be reasonably incurred in connection with the foreclosure by the Pledgee of the Right of Pledge shall be for the account of the Pledgor.
6.6	Conflicts with Custody Agreement
	If any of the terms of this Agreement conflicts with any of the terms of the Custody Agreement, the relevant terms of this Agreement will prevail.

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7.	TERMINATION
7.1	Termination of Right of Pledge
	The Right of Pledge will remain in full force and effect until the payment in full or termination of all Secured Obligations. The Right of Pledge will terminate automatically on the date and at the time upon which the Credit Facility terminates or is cancelled and all amounts due and payable under the Credit Facility have been fully and finally paid by the Pledgor to the Pledgee under the terms thereof. The Pledgee will give the Account Bank forthwith notice of such termination, without such notice being required to effect the termination.
7.2	Unilateral termination by the Pledgee
	The Pledgee is entitled to unilaterally terminate (opzeggen) the Right of Pledge in whole or in part. Notice of such termination must be given to the Pledgor and the Account Bank.
7.3	Notice of termination
	Each of the Pledgor and the Pledgee are required to notify the Account Bank in writing as soon as it is aware of the termination of the Right of Pledge pursuant to this Clause 7. A failure by either Pledgor or Pledgee to give such notice shall however not invalidate, affect or delay any such termination.
8.	MISCELLANEOUS
8.1	Notices
	Any notices or other communication under or in connection with this Agreement shall be made as provided in the Credit Facility.
	Notices and other communications under this Agreement to the Account Bank may be sent to the following address or fax number:
	ABN AMRO Mellon GSS Regus Office Verlengde Poolseweg 34-46 4818 CL Breda

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	Tel 0031-76-5799711 Fax 0031-76-5799323
	or such other address or fax number as notified by the Account Bank by not less than five business days prior notice.
8.2	Illegality and unenforceability
	If a provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, such shall not affect the legality, validity or enforceability of any other provision of this Agreement and the legality, validity or enforceability in other jurisdictions of that or any other provision of this Agreement.
8.3	Waiver of right to ask for dissolution
	The Pledgor, the Pledgee and the Account Bank hereby waive, to the fullest extent permitted by law, their right to dissolve (ontbinden) this Agreement in whole or in part pursuant to failure in the performance of one or more obligations as referred to in Section 6:265 of the Dutch Civil Code or on any other ground.
8.4	Governing law and jurisdiction
(a)	This Agreement, including the Right of Pledge shall be governed by the laws of the Netherlands.
(b)	The Pledgor, the Pledgee and the Account Bank agree that the competent courts of Amsterdam, judging in first instance, shall have jurisdiction with regard to any and all disputes which may arise out or in connection with this Agreement.

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In witness whereof this Agreement is signed by the parties on the date stated in the beginning of this Agreement

Converium (Rückversicherung) Deutschland AG

ABN AMRO Bank N.V.

ABN AMRO Mellon Global Securities Services B.V.

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Annex A

Details of the Securities

US Treasury Bonds, UK Treasury Bonds and EURO Government Bonds

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Annex B

Details of the Securities Account

CVDF2003902
CVDF2003002

Details of the Cash Account

Same as above

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EX-4.42

Exhibit 4.42

Execution copy

DEED OF PLEDGE

DATED 15 DECEMBER 2004

CONVERIUM AG, ZURICH
as the Pledgor

AND

ABN AMRO BANK N.V.
as the Pledgee

AND

ABN AMRO MELLON GLOBAL SECURITIES SERVICES B.V.
as the Account Bank

ALLEN & OVERY LLP
AMSTERDAM

DEED OF PLEDGE

THIS DEED OF PLEDGE is entered into on 26 November 2004 by and between:

(1)	CONVERIUM AG, ZURICH (the Pledgor or the Company);
(2)	ABN AMRO BANK N.V., acting in its capacity as Facility Agent under the Credit Facility (as defined below) (the Pledgee or ABN AMRO); and
(3)	ABN AMRO MELLON GLOBAL SECURITIES SERVICES B.V. a private company with limited liability organised under the laws of the Netherlands, acting for itself and as agent for ABN AMRO Mellon Global Custody B.V. (the Account Bank or AAMGSS).

BACKGROUND:

(i)	The Pledgor and the Pledgee are both parties to the Credit Facility (as defined below);
(ii)	The Pledgor and the Pledgee have agreed that the Pledgor grants a first ranking right of pledge over the Collateral (as defined below) to secure the obligations of the Company to pay the amounts due to ABN AMRO under the Credit Facility and the Parallel Debt (both as defined below);

IT IS AGREED as follows:

1.	DEFINITIONS
1.1	Definitions and Parallel Debt
	In this Agreement:
	“Assets” means Assets as such term is defined in the Custody Agreement (as defined below);
	“Business Day” means a day upon which banks are open for business in the Netherlands and upon which transfers of securities subject to the Giro System Act can be effected by banks that are admitted institutions under the Giro System Act;

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“Cash Account” means Cash Account(s) as such term is defined in the Custody Agreement (as defined below) particulars of which are set out in Annex B;

“Collateral” means all of the Pledgor’s present and future:

(a) rights to and interests in the Securities that the Pledgor holds in or through the Securities Account;

(b) rights to and interests in each Securities Account (as defined below) and Cash Account;

(c) rights to and interests against:

— ABN AMRO Mellon Global Securities Services B.V.; and

— ABN AMRO Mellon Global Custody B.V.

under or pursuant to each Securities Account;

(d) rights against any Subcustodian (as defined in the Custody Agreement) under or pursuant to each Securities Account;

(e) rights against Mellon Bank N.A. and any rights or interests in any accounts in the Pledgor’s name in Mellon Bank N.A. and any securities standing to the credit of that account; and

(f) rights in other Assets (as defined in the Custody Agreement) under or pursuant to each Securities Account.

“Credit Facility” means the USD 1,600,000,000 Credit Facility dated 26 November, 2004 for Converium AG, Zurich arranged by ABN AMRO Bank N.V., Barclays Capital, BNP Paribas, Commerzbank Aktiengesellschaft, Credit Suisse First Boston and J.P. Morgan Plc (as amended and restated from time to time);

“Custody Agreement” means the agreement originally entered into on March 25, 2002 between ABN AMRO Bank N.V. and Converium A.G. which was transferred by ABN AMRO Bank N.V. to ABN AMRO Mellon Global Securities Services B.V. pursuant to a Transfer of Custody Contract dated December 5, 2002 by and between ABN AMRO Bank N.V., ABN AMRO Mellon Global Securities Services B.V. and Converium A.G.;

“Event of Default” means the Company being in default (in verzuim) with regard to any of the Secured Obligations (as defined below);

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“Equivalent Securities” means securities of an identical type, nominal value, description and amount to particular Securities and such term shall include the certificates and other documents of or evidencing title and transfer in respect of the foregoing (as appropriate);

“Existing Company Custodian Accounts” means the accounts and other rights that have been pledged by the Company to the Pledgee in relation to the Existing Facility on or around September 2004 through the Existing Pledge, including the accounts mentioned under (a) through (e) in Annex B hereto.

“Existing Pledge” means the deed of pledge entered into by the Company, the Pledgee and the Account Bank on or around September 2004 in relation to the Existing Facility.

“Facility Agent” means Facility Agent as further set out in the Credit Facility;

“Giro System Act” means the Wet giraal effectenverkeer of the Netherlands;

“Parallel Debt” means the parallel debt as defined in Clause 1.2 hereof;

“Right of Pledge” means the first ranking right of pledge created pursuant to Clause 2.1 of this Agreement;

“Secured Obligations” means all obligations of the Pledgor to pay an amount of money under the Finance Documents including all obligations of the Pledgor to the Pledgee to pay any amount due under any Finance Document and any amount due with respect to the Parallel Debt (as defined below);

“Securities” means Securities as such term is defined in the Custody Agreement; and

“Securities Account” means each Securities Account of the Company as such term is defined in the Custody Agreement, particulars of which are specified in Annex B hereto.

Unless the context requires otherwise, capitalised terms used herein, and not specifically defined herein, shall have the same meaning as in the Credit Facility.

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1.2	Parallel Debt
	The Company hereby irrevocably and unconditionally undertakes to pay the Pledgee amounts equal to any amounts owing by it from time to time to any Party under the Credit Facility (including but not limited to all Finance Parties (as defined in the Credit Facility)) as and when the same fall due for payment thereunder, so that the Pledgee shall be the obligee of such covenant to pay and shall be entitled to claim performance thereof in its own name and not as agent acting on behalf of the relevant Party or Parties under the Credit Facility. The Company and the Pledgee acknowledge that for this purpose such obligations of the Company are several and are separate and independent from, and without prejudice to, the identical obligations which it has to the Parties under the Credit Facility, provided that this shall not, at the same time, result in the Company incurring an aggregate obligation to any of the Parties under the Credit Facility and the Pledgee which is greater than the obligation to any such Party under the Credit Facility. To this end and without prejudice to the foregoing, it is agreed that (i) the amounts due and payable by the Company under this Clause 1.2 (the Parallel Debt) shall be decreased to the extent that the Company has paid any amounts to the Parties under the Credit Facility or any of them in respect of the amount due under the Credit Facility and vice versa and (ii) the Parallel Debt shall not exceed the aggregate of the corresponding obligations which the Company has to any of the the Parties under the Credit Facility, under such Credit Facility.
	Nothing in this Clause shall in any way negate, affect or increase the obligations of the Company to any of the Parties under the Credit Facility in respect of the amounts due under such Credit Facility. For the purpose of this Clause the Pledgee acts in its own name and on behalf of itself and not as agent or representative of any other party hereto or the Credit Facility and any security granted to the Pledgee to secure the Parallel Debt is granted to the Pledgee in its capacity as creditor of the Parallel Debt and solely for the purpose referred to above.
2.	PLEDGE
2.1	Creation of Right of Pledge
	As security for the Secured Obligations, the Pledgor hereby grants to the Pledgee a first ranking right of pledge (eerste recht van pand) in the Collateral (the Right of Pledge), and the Pledgee hereby accepts such Right of Pledge.

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	The Account Bank will register the Right of Pledge in relation to the Securities in its administration in the manner contemplated by Section 20 of the Giro System Act. The Account Bank acting for itself and as agent for ABN AMRO Mellon Global Custody B.V., acknowledges receipt of notice of the Right of Pledge created by this deed.
2.2	Scope of Right of Pledge
(a)	The Right of Pledge encompasses all rights which the Pledgor now has or may acquire at any time in the future pertaining to the Collateral, including — inter alia — rights to receive interests and other distributions, rights to receive other payments that may from time to time become due and payable under the Securities or any of them.
(b)	The Right of Pledge is one and indivisible (één en ondeelbaar) and shall not be affected by one or more but not all of the Secured Obligations being discharged, amended or supplemented.
2.3	Voting rights power of attorney
	Until the occurrence of an Event of Default, and notice thereof having been given to the Pledgor, the Pledgor shall retain the rights to vote, if any, attached to the Securities. The Pledgor agrees that it shall not exercise its voting rights in any manner which will prejudice the rights of the Pledgee hereunder or which will or may reasonably be expected to adversely affect the value of the Securities.
2.4	No exercise of rights in conflict with existing pledge
	The Right of Pledge with respect to the Existing Company Custodian Accounts shall not be exercised without the prior written consent of the facility agent with respect to the Existing Facility until the date on which the facility agent with respect to the Existing Facility notifies the Pledgee that the security over the Existing Company Custodian Accounts in relation to the Existing Facility has been discharged.
3.	REPRESENTATIONS AND WARRANTIES
3.1	Representations and warranties

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	The Pledgor makes the representations and warranties set out in this Clause 3 to the Pledgee and upon which the Pledgee relies:
3.2	Collateral
(a)	The Securities shall (unless otherwise agreed to in advance in writing by the Pledgee) be securities of the same type, denomination and description as the Securities specified in Annex A.
(b)	Unless this Deed of Pledge explicitly states otherwise, the Collateral has not been and will not be, encumbered with any attachment (beslag) or any right in rem (zakelijk recht) other than for the benefit of the Pledgee and the Pledgor is authorised and able to grant a first ranking right of pledge to the Pledgee in the Collateral, and the legal relationship pursuant to which the Pledgor acquired ownership to the Collateral is not subject to nullification (vernietiging) or rescission (ontbinding) or any defect that might result in rescission or avoidance thereof.
(c)	Save (i) as created under this pledge and (ii) for the security over the Existing Company Custodian Accounts in relation to the Existing Facility no Security Interests exist over or in relation to the Collateral.
4.	UNDERTAKINGS BY THE PLEDGOR
4.1	Duration
	The undertakings in this Clause 4 remain in force from the date of this Agreement until the termination of the Right of Pledge in accordance with Clause 7.
4.2	Assistance and further assurance
	Upon the reasonable request of the Pledgee the Pledgor shall immediately render all assistance in order to enable the Pledgee to exercise its rights under this Agreement in respect of the Collateral. The Pledgor shall upon the reasonable request of the Pledgee take all such actions and execute all such additional documents which are necessary or desirable for the purpose of creating, maintaining or perfecting the Right of Pledge or exercising the Pledgee’s rights under this Agreement.

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4.3 No disposals or encumbrances

(i)

The Pledgor shall not, without the prior written consent of the Pledgee, sell, dispose of, transfer, pledge, encumber or make any withdrawal from any Securities Account in any other manner, the Collateral until the termination of the Right of Pledge in accordance with Clause 7.

(ii)

	The prior written consent of the Pledgee for a disposal of the Collateral or withdrawal from a Securities Account shall not be unreasonably withheld under paragraph (i) if the same is done in accordance with, and meets the requirements of, Clause 22.15(c) of the Credit Facility (as determined by the Pledgee).
4.4	No adverse actions
	The Pledgor shall refrain from any action which results in or may reasonably be expected to result in a reduction of the value of the Collateral or which may impair the enforceability of the Right of Pledge.
4.5	Information
	The Pledgor shall at the Pledgee’s reasonable request as soon as practicable provide the Pledgee with copies of any and all bank statements pertaining to the Securities and the Securities Account and the Cash Account and any other Collateral and all information and supporting documentation relating to the Securities and the Securities Account and the Cash Account and any other Collateral. The Pledgor shall forthwith inform the Pledgee of any attachment (beslag) on any of the Collateral and of any other encumbrance, pledge, lien, transfer or other disposal of any of the Collateral.
5.	UNDERTAKINGS BY THE ACCOUNT BANK
5.1	Duration
	The undertakings in this Clause 5 remain in force from the date of this Agreement until the termination of the Right of Pledge in accordance with Clause 7.

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5.2	Maintenance of registration
	The Account Bank shall maintain the registration of the Right of Pledge in its administration until the Right of Pledge has been terminated.
5.3	Waiver

(a)

The Account Bank hereby, effective for the duration of the Right of Pledge, waives (doet afstand van) any right of pledge which it may have or in the future may obtain in respect of the Collateral pursuant to its general banking conditions or otherwise.

(b)

	ABN AMRO Bank N.V., hereby, effective for the duration of the Right of Pledge, waives (doet afstand van) any right of pledge which it may have or in the future may obtain in respect of the Collateral pursuant to its general banking conditions or otherwise. This waiver does not include any rights of pledge that ABN AMRO Bank N.V. derives form this Agreement or from the Existing Pledge. For the purpose of this subclause 5.3(b), ABN AMRO Bank N.V. is not acting in its capacity as Facility Agent but solely in its own capacity.
	The above waivers are only given to the extent required to enable the Pledgee under this Agreement to obtain and exercise the rights as contemplated by this Agreement.
5.4	Instructions from Pledgee
	The Account Bank shall comply with the terms of any written notice or instructions given by the Pledgee in accordance with the terms of this Agreement in any way relating to the Securities or the Securities Account or any other Collateral. The Account Bank may comply with such notice or instruction without the Pledgor’s approval being required. The Account Bank is under no obligation to make any inquiry as to the validity of such notice or instruction, but if and to the extent that the Account Bank reasonably believes that such written notice or instructions are not or may not be in compliance with the terms of this Agreement or applicable law, the Account Bank may require the Pledgee to provide it with a legal opinion of external legal counsel acceptable to the Account Bank confirming that such written notice or instructions are so in compliance.

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	Notwithstanding the above and in accordance with section 3:246 paragraph 4 of the Dutch Civil Code, the Pledgee herewith authorises the Account Bank to continue to accept instructions from the Company as long as these instructions are in compliance with section 4.3 hereof. Such authorisation may be revoked by the Pledgee by sending a written notice to that extent to the Account Bank at any time it sees fit.
6.	RIGHTS OF THE PLEDGEE
6.1	Foreclosure
	Upon the occurrence of an Event of Default, the Pledgee has the right to exercise all rights and powers which the Pledgee has under Dutch law as holder of a first right of pledge in the Collateral, including without limitation the right to sell the Collateral or any part thereof in accordance with Section 22 of the Giro System Act.
6.2	Application of proceeds
	Upon payment out of the proceeds of all costs referred to in Clause 6.5 which are still due, the Pledgee shall apply the net proceeds of the sale of the Collateral against the Secured Obligations.
6.3	No notice required
	The Pledgee will not be bound to give notice pursuant to Sections 3:249 or 3:252 of the Dutch Civil Code in respect of any sale permitted by Clause 6.1 hereof.
6.4	No request by the Pledgor
	The Pledgor shall not be entitled to file a request with the president of the district court for the sale of any of the Collateral in a manner which deviates from the sale as referred to in Section 22 of the Giro System Act or Section 3:251, paragraph 1, of the Dutch Civil Code.
6.5	Costs
	All reasonable costs which may arise from or may be reasonably incurred in connection with the foreclosure by the Pledgee of the Right of Pledge shall be for the account of the Pledgor.

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6.6	Conflicts with Custody Agreement
	If any of the terms of this Agreement conflicts with any of the terms of the Custody Agreement, the relevant terms of this Agreement will prevail.
7.	TERMINATION
7.1	Termination of Right of Pledge
	The Right of Pledge will remain in full force and effect until the payment in full or termination of all Secured Obligations. The Right of Pledge will terminate automatically on the date and at the time upon which the Credit Facility terminates or is cancelled and all amounts due and payable under the Credit Facility have been fully and finally paid by the Pledgor to the Pledgee under the terms thereof. The Pledgee will give the Account Bank forthwith notice of such termination, without such notice being required to effect the termination.
7.2	Unilateral termination by the Pledgee
	The Pledgee is entitled to unilaterally terminate (opzeggen) the Right of Pledge in whole or in part. Notice of such termination must be given to the Pledgor and the Account Bank.
7.3	Notice of termination
	Each of the Pledgor and the Pledgee are required to notify the Account Bank in writing as soon as it is aware of the termination of the Right of Pledge pursuant to this Clause 7. A failure by either Pledgor or Pledgee to give such notice shall however not invalidate, affect or delay any such termination.
8.	MISCELLANEOUS
8.1	Notices
	Any notices or other communication under or in connection with this Agreement shall be made as provided in the Credit Facility.
	Notices and other communications under this Agreement to the Account Bank may be sent to the following address or fax number:

11

	ABN AMRO Mellon GSS Regus Office Verlengde Poolseweg 34-46 4818 CL Breda
	Tel 0031-76-5799711 Fax 0031-76-5799323
	or such other address or fax number as notified by the Account Bank by not less than five business days prior notice.
8.2	Illegality and unenforceability
	If a provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, such shall not affect the legality, validity or enforceability of any other provision of this Agreement and the legality, validity or enforceability in other jurisdictions of that or any other provision of this Agreement.
8.3	Waiver of right to ask for dissolution
	The Pledgor, the Pledgee and the Account Bank hereby waive, to the fullest extent permitted by law, their right to dissolve (ontbinden) this Agreement in whole or in part pursuant to failure in the performance of one or more obligations as referred to in Section 6:265 of the Dutch Civil Code or on any other ground.
8.4	Governing law and jurisdiction
(a)	This Agreement, including the Right of Pledge shall be governed by the laws of the Netherlands.
(b)	The Pledgor, the Pledgee and the Account Bank agree that the competent courts of Amsterdam, judging in first instance, shall have jurisdiction with regard to any and all disputes which may arise out or in connection with this Agreement.

12

In witness whereof this Agreement is signed by the parties on the date stated in the beginning of this Agreement

Converium AG, Zurich

ABN AMRO Bank N.V.

ABN AMRO Mellon Global Securities Services B.V.

13

Annex A

Details of the Securities

US Treasury Bonds, UK Treasury Bonds and EURO Government Bonds

14

Annex B

Details of the Securities Account

(a) account number CVZF0001002
(b) account number CVZF0006002
(c) account number CVZF0008002
(d) account number CVZF0540072
(e) account number CVZF5008522
(f) account number CVZ0011002

Details of the Cash Account

Same as above

15

EX-4.43

Exhibit 4.43

This Guarantee is dated October 21, 2004 between:

By Converium AG (“Guarantor”) to and in favor of the Insureds (as defined below) of Converium Insurance (UK) Limited (the “Company”)

Preamble

A.	The Company is the direct 100% subsidiary of the Guarantor and is considered by the Guarantor to be wholly integral to the Guarantor’s current group identity and future strategy.
B.	The Company is authorised by the United Kingdom Financial Services Authority to conduct insurance business pursuant to the Financial Services and Markets Act 2000.
C.	The Guarantor has agreed to enter into this Guarantee for the benefit of the Company’s Insureds. This Guarantee is a guarantee of payment, not of collection, and is unconditional, other than as expressly stated herein.

It is agreed as follows:

1.   Interpretation

1.1   In this Guarantee,

“Insured” means the person(s) named in a Policy as being the beneficiary of that Policy and any legal successor of such person who is entitled to become the beneficiary of the Policy in substitution for such person.

“Policy” means a policy, slip or other agreement pursuant to which the Company insures or reinsures any person.

“Rating Agency” means Standard & Poor’s a division of McGraw-Hill Companies of 20 Canada Square, Canary Wharf, London E14 5LH.

2.	Guarantee
	The Guarantor hereby undertakes, on and subject to the terms of this Guarantee which shall be governed by article 112 of the Swiss Code of Obligations, that whenever:

a)   (i) the Company does not pay any amount which is due and payable under a Policy to an Insured pursuant to that Policy within 20 days’ after receipt of a written request therefor by the Company; or (ii) in the case the Company refuses, in good faith, to make any such payment as per para. (i) above, such payment is, based on a final judgment or decision of a competent court or administration, adjudicated to be made by the Company to the Insured; or

Page 1 of 6

b)	any payment made by the Company to the Insured pursuant to a Policy is repaid to the Company or its legal representative by the Insured based on a final judgment or decision of a competent court or administration rendered in connection with the Company’s insolvency or bankruptcy
	the Guarantor shall, on receipt of a notice or demand in writing from the Insured, pay that amount as if the Guarantor instead of the Company were expressed to be the principal obligor.

3.   Term of Guarantee

3.1	Termination. This Guarantee shall continue until terminated by not less than 90 days written notice given to the Company, copied to the Rating Agency and published by the Rating Agency or the Guarantor and shall thereupon be of no further force or effect in respect of any Policies issued or renewed on or after the date of termination.
3.2	Continuation. The termination of this Guarantee in accordance with clause 3.1 shall not affect the Guarantor’s liability in respect of any Policies issued or renewed by the Company prior to the date of such termination, in respect of which Policies this Guarantee is a continuing guarantee and will extend to all sums payable by the Company under those Policies.

4.   No greater Liability

4.1

The Guarantor shall have no greater liability to any Insured than the Company and shall be entitled to rely on all rights of the Company under the terms of the Policy but the Guarantor shall not re-investigate the Insured’s entitlement to payment in circumstances where a payment from the Company has already been determined in compliance with the Company’s claims determination process to be due and payable under the Policy, except where the Company is in administration, liquidation, receivership or subject to some similar form of insolvency arrangement in which a non-connected party is responsible for the management of the Company.

4.2

Under no circumstances shall the Guarantor be liable to make any payment under this Guarantee with respect to any payment under a Policy not due and payable by the Company at the time of a request for payment from the Guarantor.

5.

Subrogation & Recovery

The Guarantor shall be entitled to require the Insured, as a condition precedent of payment, to execute documentation reasonably required by the Guarantor to ensure that the Guarantor has all (i) rights of or akin to subrogation against the Company with respect to the amounts payable or paid by the Guarantor and/or (ii) rights of recovery which would have been available to the Company pursuant to the Policy or any associated documentation in the event that the claim had been paid by the Company but otherwise waives its right to subrogation until the amount due to the relevant Insured is paid in full.

Page 2 of 6

6.	Payment
	Subject to and on the terms of this Guarantee, the Guarantor, upon notice or demand in writing from an Insured, clearly identifying (either in that written demand or separately and requiring no particular form of words) the Insured’s intention to rely on its rights as a third party beneficiary under this Guarantee, will promptly remit to the Insured, in cleared funds in the currency required by the terms of the Policy, amounts due for payment by the Company to the Insured, in the circumstances stated in clause 2 and subject to the terms and conditions of this Guarantee.
7.	Waiver of Set Off
	All payments owed by the Guarantor under this Guarantee shall be made without set-off or counterclaim.
8.	Gross-Up for Taxation
	All payments by the Guarantor under this Guarantee shall be made free and clear of and without deduction for or on account of any present or future taxes or duties of whatever nature imposed on or levied from the Guarantor by or on behalf of any competent authority having power to tax, except to the extent that the Guarantor is required by law or regulation to deduct such taxes or duties. In that event, the Guarantor will pay such additional amounts as will result (after deduction of the taxes or duties) in the payment to the Insured of the amount which would otherwise have been payable to the Insured by the Company.
9.	Representations
	The Guarantor represents on the date of this Guarantee and on each date that this Guarantee is outstanding that:

a)	This Guarantee constitutes the legal, valid and binding obligations of the Guarantor;
b)	this Guarantee is within the powers of the Guarantor;
c)	this Guarantee has been duly authorised by the Guarantor;
d)	this Guarantee does not and will not breach any instrument, agreement or undertaking by which the Guarantor or any of its assets is bound and where such breach would have a material adverse effect on its ability to perform its obligations under this Guarantee;
e)	this Guarantee does not and will not violate any applicable law, rule or regulation by which the Guarantor or any of its assets is bound and where such breach would have a material adverse effect on its ability to perform its obligations under this Guarantee;

Page 3 of 6

f)	all consents and authorisations necessary in relation to this Guarantee have been obtained and are in force; and
g)	the Guarantor’s obligations under this Guarantee rank pari-passu with the unsecured debt obligations (other than subordinated obligations, if any, which rank below the Guarantor’s obligations under this Guarantee) of the Guarantor.

10.   Third Party Rights

10.1	Each Insured in respect of whom a Policy is issued during the continuance in force of this Guarantee shall be a beneficiary of this Guarantee for so long as the Company continues to have a liability to such Insured under such Policy.
10.2	The Company is not a beneficiary of this Guarantee.
10.3	No other party other than the Guarantor, Company or Insured has any rights under or in respect of this Guarantee.

11.   Transfers & Succession

11.1	By the Guarantor. The Guarantor may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Guarantee but this Guarantee shall continue in force and be binding on any successor of the Guarantor.
11.2	By the Company. The Company may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Guarantee.
11.3	By the Insured. No Insured may assign, transfer, novate or dispose of any of, or any interest in its rights and/or obligations under this Guarantee except that, if the Policy pursuant to which such rights arise expressly permits such transfer and such transfer has been made on or prior to the date on which the Company became liable to make a payment to the Insured under that Policy, the Insured may transfer its rights under this Guarantee to the transferee of the Policy rights.

Page 4 of 6

12.   Amendment

12.1	Amendment. This Guarantee may only be amended by a written instrument signed by the authorised signatories of the Guarantor and the Company, which shall not take effect earlier than the expiry of 90 days from the date on which the Rating Agency receives notice of the amendment.
12.2	No prior effect. No amendment shall have the effect of avoiding, reducing or limiting the rights under this Guarantee of an Insured whose Policy was issued or renewed prior to the date of such amendment.

13.   Notices

13.1	Giving of notices
	All notices or other communications under or in connection with this Guarantee shall be in writing and delivered by both (a) either fax or e-mail and (b) by a method of personal, postal or courier delivery which includes the acknowledgement of receipt. Any such notice will be deemed to be received at the earliest business day on which the notice is in fact received during normal business hours in the place of receipt (or if received other than on a business day or in business hours, on the next such business day.)
13.2	Addresses for notices
	The address and facsimile number of the Company is:

Converium Insurance (UK) Limited
71 Fenchurch Street
London EC3M 4BS
United Kingdom
Facsimile No:	+44 20 7553 8120
For the attention of:	Chief Executive Officer

The address and facsimile number of the Guarantor is:

Converium AG
General Guisan-Quai 26
P.O. Box
CH-8022 Zurich
Switzerland
Facsimile No:	+41 1 639 9090
For the attention of:	General Legal Counsel

Page 5 of 6

The address and facsimile number of the Rating Agency is:

Standard & Poor’s
20 Canada Square
Canary Wharf
London E14 5LH
U.K.
Facsimile No:	+44 020 7176 7003
For the attention of:	The Standard & Poor’s analyst for Converium

Or such other addresses or facsimile numbers as may be notified by the party named above to the other parties named above by notice given in accordance with the provisions of this clause.

13.3	Notice of Demand
	An Insured may make a demand under this Guarantee by giving written notice to the Guarantor and the Company in accordance with the requirements of clause 13.

14   Governing Law and Jurisdiction

14.1	Governing law. This Guarantee is governed by Swiss law.
14.2	Courts. Each of the parties hereto irrevocably agrees for the benefit of the other that the commercial court (Handelsgericht) of the Canton of Zurich, Switzerland, shall have exclusive jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Guarantee.

This Guarantee has been entered into on the date stated at the beginning of this Guarantee.

For Converium AG:

/s/ BENJAMIN GENTSCH	/s/ DIRK LOHMANN
Benjamin Gentsch	Dirk Lohmann
Vice-Chairman of the Board of Directors	Chairman of the Board of Directors
& Executive Vice-President	& Chief Executive Officer
Specialty Lines

For Converium Insurance (UK) Limited:

/s/ ALAN GRANT	/s/ MALCOLM NEWMAN
Alan Grant	Malcolm Newman
Chief Executive Officer	Chief Financial Officer

Page 6 of 6

EX-4.44

Exhibit 4.44

This Guarantee is dated October 21, 2004 between:

By Converium AG (“Guarantor”) to and in favor of the Insureds (as defined below) of Converium Ruckversicherung (Deutschland) AG (the “Company”)

Preamble

A.	The Company is the direct 100% subsidiary of the Guarantor and is considered by the Guarantor to be wholly integral to the Guarantor’s current group identity and future strategy.
B.	The Company is registered with the Commercial Register in Cologne, HRB 706. No authorization by the supervisory authority (BAFin) has been necessary. However, the Company is subject to indirect supervision under German Insurance Supervisory Law (VAG).
C.	The Guarantor has agreed to enter into this Guarantee for the benefit of the Company’s Insureds. This Guarantee is a guarantee of payment, not of collection, and is unconditional, other than as expressly stated herein.

It is agreed as follows:

1.   Interpretation

1.1	In this Guarantee,
	“Insured” means the person(s) named in a Policy as being the beneficiary of that Policy and any legal successor of such person who is entitled to become the beneficiary of the Policy in substitution for such person.
	“Policy” means a policy, slip or other agreement pursuant to which the Company insures or reinsures any person.
	“Rating Agency” means Standard & Poor’s a division of McGraw-Hill Companies of 20 Canada Square, Canary Wharf, London E14 5LH.

2.	Guarantee
	The Guarantor hereby undertakes, on and subject to the terms of this Guarantee which shall be governed by article 112 of the Swiss Code of Obligations, that whenever:

a)   (i) the Company does not pay any amount which is due and payable under a Policy to an Insured pursuant to that Policy within 20 days’ after receipt of a written request therefor by the Company; or (ii) in the case the Company refuses, in good faith, to make any such payment as per para. (i) above, such payment is, based on a final judgment or decision of a competent court or administration, adjudicated to be made by the Company to the Insured; or

Page 1 of 6

b)	any payment made by the Company to the Insured pursuant to a Policy is repaid to the Company or its legal representative by the Insured based on a final judgment or decision of a competent court or administration rendered in connection with the Company’s insolvency or bankruptcy
	the Guarantor shall, on receipt of a notice or demand in writing from the Insured, pay that amount as if the Guarantor instead of the Company were expressed to be the principal obligor.

3.   Term of Guarantee

3.1	Termination. This Guarantee shall continue until terminated by not less than 90 days written notice given to the Company, copied to the Rating Agency and published by the Rating Agency or the Guarantor and shall thereupon be of no further force or effect in respect of any Policies issued or renewed on or after the date of termination.
3.2	Continuation. The termination of this Guarantee in accordance with clause 3.1 shall not affect the Guarantor’s liability in respect of any Policies issued or renewed by the Company prior to the date of such termination, in respect of which Policies this Guarantee is a continuing guarantee and will extend to all sums payable by the Company under those Policies.

4.   No greater Liability

4.1

The Guarantor shall have no greater liability to any Insured than the Company and shall be entitled to rely on all rights of the Company under the terms of the Policy but the Guarantor shall not re-investigate the Insured’s entitlement to payment in circumstances where a payment from the Company has already been determined in compliance with the Company’s claims determination process to be due and payable under the Policy, except where the Company is in administration, liquidation, receivership or subject to some similar form of insolvency arrangement in which a non-connected party is responsible for the management of the Company.

4.2

Under no circumstances shall the Guarantor be liable to make any payment under this Guarantee with respect to any payment under a Policy not due and payable by the Company at the time of a request for payment from the Guarantor.

5.

Subrogation & Recovery

The Guarantor shall be entitled to require the Insured, as a condition precedent of payment, to execute documentation reasonably required by the Guarantor to ensure that the Guarantor has all (i) rights of or akin to subrogation against the Company with respect to the amounts payable or paid by the Guarantor and/or (ii) rights of recovery which would have been available to the Company pursuant to the Policy or any associated documentation in the event that the claim had been paid by the Company but otherwise waives its right to subrogation until the amount due to the relevant Insured is paid in full.

Page 2 of 6

6.	Payment
	Subject to and on the terms of this Guarantee, the Guarantor, upon notice or demand in writing from an Insured, clearly identifying (either in that written demand or separately and requiring no particular form of words) the Insured’s intention to rely on its rights as a third party beneficiary under this Guarantee, will promptly remit to the Insured, in cleared funds in the currency required by the terms of the Policy, amounts due for payment by the Company to the Insured, in the circumstances stated in clause 2 and subject to the terms and conditions of this Guarantee.
7.	Waiver of Set Off
	All payments owed by the Guarantor under this Guarantee shall be made without set-off or counterclaim.
8.	Gross-Up for Taxation
	All payments by the Guarantor under this Guarantee shall be made free and clear of and without deduction for or on account of any present or future taxes or duties of whatever nature imposed on or levied from the Guarantor by or on behalf of any competent authority having power to tax, except to the extent that the Guarantor is required by law or regulation to deduct such taxes or duties. In that event, the Guarantor will pay such additional amounts as will result (after deduction of the taxes or duties) in the payment to the Insured of the amount which would otherwise have been payable to the Insured by the Company.
9.	Representations
	The Guarantor represents on the date of this Guarantee and on each date that this Guarantee is outstanding that:

a)	This Guarantee constitutes the legal, valid and binding obligations of the Guarantor;
b)	this Guarantee is within the powers of the Guarantor;
c)	this Guarantee has been duly authorised by the Guarantor;

Page 3 of 6

d)	this Guarantee does not and will not breach any instrument, agreement or undertaking by which the Guarantor or any of its assets is bound and where such breach would have a material adverse effect on its ability to perform its obligations under this Guarantee;
e)	this Guarantee does not and will not violate any applicable law, rule or regulation by which the Guarantor or any of its assets is bound and where such breach would have a material adverse effect on its ability to perform its obligations under this Guarantee;
f)	all consents and authorisations necessary in relation to this Guarantee have been obtained and are in force; and
g)	the Guarantor’s obligations under this Guarantee rank pari-passu with the unsecured debt obligations (other than subordinated obligations, if any, which rank below the Guarantor’s obligations under this Guarantee) of the Guarantor.

10.   Third Party Rights

10.1	Each Insured in respect of whom a Policy is issued during the continuance in force of this Guarantee shall be a beneficiary of this Guarantee for so long as the Company continues to have a liability to such Insured under such Policy.
10.2	The Company is not a beneficiary of this Guarantee.
10.3	No other party other than the Guarantor, Company or Insured has any rights under or in respect of this Guarantee.

11.   Transfers & Succession

11.1	By the Guarantor. The Guarantor may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Guarantee but this Guarantee shall continue in force and be binding on any successor of the Guarantor.
11.2	By the Company. The Company may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Guarantee.
11.3	By the Insured. No Insured may assign, transfer, novate or dispose of any of, or any interest in its rights and/or obligations under this Guarantee except that, if the Policy pursuant to which such rights arise expressly permits such transfer and such transfer has been made on or prior to the date on which the Company became liable to make a payment to the Insured under that Policy, the Insured may transfer its rights under this Guarantee to the transferee of the Policy rights.

Page 4 of 6

12.   Amendment

12.1	Amendment. This Guarantee may only be amended by a written instrument signed by the authorised signatories of the Guarantor and the Company, which shall not take effect earlier than the expiry of 90 days from the date on which the Rating Agency receives notice of the amendment.
12.2	No prior effect. No amendment shall have the effect of avoiding, reducing or limiting the rights under this Guarantee of an Insured whose Policy was issued or renewed prior to the date of such amendment.

13.   Notices

13.1	Giving of notices
	All notices or other communications under or in connection with this Guarantee shall be in writing and delivered by both (a) either fax or e-mail and (b) by a method of personal, postal or courier delivery which includes the acknowledgement of receipt. Any such notice will be deemed to be received at the earliest business day on which the notice is in fact received during normal business hours in the place of receipt (or if received other than on a business day or in business hours, on the next such business day.)
13.2	Addresses for notices
	The address and facsimile number of the Company is:

Converium Ruckversicherung (Deutschland) AG
Clever Strasse 36
D-50668 Cologne
Germany
Facsimile No:	+49 221 539 2022
For the attention of:	Chief Executive Officer

The address and facsimile number of the Guarantor is:

Converium AG
General Guisan-Quai 26
P.O. Box
CH-8022 Zurich
Switzerland
Facsimile No:	+41 1 639 9090
For the attention of:	General Legal Counsel

Page 5 of 6

The address and facsimile number of the Rating Agency is:

Standard & Poor’s
20 Canada Square
Canary Wharf
London E14 5LH
U.K.
Facsimile No:	+44 020 7176 7003
For the attention of:	The Standard & Poor’s analyst for Converium

Or such other addresses or facsimile numbers as may be notified by the party named above to the other parties named above by notice given in accordance with the provisions of this clause.

13.3	Notice of Demand
	An Insured may make a demand under this Guarantee by giving written notice to the Guarantor and the Company in accordance with the requirements of clause 13.

14   Governing Law and Jurisdiction

14.1	Governing law. This Guarantee is governed by Swiss law.
14.2	Courts. Each of the parties hereto irrevocably agrees for the benefit of the other that the commercial court (Handelsgericht) of the Canton of Zurich, Switzerland, shall have exclusive jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Guarantee.

This Guarantee has been entered into on the date stated at the beginning of this Guarantee.

For Converium AG:

/s/ BENJAMIN GENTSCH	/s/ DIRK LOHMANN
Benjamin Gentsch	Dirk Lohmann
Vice-Chairman of the Board of Directors	Chairman of the Board of Directors
& Executive Vice-President	& Chief Executive Officer
Specialty Lines

For Converium Rückversicherung (Deutschland) AG:

/s/ FRANK SCHAAR	/s/ EWALD STEPHAN
Frank Schaar	Ewald Stephan
Chief Executive Officer	Chief Financial Officer

Page 6 of 6

EX-4.45

EXHIBIT 4.45

DATED 7^TH JANUARY 2005

GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED

- and -

GLOBAL AEROSPACE, INC.

- and -

MÜNCHENER RÜCKVERSICHERUNGS-
GESELLSCHAFT AKTIENGESELLSCHAFT
IN MÜNCHEN

- and -

NATIONAL INDEMNITY COMPANY

- and -

CONVERIUM AG

FRONTING AND ADMINISTRATION
AGREEMENT RELATING TO THE GLOBAL
AEROSPACE UNDERWRITERS POOL

 
 
 
 
 

CONTENTS

CLAUSE		PAGE
1.	DEFINITIONS		4
2.	APPOINTMENT OF GLOBAL AND GAI TO WRITE FRONTING INSURANCE		9
3.	CONVERIUM’S REINSURANCE AND INDEMNITY OBLIGATIONS		13
4.	DUTIES & WAIVERS		15
5.	PREMIUMS AND POOL PAYMENTS		17
6.	OVERRIDING COMMISSION		18
7.	CLAIMS		19
8.	ACCOUNTS AND INFORMATION		20
9.	RELATIONSHIP BETWEEN THE PARTIES		21
10.	TERMINATION		21
11.	CONFIDENTIALITY		25
12.	UNDERTAKINGS		26
13.	MUNICH RE SECURITY		27
14.	NATIONAL INDEMNITY SECURITY		31
15.	DISPUTE RESOLUTION		36
16.	LETTERS OF CREDIT AND AUTHORITY		36
17.	SET-OFF		37
18.	REGULATORY MATTERS		37
19.	WAIVER OF OBLIGATIONS		37
20.	AMENDMENT AND REPRESENTATIONS		37
21.	ASSIGNMENT		38
22.	NOTICES AND COMMUNICATIONS		38
23.	GOVERNING LAW AND ARBITRATION		39
24.	COSTS		40
25.	ENFORCEABILITY		40
26.	RELATIONSHIP WITH POOL MEMBERS’ AGREEMENT		40
27.	NO RIGHTS UNDER CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999		41
28.	COUNTERPARTS		41

1

CLAUSE	PAGE
SCHEDULE 1 AMOUNT AND BASIS OF CALCULATION OF OVERRIDING COMMISSION		42
SCHEDULE 2 MUNICH RE GROUP FRONTING		43
SCHEDULE 3 NATIONAL INDEMNITY GROUP FRONTING		45
SCHEDULE 4 MR STATEMENT DISPUTE RESOLUTION MECHANISM		48
SCHEDULE 5 NIC STATEMENT DISPUTE RESOLUTION MECHANISM		50
SCHEDULE 6 DISPUTE MECHANISM IN RELATION TO RESERVE CALCULATIONS		52
ANNEXURE 1 FORM OF DEED OF ADHERENCE FOR USE BY SUBSIDIARIES OF GLOBAL AND GAI		56

2

THIS FRONTING AND ADMINISTRATION AGREEMENT is made on 7^th January 2005 between:

(1)	CONVERIUM AG, a company incorporated in Switzerland whose registered office is at General Guisan-Quai 26, 8022 Zürich, Switzerland (Converium);
(2)	MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN, whose registered office is at Königinstraße, 107, 80802 München, Germany (Munich Re);
(3)	NATIONAL INDEMNITY COMPANY, a company incorporated in Nebraska, United States of America, whose registered office is at 3024 Harney Street, Omaha, Nebraska, USA 68131 (National Indemnity);
(4)	GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED (registered number 2512067) whose registered office is at Fitzwilliam House, 10 St. Mary Axe, London EC3A 8EQ (Global); and
(5)	GLOBAL AEROSPACE, INC. (formerly known as ASSOCIATED AVIATION UNDERWRITERS, INC.) a Delaware corporation (GAI).

Whereas:

(A)     An aviation and aerospace underwriting pool (the Pool) has been established between certain insurance and reinsurance companies including Converium, Munich Re, National Indemnity, Global and GAI in respect of risks written after the date of the Pool Members’ Agreement (as hereinafter defined) and attaching on or after 1 January 2003, and in respect of which inter alia Converium appoints each of Global and GAI as its agents for writing insurance and reinsurance in respect of certain risks and to provide administration and management services in respect of the Pool.

(B)     Converium intends to appoint National Indemnity and Munich Re (or members of their Groups) to provide fronting insurance for Converium in respect of Relevant Risks which incept in the Period (all terms as hereinafter defined). The intention is that in respect of each risk which would be written in the name of Converium under the terms of the Pool Members’ Agreement, National Indemnity or a member of its Group will front 50 per cent. of such risk and Munich Re or a member of its Group will front 50 per cent. of such risk. In certain jurisdictions where there is currently fronting in place in respect of National Indemnity’s or Munich Re’s participation in the Pool, the fronter (being those persons listed in column 4 of Part II of Schedule 2 and Schedule 3) has agreed to extend the fronting that is currently in place so that it covers (in each case) 50 per cent of each risk in such jurisdiction which would be written in the name of Converium under the Pool Members’ Agreement.

(C)     Accordingly, this Agreement constitutes a Fronting Arrangement for the purposes of the Pool Members’ Agreement and sets out the basis on which (1) National Indemnity and Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 will appoint Global and GAI to underwrite,

3

administer and manage such Relevant Risks and (2) all business written in the name of National Indemnity and Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 under this Agreement will be fully reinsured by Converium.

Now it is hereby agreed as follows:

1.	Definitions
1.1	Unless otherwise defined in this Agreement and unless the context otherwise requires, all words and phrases shall have the meaning ascribed to them in the Pool Members’ Agreement.

Agent means both, or each of, Global and GAI as the context requires;

Agreement means this Agreement as amended from time to time;

Business means the business of writing Fronting Insurance Contracts as agent for National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 in their capacity as fronting insurers for Converium and managing such business on behalf of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 and doing such other things ancillary or incidental thereto in any such case as may from time to time be permitted or required by or pursuant to this Agreement and for the avoidance of doubt, Business excludes that portion of any risk reflecting the participation of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 under the Pool Members’ Agreement and that portion of any risk which is written on behalf of Munich Re or National Indemnity by the persons set out in column 4 of Part II of Schedule 2 or Schedule 3 respectively;

Business Day means any day (not being a Saturday or Sunday) on which banks are open for the transaction of general banking business in London;

Confidential Information means:

(a)	all information obtained by a party as a result of negotiating and entering into this Agreement;
(b)	all financial or other information received by a party pursuant to this Agreement in respect of Global or GAI;
(c)	all financial or other information received by a party pursuant to this Agreement in respect of Converium;
(d)	all financial or other information received by a party pursuant to this Agreement in respect of National Indemnity or Munich Re; and
(e)	information as to the terms of this Agreement or of any agreement referred to in it and information relating to the performance by any party of its obligations under this Agreement or any agreement referred to in it;

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Claim means, in relation to any Reinsured Risk, the notification, by the insured (or as applicable reinsured) of an actual or potential claim under such Reinsured Risk and, for the avoidance of doubt, a Claim shall be deemed to have been made where there is a settlement, compromise, commutation and/or policy buy back entered into by or on behalf of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 in relation to the Reinsured Risks (or any of them);

Claims-Related Extra Contractual Obligation means any liability on the part of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 (or amount agreed to be paid by or on behalf of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 in respect of potential or alleged liability on the part of National Indemnity, Munich Re or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3) which has arisen in connection with or which relates in any way to the conduct of a claim and/or the conduct of the Business where such liability (or potential or alleged liability) has arisen because of or relates in any way to any Reinsured Risk in respect of which a Fronting Insurance Contract has been written in such person’s name save to the extent that any Claims-Related Extra Contractual Obligation results from fraud of National Indemnity or a member of its Group, or Munich Re or a member of its Group;

duly authorised means:

(a)	in the United Kingdom, duly authorised to carry on general insurance business under the Financial Services and Markets Act 2000; and
(b)	in any other jurisdiction, duly authorised, licensed or otherwise approved or permitted, under the laws of the applicable jurisdiction, to underwrite or carry on general insurance business covering Specified Risks in accordance with the relevant laws or regulations of such jurisdiction;

Fronting Insurance Contract means a contract of insurance and/or reinsurance which is written by Global or GAI (as the case may be) pursuant to this Agreement on behalf of National Indemnity or Munich Re or the relevant member of such person’s Group (solely in its capacity as fronting insurer for Converium) in respect of the proportion of the Relevant Risks set out in Clause 2.3(b) attaching during the Period provided that Fronting Insurance Contracts shall not relate to the percentage of each policy issued under the Pool Members’ Agreement representing Munich Re’s or National Indemnity’s interest under the Pool Members’ Agreement;

Group means in relation to a company, that company and any company which is a holding company of that company or a subsidiary of that company or of such holding company;

holding company has the meaning ascribed thereto by Section 736 of the Companies Act 1985;

Incurred Position means, in relation to Converium, such amount as may be determined in accordance with Clause 15 as being the greater of:

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(a)	written premiums in relation to the relevant Reinsured Risks less any (i) reinsurance premiums ceded in respect of reinsurance taken out in accordance with the Pool Business Plan (as defined in the Pool Members’ Agreement) as amended from time to time or otherwise taken out by the Agents on behalf of the Members of the Pool as a whole; (ii) original commissions in relation to such Reinsured Risks; and (iii) taxes on the premiums relating to such Reinsured Risks, ((a) less each of (i), (ii) and (iii) being the Net Premiums) multiplied by 150 per cent;
(b)	120 per cent. of outstanding claims attributable to relevant Reinsured Risks (including reserves for claims incurred but not reported maintained by National Indemnity or Munich Re or the relevant member of such person’s Group (as the case may be) in respect of relevant Reinsured Risks) written in the name of National Indemnity or Munich Re or the relevant member of such person’s Group; or
(c)	$50 million plus the Net Premiums in relation to the relevant Reinsured Risks;

provided that:

(i)

if this Agreement is terminated pursuant to Clause 10.1(i) the references to “150” and “120” above shall be read as “100” save that nothing in this proviso shall be construed to reduce the Incurred Position below the minimum percentage which is required to allow Munich Re, National Indemnity or the relevant member of its Group to receive credit for the Reinsurance to which the security relates under the laws of the jurisdiction in which such person is domiciled; and

(ii)

proviso (i) above shall only apply during such periods as Standard & Poor’s financial strength rating of Converium is A– or above (or if such rating is not available, such comparable rating as may be reasonably agreed between Converium, Munich Re and National Indemnity). Converium shall make such additional deposits to the MR Fund and the NICO Fund in the event that Standard & Poor’s financial strength rating of Converium falls below A– subsequent to termination of this Agreement under Clause 10.1(i) so as to comply with the requirements of Clause 13 or Clause 14 (as appropriate) without regard to proviso (i) above;

Letter of Credit means a clean, unconditional and irrevocable Letter of Credit issued on behalf of Converium by a bank with a credit rating by Standard and Poors of AA or above (or if such rating is not available, such other comparable rating as may be reasonably agreed between the person in whose favour such Letter of Credit is written and Converium) for the benefit of National Indemnity or Munich Re (or the applicable member of such person’s Group) (as the case may be) in an amount to be determined from time to time in accordance with Clause 13 or Clause 14 (as appropriate) provided that the bank issuing any Letter of Credit must be one that would permit (a) National Indemnity or the relevant member of its Group to receive credit for the Reinsurance to which that Letter of Credit relates under the laws of the jurisdiction in which such person is domiciled; or (b) Munich Re or the relevant

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member of its Group to receive credit for the Reinsurance to which that Letter of Credit relates under the laws of Germany;

Letter of Credit Notice means a notice issued by National Indemnity or Munich Re (as the case may be) from time to time requiring Converium to either: (a) arrange or cause to be arranged the issue and/or delivery of a Letter of Credit and/or to increase the amount of any such Letter of Credit; or (b) deposit additional funds in the MR Fund or the NICO Fund;

Net Premiums has the meaning given to it in the definition of Incurred Position;

Overriding Commission means the overriding commission payable in accordance with Clause 6, the amount of which shall be calculated in accordance with Schedule 1;

Period means the period beginning at 12:01 pm BST on 16 September 2004 and ending at 12.01 a.m. BST on 30 September 2005;

Pool Members’ Agreement means the Agreement between GAI, Global and various insurance companies and reinsurance companies including National Indemnity, Munich Re and Converium dated 27 November 2002 for the formation of an aviation and aerospace underwriting pool under the management of Global and GAI;

Premium shall have the meaning given to it in Clause 5.1;

profit shall mean, subject to the provisions of Schedule 4 or Schedule 5, for the purposes of Clauses 13.5, 13.12 to 13.14, 14.5 and 14.12 to 14.14:

(a)	the written premiums in respect of the relevant Reinsured Risks;
	LESS
(b)	paid claims in respect of the relevant Reinsured Risks as at 31 December 2008;
	LESS
(c)	outstanding claims which have been notified to Global or AAU or any of their subsidiaries in relation to relevant Reinsured Risks as at 31 December 2008;
	LESS
(d)	the reserves held for incurred but not reported claims in respect of relevant Reinsured Risks as at 31 December 2008 by Munich Re or National Indemnity or a relevant number of such person’s group, calculated by Munich Re or National Indemnity (or such person’s respective appointee) (as appropriate) in accordance with actuarial best practice and guidance produced by relevant actuarial bodies in the relevant country (and subject to the dispute resolution mechanism in Clause 6),

in the case of (a) to (c) as produced by Global’s computer systems;

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Regulatory Action means:

(a)	any order of a court of competent jurisdiction;
(b)	any order made, decision given or final view expressed by a competent national, supranational, governmental or regulatory authority or agency; or
(c)	any enactment of a legislative body;
(i)	which prohibits or restricts to a material extent the carrying on of the Business or the arrangements contemplated by this Agreement; or
(ii)	in consequence of which any of the parties would incur fines or a liability in damages were this Agreement to be performed in accordance with its terms;

Reinsurance has the meaning given to it in Clause 3;

Reinsured Risks means that percentage of any and all contracts of insurance, reinsurance or retrocession written by either Agent in the name of Munich Re, National Indemnity (or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3) solely in its capacity as fronting insurer for Converium under, pursuant to or in connection with (or purportedly under, pursuant to or in connection with) this Agreement (as such contracts may be amended from time to time) and irrespective of whether the acceptance of such contract was within the scope of the authority granted to the Agent by Munich Re or National Indemnity or members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 under the terms of this Agreement or within the scope of (or in accordance with the terms of) the Pool Members’ Agreement and Reinsured Risk shall be construed accordingly. For the avoidance of doubt, Reinsured Risks shall not include the percentage of each policy issued under the Pool Members’ Agreement representing Munich Re’s or National Indemnity’s interest under the Pool Members’ Agreement;

Relevant Risks means Specified Risks relating to those countries set out in Part I of Schedule 2 in the case of Munich Re and the members of its Group and Part I of Schedule 3 in the case of National Indemnity and the members of its Group, which are insurance or reinsurance risks;

Respective Proportion has the meaning given to it in the Pool Members’ Agreement;

Specified Risks means aerospace, aviation and all related and incidental insurance and reinsurance risks;

subsidiary and wholly-owned subsidiary shall have the meanings given thereto in Section 736 of the Companies Act 1985; and

Taxation means all forms of taxation and statutory, governmental, state, provincial, local governmental or municipal impositions, duties, contribution and levies and all penalties, charges, costs and interest relating thereto.

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1.2     References to Recitals, Clauses, Schedules and parties are, except where otherwise provided, to Recitals, Clauses, Schedules or parties to this Agreement. The Schedules form part of this Agreement and have the same force and effect as if set out in the body of this Agreement.

1.3     References to a statutory provision include such provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement so far as such modification or re-enactment applies or is capable of applying to any transactions entered into pursuant to this Agreement or to which this Agreement relates and (so far as the same may be relevant) shall include any statutory provisions or regulations which such provisions or regulations have directly or indirectly replaced.

1.4     The headings and index hereto are inserted for convenience only and shall not affect the construction of this Agreement.

1.5     References to Converium, Munich Re (and any member of its Group), National Indemnity (and any member of its Group) or to the Agents or any of them mean and include their respective successors in title and permitted assigns.

1.6     Where the context so admits, references to the singular shall be deemed to include the plural and vice versa.

1.7     References to Schedule 2 or Schedule 3 shall be to that Schedule as amended in accordance with the terms of Schedule 2 or Schedule 3 (respectively) at the relevant time.

2. Appointment of Global and GAI to write Fronting Insurance

2.1     Each of Munich Re and National Indemnity (for itself and as agent for each member of its Group set out in Part I of Schedule 2 or Part I of Schedule 3 respectively) hereby severally appoints each of Global and GAI to act as agent for it or such member of its Group as is set out in Part I of Schedule 2 or Part I of Schedule 3 in the relevant jurisdiction indicated in those Schedules (which appointment each of Global and GAI hereby accepts and acknowledges):

(a)	to underwrite and/or bind and/or effect Fronting Insurance Contracts in the name of each of such persons in accordance with the terms of this Agreement; and
(b)	to administer the Fronting Insurance Contracts and any reinsurance of them including (without limitation) providing those services specified in paragraphs 1.2 and 2 of Schedule 3 of the Pool Members’ Agreement in relation to the Fronting Insurance Contracts

provided that the appointments pursuant to this Clause 2.1 shall be deemed to have taken effect on 16 September 2004.

2.2     Each of the Agents in performing its services under this Agreement shall act as agent (and describe itself as acting as agent) for Munich Re or the relevant member

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of its Group when acting pursuant to its appointment by Munich Re or a member of its Group or National Indemnity or the relevant member of its Group when acting pursuant to its appointment by National Indemnity or a member of its Group.

2.3     The appointment by each of Munich Re and National Indemnity and the relevant members of their Groups of each of Global and GAI to act as its agent to underwrite and/or bind and/or effect Fronting Insurance Contracts in the name of Munich Re or National Indemnity or the relevant member of its Group is limited to the negotiation and/or underwriting and/or binding and/or effecting of Fronting Insurance Contracts:

(a)	in those countries set out against such person’s name in Part I of Schedule 2 or Part I of Schedule 3;
(b)	in respect of the percentage set out against such person’s name in Part I of Schedule 2 or Part I of Schedule 3 of Converium’s Respective Proportion of the Relevant Risk;
(c)	which are bound and/or effected prior to the expiration of the Period;
(d)	which incept in the Period (provided that where a policy relating to a Relevant Risk was written prior to the Period and is cancelled but re-written on the same terms save for the fact that Converium is replaced as an underwriter by Munich Re and National Indemnity for the Period, such policy shall be deemed to incept in the Period);
(e)	the period of which does not, in any case, exceed 12 months plus odd time not exceeding 15 months in all;
(f)	the terms of which, where written on a risks attaching basis, do not allow for any risks to attach where the period of such risks exceeds 12 months plus odd time not exceeding 15 months in all;
(g)	which are in respect of Relevant Risks; and
(h)	which are within the scope of the insurance and reinsurance contracts the Agents are authorised to write under the Pool Members’ Agreement.

2.4     Neither Global nor GAI shall have any entitlement whatsoever to remuneration from Munich Re, National Indemnity or the members of their Groups and none of Munich Re, National Indemnity or the members of their Groups shall have any obligation whatsoever to remunerate the Agents in respect of the assumption and performance of the Agents’ obligations under this Agreement.

2.5     Either Agent may (subject to prior notification of Converium, Munich Re and National Indemnity) appoint a wholly-owned subsidiary of Global, which has been appointed pursuant to Clause 10 of the Pool Members’ Agreement, for the purposes of providing all or some of the services under this Agreement in relation to such part of the Business as the board of directors of the relevant Agent may determine and shall give prior notice of such appointment to each of Converium, Munich Re and

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National Indemnity. Such subsidiary shall, as soon as reasonably practicable, become a party to this Agreement by executing a Deed of Adherence in the form (or substantially in the form) set out in Annexure 1.

2.6     The parties acknowledge the Agents have appointed Global Aerospace Canada Limited (GAC) for the purpose of providing services under this Agreement relating to policies written in Canada and the Agents agree to procure that GAC enters into a Deed of Adherence.

2.7     The appointment by Munich Re, National Indemnity or the relevant member of their Group of the relevant Agent as its agent under Clause 2.1 shall be extended to the subsidiary, as if references to Global, GAI or the Agents, as the case may be, were references to such subsidiary, in each case in relation only to such services and/or to such parts of the Business as is determined by the board of directors of the relevant Agent.

2.8     Any appointment of a subsidiary under Clause 2.5 shall terminate upon such subsidiary ceasing to be a wholly-owned subsidiary of Global.

2A. Extension of National Indemnity and Munich Re Fronting Lines

2A.1     Munich Re’s Respective Proportion of Specified Risks written in the jurisdictions set out in Part II of Schedule 2 is fronted by the company set out opposite such jurisdiction in Part II of Schedule 2 (together the MR Fronters). Munich Re agrees to use its reasonable endeavours to amend its agreements with the MR Fronters so that each MR Fronter also writes fifty per cent (50%) of Converium’s Respective Proportion of Specified Risks in the jurisdiction set out opposite it in Part II of Schedule 2 (the Converium Risks) (which shall then be 100% quota share reinsured by Munich Re).

2A.2     Converium agrees that to the extent Converium Risks are written by the MR Fronters on terms previously agreed with Converium in writing and provided that Munich Re and each member of its Group pays to Converium all amounts received by it from the MR Fronters in relation to them fronting Converium Risks it will:

(a)     pay overriding commissions previously notified to and agreed by Converium in writing due to the MR Fronters in respect of the Converium Risks;

(b)     provide any security previously notified to and agreed by Converium in writing required by the MR Fronters in relation to the Converium Risks (which security shall be provided from the MR Fund pro rata to the applicable exposure); and

(c)     reinsure Munich Re’s reinsurance of the Converium Risks on an equivalent basis to that set out in Clause 3.

2A.3     Converium shall pay Munich Re commission (the MR Fronted Commission) for reinsuring the Converium Risks on the basis set out in Clauses 2A.4 to 2A.6.

2A.4     The amount of MR Fronted Commission payable by Converium shall be calculated by reference to the total gross premium income written by the Agents in

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the period in question in respect of each Converium Risk after deduction of (i) any original commission or taxes on premiums payable thereunder but before the deduction of amounts, if any, payable to the Agents under the terms of the Pool Members’ Agreement and (ii) any premiums payable by the Agents for reinsurance in relation to the Pool (such amount being referred to as the MR Relevant Net Premium Income).

2A.5     The amount of MR Fronted Commission payable by Converium to Munich Re shall be calculated by multiplying the MR Relevant Net Premium Income attributable to Converium Risks covered by policies written by MR Fronters by 1 per cent. (or by such percentage as may be agreed from time to time between Munich Re and Converium in writing).

2A.6     The amount of MR Fronted Commission attributable to any calendar quarter shall be due and payable on (i) the last business day of the immediately following calendar quarter, or (ii) the date on which a cash distribution is paid by the Agents to Converium under the Pool Members’ Agreement with respect to business written in such calendar quarter, whichever is earlier and shall be deducted by Munich Re from the MR Fund on that date.

2A.7     National Indemnity’s Respective Proportion of Specified Risks written in the jurisdictions set out in Part II of Schedule 3 is fronted by the company set out opposite such jurisdiction in Part II of Schedule 3 (together the NIC Fronters). National Indemnity agrees to use its reasonable endeavours to amend its agreements with the NIC Fronters so that each NIC Fronter also writes fifty per cent (50%) of Converium’s Respective Proportion of Specified Risks in the jurisdiction set out opposite it in Part II of Schedule 3 (the NIC Converium Risks) (which shall then be reinsured by National Indemnity).

2A.8     Converium agrees that to the extent the NIC Converium Risks are written by the NIC Fronters on terms previously agreed with Converium in writing and provided that National Indemnity and each member of its Group pays to Converium all amounts received by it from the NIC Fronters in relation to them fronting NIC Converium Risks it will:

(a)     pay overriding commissions previously notified to and agreed by Converium in writing due to the NIC Fronters in respect of the NIC Converium Risks;

(b)     provide any security previously notified to and agreed by Converium in writing required by the NIC Fronters in relation to the NIC Converium Risks (which security shall be provided from the NIC Fund pro rata to the applicable exposure); and

(c)     reinsure National Indemnity’s reinsurance of the NIC Converium Risks on an equivalent basis to that set out in Clause 3.

2A.9     Converium shall pay National Indemnity commission (the NIC Fronted Commission) for reinsuring the NIC Converium Risks on the basis set out in Clauses 2A.10 to 2A.12.

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2A.10     The amount of NIC Fronted Commission payable by Converium shall be calculated by reference to the total gross premium income written by the Agents in the period in question in respect of each NIC Converium Risk after deduction of (i) any original commission or taxes on premiums payable thereunder but before the deduction of amounts, if any, payable to the Agents under the terms of the Pool Members’ Agreement and (ii) any premiums payable by the Agents for reinsurance in relation to the Pool (such amount being referred to as the NIC Relevant Net Premium Income).

2A.11     The amount of NIC Fronted Commission payable by Converium to National Indemnity shall be calculated by multiplying the NIC Relevant Net Premium Income attributable to NIC Converium Risks covered by policies written by NIC Fronters by 1 per cent. (or by such percentage as may be agreed from time to time between National Indemnity and Converium in writing).

2A.12     The amount of NIC Fronted Commission attributable to any calendar quarter shall be due and payable on (i) the last business day of the immediately following calendar quarter, or (ii) the date on which a cash distribution is paid by the Agents to Converium under the Pool Members’ Agreement with respect to business written in such calendar quarter, whichever is earlier and shall be deducted by National Indemnity from the NICO Fund on that date.

3. Converium’s Reinsurance and Indemnity Obligations

3.1     Immediately upon, and with effect from, the acceptance and/or binding of a Reinsured Risk by the Agents (or either of them), Munich Re or the relevant member of its Group and National Indemnity or the relevant member of its Group shall cede to Converium and Converium agrees to accept by way of reinsurance the quota share percentage set out against such person’s name in Part I of Schedule 2 or Part I of Schedule 3 of Converium’s Respective Proportion of the Relevant Risk (the total amount ceded pursuant to this Clause 3.1 shall be the Reinsurance and the amount ceded in relation to a particular Reinsured Risk by a particular entity shall be the Reinsurance relating to that Reinsured Risk). Such cession and acceptance shall be effected immediately and automatically on, and with effect from, the acceptance and/or binding of the Reinsured Risk in question.

3.2     In consideration of Munich Re and National Indemnity agreeing to enter into this Agreement, Converium agrees to reinsure and indemnify Munich Re, National Indemnity or the relevant member of its Group, without limit in time or amount, in respect of the Ultimate Net Loss of Munich Re, National Indemnity or the relevant member of its Group in respect of, or relating to, each Reinsured Risk in respect of which a Fronting Insurance Contract is written in such person’s name. This Agreement shall only apply to the portion of a risk reflecting Converium’s participation in the Pool Members’ Agreement and in respect of Munich Re, National Indemnity and each member of such person’s Group shall only apply to the portion of such risk actually fronted by such person.

3.3     The term Ultimate Net Loss, as used herein, shall mean all amounts paid or agreed to be paid (including by way of set-off, release or any other form of consideration) by Munich Re, National Indemnity or the relevant member of such

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person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 (or the Agent(s) on behalf of Munich Re, National Indemnity or the relevant member of such person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3) in respect of or in relation to Claims and/or Claims-Related Extra Contractual Obligations relating, in any way, to a Reinsured Risk (or any or all Reinsured Risks) and shall include, without limit, all adjustment expenses arising from the evaluation, assessment, investigation and/or settlement of claims other than the salaries of employees and office expenses of Munich Re or any member of its Group (in the case of Ultimate Net Losses relating to Munich Re or any member of its Group) or National Indemnity or any member of its Group (in the case of Ultimate Net Losses relating to National Indemnity or any member of its Group) provided that Converium shall be entitled to all amounts physically received by way of recoveries/salvages. It is further understood and agreed that:

(a)

any of Munich Re, National Indemnity or the relevant member of such person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 shall be entitled to recover any part of its Ultimate Net Loss once that has been ascertained without having to wait until its total Ultimate Net Loss has been ascertained; and

(b)

for the avoidance of doubt, notwithstanding any other provision of this Agreement, it is understood and agreed that neither Munich Re, National Indemnity nor the relevant member of such person’s Group listed in Part I of Schedule 2 or Part I of Schedule 3 shall be required to actually pay (in the sense of making a physical disbursement of money or monies worth) any amounts in respect of which indemnity is claimed in order to trigger Converium’s indemnity obligations hereunder.

3.4     If the terms of any reinsurance taken out by the Agents for the benefit of Munich Re, National Indemnity or a member of such person’s Group in relation to the Pool (a Pool Reinsurance) cover part or all of any Relevant Risk, the Reinsurance provided for in this Clause 3 shall not extend to such part of that Relevant Risk provided that to the extent the Agents are not able to recover under the Pool Reinsurance the Ultimate Net Loss in respect of such Relevant Risk for any reason other than as a result of a negligent or fraudulent act by Munich Re, National Indemnity or a member of such person’s Group (provided that for the avoidance of doubt a negligent or fraudulent act by the Agent or any person appointed by the Agent to act as agent of Munich Re or National Indemnity shall not be deemed a negligent or fraudulent act by Munich Re, National Indemnity or a member of such person’s Group for the purposes of this clause unless the Agent was instructed to undertake such act by Munich Re or National Indemnity or a member of such person’s Group (other than by instruction approved by Converium), Converium shall reinsure such Ultimate Net Loss pursuant to this Clause 3.

3.5     The Agents, Munich Re and National Indemnity shall (and shall procure that each relevant member of such person’s Group shall) take such reasonable action as is necessary to allow the Agents to make a successful claim under any relevant Pool Reinsurance.

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3.6     Converium shall, in all respects, follow the fortunes of Munich Re or National Indemnity or the member of such person’s group in whose name the relevant Fronting Insurance Contract is written in relation to all matters falling within the scope of the Reinsurance and the Reinsurance shall be construed in such a way as to give effect to the parties’ intention that, to the greatest extent permissible by law:

(a)	Munich Re, National Indemnity and the members of their Groups should retain no economic interest in the Reinsured Risks after the application of this Reinsurance; and
(b)	the economic fortunes of Converium in relation to the Reinsured Risks should exactly mirror those of Munich Re or National Indemnity or the member of such person’s Group in whose name the relevant Fronting Insurance Contract is written.

3.7     Accordingly, and without prejudice to the generality of Clause 3.6, Converium shall be unconditionally bound to follow all settlements, compromises, commutations, policy buy-backs or other agreements of any nature whatsoever entered into, or agreed, on behalf of Munich Re, National Indemnity or the members of their Groups by the Agents in relation to the Fronting Insurance Contracts including any and all ex gratia payments without regard to the question of whether Munich Re, National Indemnity or the members of their Groups had any liability whatsoever (whether arguable or otherwise) in respect of such settlements, compromises, etc.

3.8     The parties acknowledge and agree that the obligations of Converium to indemnify:

(a)

Munich Re or a member of its Group in whose name the relevant Fronting Insurance Contract is written under this Agreement shall not in any way be affected by any actual or alleged breaches by the Agents or National Indemnity of the terms of this Agreement, the Pool Members’ Agreement or of any duties (whether in contract tort or equity) owed by the Agents or National Indemnity to Converium or Munich Re or the members of their Groups.

(b)

National Indemnity or a member of its Group in whose name the relevant Fronting Insurance Contract is written under this Agreement shall not in any way be affected by any actual or alleged breaches by the Agents or Munich Re of the terms of this Agreement, the Pool Members’ Agreement or of any duties (whether in contract tort or equity) owed by the Agents or Munich Re to Converium or National Indemnity or the members of their Groups.

4. Duties & Waivers

4.1     Converium acknowledges and agrees that this Agreement is being entered into by the parties solely as a Fronting Arrangement for the purposes of the Pool Members’ Agreement in order to facilitate the participation by Converium in the underwriting of risks pursuant to the Pool Members’ Agreement and that, but for Converium having a BBB+ rating from Standard & Poor’s Rating Services, Converium would in any event have participated directly in such risks pursuant to the

15

terms of the Pool Members’ Agreement. Accordingly, subject to Clause 4.3, Converium agrees:

(a)	that it has been afforded the opportunity to conduct its own investigations and due diligence in relation to all matters relevant and/or material to this Agreement and the Pool Members’ Agreement (including the Reinsurance and the Reinsured Risks);
(b)	that neither Munich Re, National Indemnity nor the member of such person’s Group in whose name a Fronting Insurance Contract is written nor its agents nor any person acting on its behalf assumes, shall accept, and owe, any duty of care, whether in contract or in tort, nor fiduciary duties to Converium in relation to any matters falling within the scope of this Agreement or the Reinsurance and none of Munich Re, National Indemnity or the member of such person’s Group in whose name a Fronting Insurance Contract is written shall accept, or have, any vicarious liability for any acts or omissions of the Agents in relation thereto;
(c)	to waive any duty of disclosure on the part of Munich Re, National Indemnity or any member of such person’s Group in whose name a relevant Fronting Insurance Contract is written and/or its agents and/or any other person acting on behalf of Munich Re, National Indemnity or the member of such person’s Group in whose name the relevant Fronting Insurance Contract is written in relation to the Reinsurance and/or the subject-matter of this Agreement (including, but not limited to, each and every Reinsured Risk and/or the cession thereof);
(d)	to acknowledge and accept the validity of each Fronting Insurance Contract underwritten by an Agent on behalf of Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 for the benefit of Converium pursuant to (or in purported pursuance of) this Agreement;
(e)	to waive and/or otherwise exclude any right (or remedy) that it might have, whether now or in the future, to seek or otherwise claim damages in respect of, or to avoid, rescind or otherwise challenge the validity of any Fronting Insurance Contract and/or the Reinsurance and/or the cession of, any Reinsured Risk on any grounds including:

(i)	misrepresentation and/or non-disclosure of material facts (whether innocent, or negligent); and/or
(ii)	any breach (or alleged breach) of any duty of utmost good faith by Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 (or any person acting on behalf of Munich Re, National Indemnity or the members of their Groups set out in Schedule 2 or Schedule 3); and

(f) save to the extent otherwise provided for in this Agreement, Converium shall indemnify and keep indemnified Munich Re, National Indemnity or the

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members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 in respect of any claim, loss or liability of any kind (including without limitation any liability to the Agents (or either of them) under the Pool Members’ Agreement) in respect of or in connection with the conduct (or purported conduct) of the Business.

4.2     Unless the contrary is expressly stated, no terms of this Agreement and/or Reinsurance which are expressed to be warranties (or which might be otherwise have been construed as warranties but for this Clause 4.2) shall take effect as warranties within the meaning of the Marine Insurance Act 1906 (which for the purposes of information only provides, in general circumstances, for the discharge of liability should a warranty be breached) but shall, instead, be construed and take effect as innominate terms.

4.3     For the avoidance of doubt, however, nothing in this Clause 4 is intended to affect and/or waive and/or otherwise exclude any rights or remedies which Converium might have, whether now or in the future, arising out of, or relating to, fraud on the part of any of Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 themselves (as opposed to fraud of the Agents, or either of them, on behalf of Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3), provided that the parties agree that no fraud on the part of:

(a)	National Indemnity or a member of its Group shall impact the obligations of Converium to Munich Re or a member of its Group; and
(b)	Munich Re or a member of its Group shall impact the obligations of Converium to National Indemnity.

5. Premiums and Pool Payments

5.1     Subject to Clause 6, each of Munich Re and National Indemnity agrees for itself and as agent for each member of its Group set out in Part I of Schedule 2 and Part I of Schedule 3 respectively that Converium shall be entitled to all amounts actually received by the Agents (or either of them) in respect of premiums payable under the terms and conditions of the Reinsured Risks including, for the avoidance of doubt, any and all adjustment and/or reinstatement premiums but after the deduction of any commissions or brokerage or other deductions payable or to be deducted therefrom (Premiums) provided that all amounts payable to Converium pursuant to Clause 7 of the Pool Members’ Agreement less all amounts payable by Converium under Clause 7.5 of the Pool Members’ Agreement (and less all amounts due to National Indemnity or Munich Re, respectively, under Clause 6 as Overriding Commission) shall be paid:

(a) as to fifty per cent directly to Munich Re in relation to Reinsurance Risks covered by Fronting Insurance Contracts written in the name of Munich Re or a member of its Group set out in Part I of Schedule 2 to be held as set out in Clause 13.2; or

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(b) as to fifty per cent directly to National Indemnity (or such member of its Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents) in relation to Reinsurance Risks covered by Fronting Insurance Contracts written in the name of National Indemnity or any member of its Group set out in Part I of Schedule 3 to be held as set out in Clause 14.2.

5.2     The Agents shall hold such proportion of the Premiums that is equivalent to any Overriding Commission payable (or potentially payable) by Converium to:

(a)	Munich Re or any member of its Group and shall pay such amount to Munich Re in accordance with Clause 6 and shall only pay the remaining amount as specified in Clause 5.1(a);
(b)	National Indemnity or any member of its Group and shall pay such amount to National Indemnity (or such member of its Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents in writing prior to such payment being made) in accordance with Clause 6 and shall only pay the remaining amount as specified in Clause 5.1(b).

5.3     All amounts payable by Converium to the Agents pursuant to Clause 7 of the Pool Members’ Agreement shall be paid by Converium as to fifty per cent from the MR Fund and as to fifty per cent from the NIC Fund, provided that Munich Re shall not be obligated to make any payment described in Clauses 13.17(b) or (c) which would cause the MR Fund to be reduced below $50 million (or, if lower and Clause 13.8 applies, the amount required to be held in the MR Fund pursuant to Clause 13.8) and provided further that National Indemnity shall not be obligated to make any payment described in Clauses 13.17(b) or (c) which would cause the NIC Fund to be reduced below $50 million (or, if lower and Clause 13.8 applies, the amount required to be held in the NIC Fund pursuant to Clause 13.8). Any shortfall in amounts payable by Converium to the Agents pursuant to Clause 7 of the Pool Members’ Agreement by reason of either of the foregoing provisos shall be paid by Converium.

6. Overriding Commission

6.1     In consideration of Munich Re and the members of its Group set out in Part I of Schedule 2 agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees to pay commission to Munich Re for itself and as agent for such member of its Group (Munich Re Overriding Commission) in respect of each Reinsured Risk covered by Fronting Insurance Contracts written by such persons.

6.2     In consideration of National Indemnity and the members of its Group set out in Part I of Schedule 3 agreeing to front for Converium in respect of the Reinsured Risks, Converium agrees to pay commission to National Indemnity (or such member of National Indemnity’s Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents) for itself and as agent for such members of its Group (NIC Overriding Commission and together with Munich Re Overriding Commission, Overriding Commission) in respect of each Reinsured Risk covered by Fronting Insurance Contracts written by such persons.

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6.3     Subject always to Clause 6.4, the relevant Agent shall calculate the amount of Overriding Commission payable in respect of all Premiums written in respect of the relevant Reinsured Risks and shall:

(a)	deduct and withhold such amounts from the Premiums payable as set out in Clause 5.1; and
(b)	account for, and pay, such amounts to Munich Re or National Indemnity (or such member of its Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents in writing prior to such payment being made) in accordance with Schedule 1.

6.4     Converium’s obligation to pay Overriding Commission to Munich Re or National Indemnity shall be discharged only by the actual receipt by Munich Re or National Indemnity (or such member of National Indemnity’s Group listed in Part I of Schedule 3 as National Indemnity shall advise Converium and the Agents) of the amounts due and not by the deduction or withholding by the Agents (or any of them) of amounts calculated to be due in respect of Overriding Commission provided that such payment obligation shall be discharged to the extent that the Overriding Commission (or part thereof) payable to Munich Re or National Indemnity is set-off against monies due and payable by Munich Re or National Indemnity to the relevant Agent in connection with the Pool. The receipt of Overriding Commission by Munich Re or National Indemnity in respect of Fronting Insurance Contracts written by members of such person’s Group shall discharge Converium’s obligations in respect thereof and Converium shall not be concerned as to the application of such amounts.

7. Claims

7.1     The Agents shall manage and perform the administration of the Reinsured Risks and the negotiation and settlement of Claims thereunder and, in doing so, shall act as agent of Munich Re, National Indemnity (and the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3) and Converium.

7.2     Without prejudice to the generality of Clause 7.1, all decisions made by the Agents in relation to the administration of the Reinsured Risks and the negotiation and/or settlement of Claims thereunder shall be made as agents for Munich Re, National Indemnity (and the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3) and Converium and shall be deemed to be in the knowledge of all of them (to the greatest extent permitted or allowable by law).

7.3     As between Converium and any of Munich Re, National Indemnity and the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3, Munich Re, National Indemnity and the members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 shall have no obligation to provide or disburse funds in respect of any obligations arising under or in relation to Reinsured Risks. Such funds shall be provided by Converium and, accordingly, Converium shall ensure that, at all times, sufficient funds are provided to the Agents to enable all obligations under or in relation to each Reinsured Risk to be met as and when they fall due.

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7.4     Any and all funds provided by Converium pursuant to Clause 7.3 shall, until physically disbursed to the relevant insured or reinsured under the relevant Reinsured Risk or claimant against such insured, be held by the Agents as agent for Converium and payment of such funds by Converium to the Agents shall not constitute a discharge of, or operate to discharge, the obligations of Converium to Munich Re, National Indemnity or any members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 under the terms of the Reinsurance, which obligations shall be discharged only by (and to the extent of):

(a)	physical disbursements of relevant amounts to insureds and/or reinsureds under the Reinsured Risks or claimant against such insured; and/or
(b)	physical disbursement to Munich Re, National Indemnity or any members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3 of amounts due under the Reinsurance to Munich Re, National Indemnity or any members of their Groups set out in Part I of Schedule 2 and Part I of Schedule 3.

8. Accounts and Information

8.1     Each Agent agrees to provide accounting and other information to Munich Re, National Indemnity or Converium in the form and in the manner that may be reasonably required by Munich Re, National Indemnity or Converium from time to time by giving notice as provided for in Clause 22.

8.2     Each of the Agents shall keep, in such forms as may be agreed from time to time with (a) Munich Re and Converium in relation to Relevant Risks for which Munich Re or a member of its Group provides Fronting Insurance Contracts or (b) National Indemnity and Converium in relation to Relevant Risks for which National Indemnity or a member of its Group provides Fronting Insurance Contracts, books, records, underwriting statistics and accounts of all transactions under this Agreement.

8.3     Munich Re, National Indemnity or Converium may, subject to any confidentiality obligations of either Agent, at all reasonable times and on reasonable notice appoint its officers, employees agents, or auditors to inspect, examine and verify at the offices of either Agent (and to take copies of such books and records) all such accounts, records, books, vouchers, correspondence and papers relating to any of the functions performed by the relevant Agent under this Agreement insofar as they relate to the affairs of Munich Re or the members of its Group set out in Part I of Schedule 2 or National Indemnity or the members of its Group set out in Part I of Schedule 3 or Converium or a member of its Group respectively, including without limitation the application of any money belonging to them paid or received by the relevant Agent and the operation of bank accounts of such persons by the relevant Agent pursuant to this Agreement, and each of the Agents shall whenever reasonably required at any time during normal business hours give such officers, employees, servants or agents access to its offices for such purposes.

8.4     Each of National Indemnity and Munich Re undertakes to agree to supply, to the extent permissible under any applicable law or regulatory requirements, such

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information as either Agent shall reasonably request from time to time in order to facilitate the management of the Business or the arrangements referred to in Clause 2A (but shall not be obliged to provide any information relating to any business of each of National Indemnity and Munich Re or any member of its Group to the extent it does not relate to the Business or the arrangements referred to in Clause 2A).

9. Relationship between the Parties

9.1     Nothing in this Agreement shall create or constitute a partnership between the parties hereto or any of them nor, save as expressly provided herein, constitute any one the agent of another and no party shall do or suffer anything to be done whereby it shall or may be represented that it is the partner or agent of any other party hereto (save as aforesaid) unless such party is appointed partner or agent of another party subject to the consent in writing of every other party to this Agreement.

9.2     The relationship between the parties to this Agreement is as described in this Agreement. Neither that relationship nor the services to be provided by Global or GAI nor any other matter shall give rise to any fiduciary or equitable obligations which would hinder Global or GAI from acting as contemplated under the terms of this Agreement.

10. Termination

10.1     For the purposes of this Clause 10, a Trigger Event shall be deemed to have occurred in relation to a party if:

(a)	it ceases to be duly authorised (or has any suspension, restriction or other limitation imposed in respect of its authority, licence, approval or permission) in respect of Specified Risks in the jurisdiction in which it is incorporated or has its principal place of business (home jurisdiction);
(b)	it goes into liquidation whether compulsorily or voluntarily (otherwise than a voluntary and solvent liquidation for the purpose of reconstruction or amalgamation pursuant to a scheme previously agreed between the parties);
(c)	it enters into any composition with its creditors generally or suffers any similar action in consequence of default by it in its obligations in respect of any indebtedness for borrowed moneys;
(d)	an administration order shall be made in respect of such party;
(e)	it stops or threatens to stop payment or ceases or threatens to cease to carry on its business (otherwise than in connection with or in pursuance of a winding-up for the purpose of a reconstruction or amalgamation pursuant to a scheme previously agreed between the parties) or is deemed for the purpose of Section 123 of the Insolvency Act 1986 to be unable to pay its debts;
(f)	it has an administrative receiver or other receiver or other similar official appointed over all (or substantially all) of its undertaking and assets;

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(g)	it suffers any action similar to any of the events described in Clauses 10.1(a) to (f) under the laws of any competent jurisdiction;
(h)	it has its financial strength rating downgraded below BBB+ (or in the case of Converium BBB) by Standard & Poor’s Rating Service (S&P) or if such rating is not available, below such comparable rating as may be reasonably agreed between the parties, or it requests or agrees that S&P should cease to rate it;
(i)	in relation to Converium, it has its financial strength rating upgraded to A- or above by S&P or if such rating is not available, above such comparable rating as may be reasonably agreed between the parties; or
(j)	Converium is subject to a change of control as defined in Clause 15.2 (f) of the Pool Members’ Agreement.

10.2     In the event that a Trigger Event occurs in relation to any of Munich Re or a member of its Group set out in Part I of Schedule 2 or National Indemnity or a member of its Group set out in Part I of Schedule 3, the Agents or either of them may suspend entirely with immediate effect the appointment by the relevant person (the defaulter) pursuant to Clause 2.1(a), in which case the parties shall seek to agree a basis upon which such suspension might be lifted and the appointment reinstated. From the time of any such suspension until the time such agreement is reached, Clause 10.3 shall apply.

10.3     If this Clause 10.3 applies (by reason of Clause 10.2 or 10.7), neither of the Agents shall (nor shall they have any authority to):

(a)	accept Fronting Insurance Contracts in the name of the defaulter or the person invoking this Clause 10.3 pursuant to Clause 10.7 (as appropriate);
(b)	provide quotations or enter into (or continue) any negotiations relating to the possible acceptance of, Fronting Insurance Contracts in the name of the defaulter or the person invoking this Clause 10.3 pursuant to Clause 10.7 (as appropriate); or
(c)	agree any amendments to the terms of or otherwise agree any endorsements to any Fronting Insurance Contract which would, or would be reasonably likely to, increase materially the gross exposure of the defaulter under the Fronting Insurance Contract in question.

10.4     In the event that any of Munich Re, National Indemnity or a member of such person’s Group set out in Part I of Schedule 2 or Part I of Schedule 3 ceases to be duly authorised (or has any suspension, restriction or other limitation imposed in respect of its authority, licence, approval or permission) in respect of any Relevant Risk in a jurisdiction set out against such person’s name in Part I of Schedule 2 or Part I of Schedule 3 (an Applicable Territory) in circumstances where Clause 10.1(a) does not apply to such person (a Non-Authorisation Event), then the appointment by such person (the non-authorised person) pursuant to Clause 2.1(a) in relation to any relevant Applicable Territory shall be suspended with immediate effect, in which case

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the parties shall seek to agree the basis upon which such suspension might be lifted and the relevant part of the appointment reinstated. From the time of any such suspension until the time such agreement is reached, Clause 10.6 shall apply.

10.5     If Clause 10.4 applies, as an alternative to suspension pursuant to Clause 10.4, Munich Re or National Indemnity shall have the right to appoint an alternate member of its respective Group meeting the requirements of the Pool Members’ Agreement to replace a non-authorized person by notice to Converium and Agents. If Munich Re or National Indemnity appoint an alternative pursuant to this Clause 10.5, Munich Re or National Indemnity shall procure that the alternative member of its Group shall enter into an agreement by which it agrees to be bound by this Agreement as if it were the entity it replaces.

10.6     If this Clause 10.6 applies (by reason of Clause 10.4), neither of the Agents shall (nor shall they have any authority to):

(a)	accept Fronting Insurance Contracts in the name of the non-authorised person in or relating to the Applicable Territory in question;
(b)	provide quotations for, or enter into (or continue) any negotiations relating to the possible acceptance of, Fronting Insurance Contracts in the name of the non-authorised person relating to the Applicable Territory in question; or
(c)	agree any amendments to the terms of or otherwise agree any endorsements to any Fronting Insurance Contract in the name of the non-authorised person previously written (and which relates to the Applicable Territory in question) which would, or would be reasonably likely to, increase materially the gross exposure of the non-authorised person under the Fronting Insurance Contract in question.

10.7 In the event that:

(a)	Converium ceases lawfully to be able to reinsure any Fronting Insurance Contracts;
(b)	Converium’s participation in the arrangements established by the Pool Members’ Agreement is terminated; or
(c)	a Trigger Event occurs in relation to Converium,

then any person making an appointment pursuant to Clause 2.1(a) shall be able to suspend all appointments or, Converium or either Agent shall be entitled, by written notice to the other parties, to suspend all appointments pursuant to Clause 2.1(a) in which case the parties shall seek to agree the basis upon which such suspension might be lifted and the relevant part of the appointment reinstated. From the time of any such suspension until the time such agreement is reached, Clause 10.3 shall apply.

10.8     For the avoidance of doubt, the Agents’ administrative obligations under Clause 2.1(b) and their duties of management and administration of the Reinsured Risks and the negotiation and settlement of Claims under Clause 7 shall not cease by

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reason of the suspension or termination, in whole or in part, of an appointment pursuant to Clause 2.1(a) (except to the extent that continuing to perform the administrative obligations would be inconsistent with such suspension or termination or that the parties so agree).

10.9     Each party shall notify the other parties upon becoming aware of a Trigger Event in relation to any of Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 or Converium at any time.

10.10     Each of Munich Re and National Indemnity shall notify the other parties upon becoming aware that the Non-Authorisation Event under Clause 10.4 applies to it or any member of its Group set out in Part I of Schedule 2 or Part I of Schedule 3 at any time.

10.11     Converium shall notify the other parties upon becoming aware that Clause 10.7(a), (b) or (c) applies to it, at any time.

10.12     Suspension and/or termination of the appointment pursuant to Clause 2.1(a) in whatever manner shall in no way affect or limit any accrued rights which any party to this Agreement may have against the others pursuant to this Agreement or any rights expressly stated to survive termination of this Agreement.

10.13     Except to the extent that any of (a) Munich Re or (b) National Indemnity, and Converium agree otherwise (such agreement to be in writing and notified to the Agents), neither the Reinsurance, nor the obligations of any of Munich Re, National Indemnity or the members of their Groups set out in Part I of Schedule 2 or Part I of Schedule 3 or Converium, shall terminate if this Agreement or any part of it is terminated or suspended.

10.14     The appointment of the Agents (or either of them) pursuant to Clause 2.1(a) shall terminate automatically at any time when a termination of the appointment of the Agent(s) to provide services under the Pool Members’ Agreement takes effect. Neither Munich Re nor any member of its Group, National Indemnity or any member of its Group nor Converium shall be required to make any payment to the Agents (or either of them) in the event of such a termination save as provided for in the Pool Members’ Agreement.

10.15     The appointment pursuant to Clause 2.1 may not be terminated save as expressly provided for in this Agreement.

10.16     For the avoidance of doubt, the occurrence of a Trigger Event or a Non-Authorisation Event shall not constitute a breach of this Agreement and, save in the case of fraud, a person to which a Trigger Event applies shall have no liability pursuant to this Agreement, whether in damages or otherwise, arising from or in connection with any such event, apart from any loss suffered by the Agents and/or Converium (excluding indirect, special or consequential loss or loss of profit, goodwill or business opportunity) directly resulting from a failure by a person to which a Trigger Event applies to notify Global that such an event applies to it in

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accordance with Clause 10.8 or 10.9 (as the case may be) and the Agents continue to write insurance business on behalf of such person under this Agreement.

11. Confidentiality

11.1     Every party hereto shall hold in confidence and shall not divulge to any other party or any third party any Confidential Information nor make any public or press announcement regarding this Agreement or matters connected herewith except as provided in Clause 11.2, 11.3, 11.4 or (as the case may be) Clause 11.5.

11.2     Notwithstanding the provisions of Clause 11.1, any party may disclose Confidential Information:

(a)	in respect of any party to any other party with the prior written consent of the first party;
(b)	with the consent of the other parties (such consent not to be unreasonably withheld or delayed);
(c)	if and to the extent required by law or for the purpose of any judicial proceedings;
(d)	if and to the extent required or permitted by this Agreement;
(e)	if and to the extent required by any securities exchange or regulatory or governmental body or tax authority to which that party or a member of its Group is subject, wherever situated;
(f)	to any member of its Group and to its officers and employees or those of such member, in any such case to the extent that such person needs to know such information in order to manage or monitor its business or in the performance of his or its duties;
(g)	to its professional advisers, auditors and bankers; or
(h)	if and to the extent the information has come into the public domain through no fault of that party.
11.3	Notwithstanding Clause 11.1:

(a)	each Agent shall, be entitled to provide extracts of this Agreement to such banks, reinsurers and brokers and other managing agents of reinsurers in the ordinary course of business as it reasonably deems necessary for the purpose of carrying out the Business;
(b)	any party may give a copy of this Agreement, or a summary of it, to any insurance company which is a member of any insurance pool constituted by the Pool Members’ Agreement but not a party hereto.

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11.4     Each party shall procure that any person to whom Confidential Information is disclosed pursuant to Clauses 11.2(f) or (g) complies with the restrictions set out in this Clause 11 as if such person were a party to this Agreement.

11.5     The provisions of this Clause 11 shall remain in full force and effect notwithstanding the termination of this Agreement and each party shall remain bound by the provisions of this Clause 11 for only a period of five years following cessation by both Agents of the provision of any services to Munich Re or National Indemnity (or any member of such person’s Group) pursuant to this Agreement.

11.6     Neither Global nor GAI shall be obliged to disclose to any other party or, in making any decision or taking any action in relation to the Business or the management thereof, to take into consideration information the disclosure of which by Global or (as the case may be) by GAI to any other party would or might be a breach of duty or confidence to any other person excluding the details of any cover written and any other information which another party requires to be in compliance with applicable law.

12. Undertakings

12.1     Global and GAI shall use all reasonable care and skill in the performance of their respective obligations under this Agreement and shall comply with all applicable laws relating thereto.

12.2     Each of Munich Re and National Indemnity severally agrees, warrants and undertakes to each of the Agents and Converium that (i) it and each member of its Group listed in Part I of Schedule 2 or Part I of Schedule 3 (respectively) has (and so long as the appointment of the relevant Agent remains in force under this Agreement shall continue to have) power to employ each of the Agents; (ii) it and each member of its Group listed in Part I of Schedule 2 or Part I of Schedule 3 (respectively) has and will have all necessary consents, powers and authorities to authorise each of the Agents to act as its agent as contemplated by this Agreement; (iii) it has all necessary consents, powers and authorities to enter into this Agreement in accordance with its terms; and (iv) it has been validly appointed by each member of its Group listed in Part I of Schedule 2 or Part I of Schedule 3 (respectively) as agent for the purposes of making the appointment on behalf of such person in Clause 2.1 and any other purpose necessary pursuant to this Agreement.

12.3     Converium agrees, warrants and undertakes to each of the Agents, Munich Re and National Indemnity that it has (and so long as the appointment of the relevant Agent remains in force under the Pool Members’ Agreement shall continue to have) power to employ each of the Agents and has and will have all necessary consents, powers and authorities: (i) to enter into this Agreement in accordance with its terms (including, without limitation, the Reinsurance); and (ii) to authorise each of the Agents to act as its agent as contemplated by this Agreement.

12.4     Subject to Munich Re or National Indemnity being fully reimbursed or indemnified (under Clause 3 or otherwise) by Converium for any loss or liability it may incur, Munich Re or National Indemnity hereby undertakes to ratify (and to procure that any relevant member of its Group ratifies) every act performed or thing

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done by each of the Agents which shall hereafter be performed or done in exercise or purported exercise of the powers conferred or to be conferred upon the relevant Agent by this Agreement provided only that such acts are in accordance with the terms of this Agreement and within the scope of the authority granted to the Agents hereunder.

12.5     Each of Munich Re and National Indemnity represents and warrants to the Agents and National Indemnity that those members of its Group marked * in Part I of Schedule 2 or Part I of Schedule 3 is duly authorised to write all Relevant Risks in the United Kingdom and undertakes to take all reasonable steps to ensure such authorisations are maintained during the duration of this Agreement.

12.6     Each of Munich Re and National Indemnity undertakes to notify the Agents and Converium in writing as soon as reasonably practicable of any changes as to the authorisations (whether in relation to any Applicable Territory or the United Kingdom) which it or the members of its Group listed in Part I of Schedule 2 or Part I of Schedule 3 has, or expects to obtain, from time to time.

13. Munich Re Security

13.1     Converium shall on or before the date five Business Days from the date of this Agreement (or such later date as Munich Re may specify) pay to Munich Re the sum of $50 million to be held on the basis set out in Clause 13.3.

13.2     Any amounts paid pursuant to Clause 5.1(a), 13.1, 13.4, 13.6 or 13.9 (or because of the definition of Incurred Position) shall be paid to the account of Munich Re notified to Converium in writing by Munich Re from time to time.

13.3     The amounts held pursuant to Clause 13.2 shall be known as the MR Fund. Such amounts shall be held by Munich Re as trustee for Converium provided that Munich Re shall be entitled to make payments from such account in order to pay amounts which are due:

(a)	or claimed to be due under Reinsured Risks in respect of which Fronting Insurance Contracts have been written by it or members of its Group;
(b)	to it or members of its Group from Converium under the terms of the Reinsurance;
(c)	to it or members of its Group from Converium in respect of Overriding Commission; and/or
(d)	pursuant to Clause 2A.

13.4     At any time prior to 31 December 2008 that the MR Fund (together with the amount of any claims paid by the Agents or Munich Re in relation to the Reinsured Risks) is less than the fifty per cent (50%) of the Incurred Position, within ten Business Days of receiving notice from Munich Re or the Agents (or, if later, the date on which the Incurred Position is determined in accordance with Schedule 6), Converium shall pay to Munich Re such additional amount as shall be required for the MR Fund to equal fifty per cent (50%) of the Incurred Position.

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13.5     Munich Re shall pay to Converium within ten Business Days of 31 March 2009 (or, if later, the date on which the profit is determined in accordance with Schedule 4), the profit arising on any Fronting Insurance Contracts written by Munich Re or any member of its Group calculated on the basis set out in Clause 13.12. Nothing in this Clause 13.5 shall be construed to require Munich Re to pay any amount which would cause the MR Fund to be less than the greater of (a) and (b) below:

(a) the sum of:

(i)	100 per cent. of outstanding claims reserves, including reserves for claims incurred but not reported, maintained by Munich Re or the relevant member of its Group in accordance with applicable law or regulation in respect of relevant Reinsured Risks written in the name of such person (the MR Reserves); plus
(ii)	the greater of:

(A)	$50 million; and
(B)	20% of the MR Reserves; or

(b) the minimum amount which is required to allow Munich Re or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled.

The greater of (a) or (b) above shall be referred to as the Post Profit Incurred Position.

13.6     At any time after 31 December 2008 but prior to 31 December 2012 that the MR Fund is less than the Post Profit Incurred Position, within ten Business Days of receiving notice from Munich Re or Agents (or, if later, the date on which the Post Profit Incurred Position is determined in accordance with Schedule 6), Converium shall pay to Munich Re such additional amount as shall be required for the MR Fund to equal the Post Profit Incurred Position.

13.7     Munich Re shall pay to Converium within ten Business Days of 31 March 2013 (or, if later, within ten Business Days of the date on which the MR Reserves are determined in accordance with Schedule 6 for that date), the amount required to reduce the MR Fund to the greater of:

(a)	the MR Reserves; or
(b)	the minimum amount which is required to allow Munich Re or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled.

13.8     At any time after 31 March 2013 that the MR Fund is less than the greater of:

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(a)	the MR Reserves; or
(b)	the minimum amount required to allow Munich Re or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled,

Munich Re may serve a Letter of Credit Notice which shall state the amount of additional security required to increase the MR Fund to the greater of (a) and (b) above.

13.9     Within ten Business Days of receipt of notice pursuant to Clause 13.8 (or, if later, the date on which the MR Reserves are determined in accordance with Schedule 6), Converium may either:

(a)	arrange or cause to be arranged the issue and delivery to Munich Re of a Letter of Credit in the amount set out in the Letter of Credit Notice for the benefit of Munich Re; or
(b)	deposit the required additional funds in the MR Fund.

If Converium elects to provide a Letter of Credit in response to the Letter of Credit Notice, Converium shall, if practicable and if agreed by Munich Re, be entitled to provide the necessary security by increasing, or causing to be increased, the amount of any existing Letter of Credit by the amount of the Letter of Credit Notice rather than by issuing and delivering, or causing to be issued and delivered, a new Letter of Credit). For the avoidance of doubt, nothing in this Clause shall be construed as limiting the number of Letter of Credit Notices that may be served from time to time by Munich Re.

13.10     Within ten Business Days of the end of each quarter following 31 December 2012, Munich Re shall pay to Converium the amount, if any, by which the MR Fund exceeds the greater of:

(a)	the MR Reserves; and
(b)	the amount required to allow Munich Re or such member of its Group to receive credit for the Reinsurance of the fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled.

13.11     In applying Clauses 13.8, 13.9 and 13.10, all currencies shall be converted to US$ at the relevant exchange rate used by (or to be used by) the Agents for the purpose of the audited accounts produced for the Pool for the year most recently ended. Clauses 13.4 through 13.10 may be terminated by the agreement Munich Re and Converium without the consent of the other parties.

13.12     Global shall, by no later than 31 March 2009 deliver to Munich Re and Converium its calculation of the profit attributable to the Fronting Insurance Contracts written by Munich Re and the members of its Group calculated on a basis consistent with that used for the purposes of the audited accounts produced for the Pool in the

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year ended on 31 December 2008 (the MR Statement). The MR Statement shall be accompanied by sufficient information to allow Munich Re and Converium to understand how the profit set out in the MR Statement has been calculated and the basis upon which it has been calculated (including without limitation the calculation of the MR IBNR). The process in Clause 15.1 and Schedule 4 shall apply in relation to the MR Statement.

13.13	In determining profit, Global shall:
(a)	calculate each of the items in (a) to (d) inclusive of the definition of profit using each of US$, Canadian $, € and GBP by allocating all relevant premiums, claims and reserves to one only of such currencies in accordance with Global’s current practice, for the avoidance of doubt profit shall be paid out in each of the four currencies; and
(b)	use the incurred but not reported reserves as reported by Munich Re and applicable members of its Group for the Reinsured Risks (the MR IBNR).

13.14     If the calculation of profit in any of the four currencies shows a loss, then Global shall calculate the total profit attributable to the Fronting Insurance Contracts in US$ by converting to US$ at the relevant exchange rate used by the Agents for the purpose of the audited accounts produced for the Pool for the year ended 31 December 2008 (the Exchange Rate) (such amount being the Total $ Distribution).

13.15     If Clause 13.14 applies, the amount of any distribution pursuant to Clause 13.5 (using the Exchange Rate to calculate the amount of the distribution) shall be limited to the Total $ Distribution and the distribution in one or more of the currencies not in deficit shall be reduced to ensure that the Total $ Distribution is not exceeded (the distribution of currencies in which there was a profit shall be reduced by an equal percentage so that the distribution equals the Total $ Distribution at the Exchange Rate).

13.16     Global shall, by no later than 31 March 2013 deliver to Munich Re and Converium its calculation of outstanding reserves on claims reported on Reinsured Risks and Munich Re’s calculation of outstanding reserves on incurred but not reported claims on Reinsured Risks as of the prior 31 December together with the actuarial calculation of those reserves and sufficient information to allow Converium, the Agents and Munich Re to understand how the reserves were set. This process shall be repeated within 90 days of the end of each calendar quarter so long as Clause 13.10 remains in effect.

13.17     The amounts required to be held in the MR Fund shall be reduced by:

(a) fifty per cent of the amount of the Letter of Credit established by Converium pursuant to Clause 15.5(c)(iii) (or, with the consent of Munich Re Clause 15.5(c)(iv)) of the Pool Members’ Agreement which relates to the Reinsured Risks;

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(b)	fifty per cent of any amount paid by (or on behalf of) Converium towards the fund held by the Agents on behalf of the Pool in relation claims on business written during the Period; and
(c)	fifty per cent of the amount of any reinsurance premiums paid by (or on behalf of) Converium in relation to reinsurance taken out by the Agents in relation to the business of the Pool written during the Period,

provided that the MR Fund shall not be reduced below $50 million (or, if lower and Clause 13.8 applies, the amount required to be held in the MR Fund pursuant to Clause 13.8) as a result of the operation of Clauses 13.17(b) or (c).

13.18     Munich Re shall pay to Converium an amount equal to the interest which is deemed to have accrued on the MR Fund in the quarter to 31 March, 30 June, 30 September and 31 December in each year within two Business Days of such date. The amount of such interest shall be calculated on a daily basis. Interest shall accrue on the amounts in the MR Fund in each quarter at a rate equal to the “yield on the three years US Treasury Notes” on the first Business Day after the 31 March, 30 June, 30 September or 31 December ending the previous quarter as shown in the Wall Street Journal for the close of that first Business Day of the calendar quarter. For the purposes of the foregoing sentence, the “three years US Treasury Yield” shall mean the annual yield on the U. S. Treasury Bond or Note maturing on the day nearest the third anniversary of that first Business Day of that calendar quarter. If there are two bonds or notes that are equally near the third anniversary, the annual yield of the instruments will be averaged.

13.19     References in this Clause 13 to reserves for claims incurred but not reported shall mean the amount of such reserves required to be kept in accordance with actuarial best practice in the relevant jurisdiction and the guidance produced by relevant actuarial bodies. Converium shall be provided with sufficient information at all times to understand how such reserves have been calculated and the basis on which they have been calculated. Converium may challenge the calculation of any such reserve as set out in Schedule 6 and until such dispute is resolved in accordance with Schedule 6, the provision of this Clause 13 for which the reserves were provided shall have no effect.

14. National Indemnity Security

14.1     Converium shall on or before the date five Business Days from the date of this Agreement (or such later date as National Indemnity may specify) pay to National Indemnity the sum of $50 million to be held on the basis set out in Clause 14.3.

14.2     Any amounts paid pursuant to Clauses 5.1(b), 14.1, 14.4, 14.6 or 14.9 or because of the definition of Incurred Position, shall be paid to the account of National Indemnity notified to Converium in writing by National Indemnity from time to time.

14.3     The amounts held pursuant to Clause 14.2 shall be known as the NICO Fund. Such amounts shall be held by National Indemnity as trustee for Converium provided that National Indemnity shall be entitled to make payments from such account in order to pay amounts which are due:

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(a)	or claimed to be due under Reinsured Risks in respect of which Fronting Insurance Contracts have been written by it or members of its Group;
(b)	to it or members of its Group from Converium under the terms of the Reinsurance;
(c)	to it or members of its Group from Converium in respect of Overriding Commission; and/or
(d)	pursuant to Clause 2A.

14.4     At any time prior to 31 December 2008 that the NICO Fund together with the amount of any claims paid by the Agents or National Indemnity in relation to the Reinsured Risks is less than fifty per cent (50%) of the Incurred Position, within ten Business Days of receiving notice from National Indemnity or the Agents (or, if later, the date on which the Incurred Position is determined in accordance with Schedule 6), Converium shall pay to National Indemnity such additional amount as shall be required for the NICO Fund to equal fifty per cent (50%) of the Incurred Position.

14.5     National Indemnity shall pay to Converium within ten Business Days of 31 March 2009 (or, if later, the date on which the profit is determined in accordance with Schedule 5), the profit arising on any Fronting Insurance Contracts written by National Indemnity or any member of its Group calculated on the basis set out in Clause 14.12. Nothing in this clause shall be construed to require National Indemnity to pay any amount which would cause the NICO Fund to be less than the greater of (a) and (b) below:

(a) the sum of:

(i)	100 per cent. of outstanding claims reserves, including reserves for claims incurred but not reported maintained by National Indemnity or the relevant member of its Group in accordance with applicable laws in respect of relevant Reinsured Risks written in the name of the relevant person (the NIC Reserves); plus
(ii)	the greater of:

(A)	$50 million; and
(B)	20% of the NIC Reserves; and

(b) the minimum amount which is required to allow National Indemnity or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which each person is domiciled.

The greater of (a) or (b) above shall be referred to as the NIC Post Profit Incurred Position.

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14.6     At any time after 31 December 2008 but prior to 31 December 2012 that the NICO Fund is less than the NIC Post Profit Incurred Position, within ten Business Days of receiving notice from National Indemnity or Agents (or, if later, the date on which the Poor Profit Incurred Position is determined in accordance with Schedule 6), Converium shall pay to National Indemnity such additional amount as shall be required for the NICO Fund to equal the Post Profit Incurred Position.

14.7     National Indemnity shall pay to Converium within ten Business Days of 31 March 2013 (or, if later, within ten Business Days of the date on which the NIC Reserves are determined in accordance with Schedule 6 for that date), an amount as shall be required to reduce the NIC Fund to the greater of:

(a)	the NIC Reserves; or
(b)	the minimum amount which is required to allow National Indemnity or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled.

14.8     At any time after 31 March 2013 that the NICO Fund is less than the greater of:

(a)	the NIC Reserves; or
(b)	the minimum amount required to allow National Indemnity or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled,

National Indemnity may serve a Letter of Credit Notice which shall state the amount of additional security required to increase the NICO Fund to the greater of (a) and (b) above.

14.9     Within ten Business Days of receipt of a notice pursuant to Clause 14.8 (or, if later, the date on which the NIC Reserves are determined in accordance with Schedule 6), Converium may either:

(a)	arrange or cause to be arranged the issue and delivery to National Indemnity of a Letter of Credit in the amount set out in the Letter of Credit Notice for the benefit of National Indemnity; or
(b)	deposit the required additional funds in the NICO Fund.

If Converium elects to provide a Letter of Credit in response to the Letter of Credit Notice, Converium shall, if practicable and if agreed by NICO, be entitled to provide the necessary security by increasing, or causing to be increased, the amount of any existing Letter of Credit by the amount of the Letter of Credit Notice rather than by issuing and delivering, or causing to be issued and delivered, a new Letter of Credit). For the avoidance of doubt, nothing in this Clause shall be construed as limiting the number of Letter of Credit Notices that may be served from time to time by NICO.

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14.10     Within ten Business Days of the end of each quarter following 31 December 2012, National Indemnity shall pay to Converium the amount, if any, by which the NICO Fund exceeds the greater of:

(a)	the NIC Reserves; and
(b)	the amount required to allow National Indemnity or such member of its Group to receive credit for the Reinsurance of the Fronting Insurance Contracts written by it under the laws of the jurisdiction in which such person is domiciled.

14.11     In applying Clauses 14.8, 14.9 and 14.10, all currencies shall be converted to US$ at the relevant exchange rate used by (or to be used by) the Agents for the purpose of the audited accounts produced for the Pool for the year most recently ended. Clauses 14.4 through 14.10 may be terminated by National Indemnity and Converium without the consent of the other parties.

14.12     Global shall, by no later than 31 March 2009 deliver to National Indemnity and Converium its calculation of the profit attributable to the Fronting Insurance Contracts written by National Indemnity and the members of its Group calculated on a basis consistent with that used for the purposes of the audited accounts produced for the Pool in the three years ended on 31 December 2008 (the NIC Statement). The National Indemnity Statement shall be accompanied by sufficient information to allow National Indemnity and Converium to understand how the profit set out in the NIC Statement has been calculated and the basis upon which it has been calculated (including without limitation the calculation of the NIC IBNR). The process in Clause 15.2 and Schedule 5 shall apply in relation to the NIC Statement.

14.13     In determining profit, Global shall:

(a)	calculate each of the items in (a) to (d) inclusive of the definition of profit using each of US$, Canadian $, € and GBP by allocating all relevant premiums, claims and reserves to one only of such currencies in accordance with Global’s current practice, for the avoidance of doubt profit shall be paid out in each of the four currencies; and
(b)	use the incurred but not reported reserves as reported by National Indemnity and applicable members of its Group for the Reinsured Risks (the NIC IBNR).

14.14     If the calculation of profit in any of the four currencies shows a loss, then Global shall calculate the total profit attributable to the Fronting Insurance Contracts in US$ by converting to US$ at the relevant exchange rate used by the Agents for the purpose of the audited accounts produced for the Pool for the year ended 31 December 2008 (the Exchange Rate) (such amount being the Total $ Distribution).

14.15     If Clause 14.14 applies, the amount of any distribution pursuant to Clause 14.5 (using the Exchange Rate to calculate the amount of the distribution) shall be limited to the Total $ Distribution and the distribution in one or more of the currencies not in deficit shall be reduced to ensure that the Total $ Distribution is not exceeded (the

34

distribution of currencies in which there was a profit shall be reduced by an equal percentage so that the distribution equals the Total $ Distribution at the Exchange Rate).

14.16     Global shall, by no later than 31 March 2013 deliver to National Indemnity and Converium its calculation of outstanding reserves on claims reported on Reinsured Risks and National Indemnity’s calculation of outstanding reserves on incurred but not reported claims on Reinsured Risks as of the prior 31 December together with the actuarial calculation of those reserves and sufficient information to allow Converium, the Agents and National Indemnity to understand how the reserves were set. This process shall be repeated within 90 days of the end of each calendar quarter so long as Clause 14.10 remains in effect.

14.17     The amounts required to be held in the NIC Fund shall be reduced by:

(a)	fifty percent of the amount of the Letter of Credit established by Converium pursuant to Clause 15.5(c)(iii) (or, with the consent of NIC Clause 15.5(c)(iv)) of the Pool Members’ Agreement which relates to the Reinsured Risks;
(b)	fifty per cent of any amount paid by (or on behalf of) Converium towards the fund held by the [Agents on behalf of the] Pool in relation claims on business written during the Period; and
(c)	fifty per cent of the amount of any reinsurance premiums paid by (or on behalf of) Converium in relation to reinsurance taken out by the Agents in relation to the business of the Pool written during the Period

provided that the NIC Fund shall not be reduced below $50 million (or if lower and Clause 14.8 applies, the amount required to be held in the NIC Fund pursuant to Clause 14.8) as a result of the operation of Clauses 14.17(b) or (c).

14.18     National Indemnity shall pay to Converium an amount equal to the interest which is deemed to have accrued on the NIC Fund in the quarter to 31 March, 30 June, 30 September and 31 December in each year within two Business Days of such date. The amount of such interest shall be calculated on a daily basis. Interest shall accrue on the amounts in the NIC Fund in each quarter at a rate equal to the “yield on the three years US Treasury Notes” on the first Business Day after the 31 March, 30 June, 30 September or 31 December ending the previous quarter as shown in the Wall Street Journal for the close of that first Business Day of the calendar quarter. For the purposes of the foregoing sentence, the “three years US Treasury Yield” shall mean the annual yield on the U.S. Treasury Bond or Note maturing on the day nearest the third anniversary of that first Business Day of that calendar quarter. If there are two bonds or notes that are equally near the third anniversary, the annual yield of the instruments will be averaged.

14.19     References in this Clause 14 to reserves for claims incurred but not reported shall mean the amount of such reserves required to be kept in accordance with actuarial best practice in the relevant jurisdiction and guidance produced by relevant actuarial bodies in the jurisdiction. Converium shall be provided with sufficient information at all times to understand how such reserves have been calculated and the

35

basis on which they have been calculated. Converium may challenge the calculation of any such reserve as set out in Schedule 6 and until such dispute is resolved in accordance with Schedule 6, the provision of this Clause 14 for which the reserves were provided shall have no effect.

15. Dispute Resolution

15.1     Within thirty (30) days of receipt of Global’s calculations under Clause 13, either Converium or Munich Re may challenge Global’s calculations under Clause 13. In that event, the dispute shall be settled as provided in Schedule 6 or in the case of the calculation of profit, Schedule 4.

15.2     Within thirty (30) days of receipt of Global’s calculations under Clause 14, either Converium or National Indemnity may challenge Agents’ calculations under Clause 14. In that event, the dispute shall be settled as provided in Schedule 6 or in the case of the calculation of profit, Schedule 5.

16. Letters of Credit and Authority

16.1     Notwithstanding any other provision of this Agreement, National Indemnity or Munich Re may, at any time, draw down upon any Letter of Credit provided by or on behalf Converium pursuant to Clause 13 or Clause 14, in order to:

(a)	fund the payment of amounts due or claimed to be due under Reinsured Risks in respect of which Fronting Insurance Contracts have been written by it or members of its Group;
(b)	pay any amounts which are due to it or any member of its Group from Converium under the terms of the Reinsurance; and/or
(c)	pay any amounts which are due to it or any member of its Group from Converium in respect of Overriding Commission.

16.2     Any bank issuing a Letter of Credit relating to this Agreement shall be unconditionally obliged to accede to any request made by or on behalf of Munich Re or National Indemnity (as appropriate) to draw down on such Letter of Credit provided only that such bank is satisfied that such request is made by, or with the proper authority of, Munich Re or National Indemnity (as appropriate) and/or its authorised representatives (who shall not include the Agents or any replacements).

16.3     Each of Munich Re and National Indemnity hereby grants the Agents (or either of them) authority to act as their respective agents in taking all necessary action on its behalf to exercise its rights under Clauses 13 and 14, including (without limitation) the service of a Letter of Credit Notice, but nothing herein shall be construed as granting the Agents any authority with respect to disputes under Clauses 15.1 or 15.2 or Schedules 4, 5 or 6.

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17. Set-off

17.1     National Indemnity may set off any amount due to it from Converium against any amount owed by National Indemnity or any member of its Group to Converium under this Agreement.

17.2     Munich Re may set off any amount due to it from Converium against any amount owed by Munich Re or any member of its Group to Converium under this Agreement.

18. Regulatory Matters

18.1     The parties shall co-operate with each other to ensure that all information necessary or desirable for making (or responding to any requests for further information following) any regulatory notification or filing made in respect of this Agreement, or any agreement, arrangement or concerted practice of which it forms part, is supplied to the party dealing with such notification or filing and that they are properly, accurately and promptly made.

18.2     The parties will each procure that any other registrations, filings and/or submissions required under the laws or regulations of any jurisdiction in respect of the Agreement or any Fronting Insurance Contract are made.

19. Waiver of Obligations

19.1     Waiver by any party of any default by any other party in the performance of any obligation of such other party hereunder shall not affect such party’s rights in respect of any other default nor any subsequent default of the same or of a different kind nor shall any delay or omission of any party to exercise any right arising from any default affect or prejudice that party’s rights as to the same or any future default. Waiver by one party of any default by any other party shall not constitute a waiver of such default on the part of or on behalf of any other party.

19.2     Subject to Clause 19.3, no claim shall be made by Converium against any officer, employee, agent or sub-contractor of either Agent in respect of any matter arising in respect of this Agreement, save in the case of criminal actions or omissions, fraud or wilful misconduct.

19.3     Clause 19.2 shall not preclude the Agents from making claims against any of its agents or sub-contractors on behalf of Converium, National Indemnity or Munich Re or the members of their Groups.

20. Amendment and Representations

20.1     Any amendment to any term of this Agreement shall be in writing and signed by the authorised representatives of the parties hereto provided that rights and obligations between Converium and (a) Munich Re or (b) National Indemnity may be amended by written agreement between Converium and such person.

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20.2     This Agreement sets out the entire agreement and understanding between the parties in relation to the Business and the arrangements in Clause 2A. It is agreed that no party has entered into this Agreement in reliance upon, or been induced to enter into this Agreement by, any representation, warranty or undertaking of any other party hereto (whether express or implied and whether pursuant to statute or otherwise) which is not set out in this Agreement and to the extent that it may have done so, it hereby waives (on behalf of itself and the members of its Group) all rights, remedies and claims it may have in respect thereto. A party may claim in contract for breach of warranty under this Agreement but shall otherwise have no claim or remedy in respect of misrepresentation (whether negligent or otherwise, and whether made prior to, and/or in, this Agreement) or untrue statement made by any other party provided that this Clause 20.2 shall not exclude any liability for, or remedy in respect of, any fraud including, without limitation, fraudulent misrepresentation by any party (or (where relevant) any member of its Group).

21. Assignment

No party shall sell, transfer or encumber all or any of its rights or obligations under this Agreement without the prior written consent of all the other parties.

22. Notices and Communications

22.1     Notices under this Agreement shall be sent to a party at its address and for the attention of the individual set out in Clause 22.3 provided that a party may change its notice details on giving notice to the other parties of the change in accordance with this Clause 22. That notice shall only be effective on the date falling five clear Business Days after the notification has been received or such later date as may be specified in the notice.

22.2     All notices or other communications required for the purposes of this Agreement shall be in English and shall be given or sent by hand, facsimile, first class post or airmail to the parties and shall be deemed to be received: (i) if given by hand, at the time of delivery; or (ii) if sent by facsimile; at the time when the sender receives from the recipient facsimile machine or from the addressee of the notice confirmation of receipt of the whole of the facsimile; or (iii) if sent by first class post, 24 hours after posting; or (iv) if sent by airmail, 6 clear Business Days after the date of posting.

22.3     Notices under this Agreement shall be sent to the following addresses or facsimile numbers for the attention of the person indicated:

Party	Title of individual/address	Facsimile Number
National Indemnity (for itself or as agent for any member of its Group)	Attention: General Counsel 100 First Stamford Place Stamford, CT, USA 06092	+1-203-363-5221

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Party	Title of individual/address	Facsimile Number
Munich Re (for itself or as agent for any member of its Group)	Attention: Hartmut Hesse (Head of Aviation and Space) Königinstraße 107 80802 München Germany	+49-89- 3891 - 4278
Converium	Attention: Chris Bell/Christian Felderer General Guisan – Quai 26 8022, Zurich Switzerland	+41-1-639-9066
Global	Attention: Company Secretary Fitzwilliam House 10 St. Mary Axe London EC3A 8EQ	+44 20 7369 2840
GAI	Attention: Company Secretary 51 John F Kennedy Parkway Short Hills New Jersey 07078 USA	+1 973 379 0923

22.4     Different persons may be authorised to give or receive instructions for different purposes, and such persons may include officers of corporations other than the parties hereto, authorised in that regard by the board of the relevant party. A certified copy of a resolution of the board of Munich Re, National Indemnity or Converium or the relevant member of such person’s Group (or with respect to National Indemnity and members of its Group, the Executive Committee of the board of such entity) may be received and accepted by either Agent as conclusive evidence of the authority of any person to act and may be considered in full force and effect until receipt of written notice to the contrary.

23. Governing Law and Arbitration

23.1     This Agreement and the relationship between the parties shall be governed by and interpreted in accordance with the law of England and Wales.

23.2     Save as set out in Schedules 4, 5 and 6 each party to this Agreement irrevocably agrees that the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set-off and counterclaims) which may arise in connection with the validity, effect, interpretation or performance of, or the legal relationships established by, this Agreement or otherwise in connection with this Agreement and for such purposes irrevocably submits to the jurisdiction of such courts.

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23.3     All parties agree that a final judgment or order of any court referred to in Clause 23.2 in connection with this Agreement is conclusive and binding on it and may be entered against it in the courts of any other jurisdiction.

24. Costs

24.1     Each party shall be responsible for the legal and other professional charges and expenses (including Value Added Tax) incurred by it in connection with the preparation and negotiation of this Agreement.

24.2     Any costs and expenses which arise pursuant to the terms of the Pool Members Agreement solely as a result of the operation of this Agreement and which would not have arisen had the Pool Members Agreement been effected on the basis existing prior to this Agreement shall be paid by Converium.

25. Enforceability

25.1     If any provision of this Agreement or any part thereof:

(a)	purports to exclude or restrict or limit any liability and such exclusion or restriction or limitation is prohibited or rendered void or unenforceable by any legislation to which it is subject; or
(b)	is itself prohibited or rendered void or unenforceable by any legislation to which it is subject,

then the exclusion, restriction or limitation or the provision or part thereof in question shall be so prohibited or rendered void or unenforceable to the extent to which it is thus prohibited or rendered void or unenforceable and no further and the validity or enforceability of any other part of this Agreement shall not thereby be affected.

26. Relationship with pool members’ agreement

26.1     This Agreement shall constitute a Fronting Arrangement for the purposes of the Pool Members’ Agreement and save as set out in this Agreement Converium shall effect all payments under Clause 9.1(f) (subject to Clauses 9.1(g) and (h)) of the Pool Members’ Agreement as if it is a Nominating Insurer.

26.2     Subject to Clause 26.3, as between Converium and the Agents, the terms of this Agreement are without prejudice to their rights and obligations under the Pool Members’ Agreement.

26.3     Converium acknowledges that the terms of the Indemnity (as defined in Clause 20 of the Pool Members’ Agreement) shall apply (mutatis mutandis) to any claims, losses, expenses and liabilities properly made against or incurred by Indemnified Directors (as defined therein) in the purported execution of and discharge of their duties with respect to the performance of services under this Agreement.

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26.4     Converium acknowledges that Clause 4.2 of the Pool Members’ Agreement shall apply to any losses, liabilities or expenses of either Agent (or a wholly-owned subsidiary of Global appointed pursuant to Clause 2.5) under this Agreement.

27. No Rights Under Contracts (Rights of Third Parties) Act 1999

A person who is not a party to this Agreement is not intended to have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms, save in respect of Clause 26.3 conferring the rights and benefits of indemnities on the Indemnified Directors and Clause 19.2 conferring rights and benefits on employees, agents or sub-contractors of either Agent (each such party being for the purposes of this Clause 27 a Third Party), which shall be enforceable by such persons by way of proceedings in the courts specified in Clause 23 subject to and in accordance with the Contracts (Rights of Third Parties) Act 1999, and Clauses 26.3 and 19.2 and this Clause 27 shall not be varied by the parties to this Agreement without the consent of each relevant Third Party. Any other provision of this Agreement may be varied or revoked without such consent.

28. Counterparts

This Agreement may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.

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SCHEDULE 1

AMOUNT AND BASIS OF CALCULATION OF OVERRIDING

COMMISSION

1. Introductory

This Schedule sets out further terms and principles applicable to the calculation and payment of Overriding Commission in accordance with Clause 6.

2. Procedure And Amounts

2.1     The amount of Overriding Commission payable by Converium shall be calculated by reference to the total gross premium income written by the Agents in the period in question in respect of each Reinsured Risk after deduction of any (i) original commission or taxes on premiums payable thereunder but before the deduction of amounts, if any, payable to the Agents under the terms of the Pool Members’ Agreement and (ii) any premiums payable for reinsurance in relation to the Pool [by the Agents] (such amount being referred to as the Relevant Net Premium Income).

2.2     The amount of Overriding Commission payable by Converium to National Indemnity shall be calculated by multiplying the Relevant Net Premium Income attributable to Reinsured Risks covered by Fronting Insurance Contracts written by National Indemnity or members of its Group by 5 per cent. (or by such percentage as may be agreed from time to time between National Indemnity and Converium).

2.3     The amount of Overriding Commission payable by Converium to Munich Re shall be calculated by multiplying the Relevant Net Premium Income attributable to Reinsured Risks covered by Fronting Insurance Contracts written by Munich Re or members of its Group by 5 per cent. (or by such percentage as may be agreed from time to time between Munich Re and Converium).

2.4     Subject to Clause 6.2, the amount of Overriding Commission attributable to any calendar quarter shall be due and payable on (i) the last business day of the immediately following calendar quarter, or (ii) the date on which a cash distribution is paid by the Agents to Converium under the Pool Members’ Agreement with respect to business written in such calendar quarter, whichever is earlier and shall be deducted by National Indemnity from the NICO Fund or by Munich Re from the MR Fund on that date.

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SCHEDULE 2

MUNICH RE GROUP FRONTING

Part I
Munich Re Group Fronters

			4. Member of Munich Re
			Group in whose name	5. Percentage of
			Fronting Insurance Contracts	Converium’s
1. Agent Accepting Business	2. Jurisdiction	3. Business	should be written	Respective Proportion
GAI	All States of the United States except Massachusetts	US National Accounts	GR LK		50
GAI	Massachusetts	US National Accounts	AAIC		50
GAI	The District of Columbia, and all States of the United States except Connecticut and Maine	US GA	AAIC		50
Global	Worldwide, subject to licensing regulations	Business written in the UK	GRLK		50
GAC	Canada, subject to licensing regulations	Canadian risks	Temple		50

GR LK means Great Lakes Reinsurance (UK) plc

AAIC means American Alternative Insurance Company

Temple means Temple Insurance Company

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Part II
Jurisdictions in which Munich Re is fronted

1. Agent Accepting Business	2. Jurisdiction	3. Business	4. Fronter for Munich Re
GAI	Connecticut and Maine	USGA	Tokio Marine and Nichido Fire Insurance Company Ltd (Tokio)
GAC	Canada	Canadian Risks	Royal and Sun Alliance Insurance Company of Canada (RSAI)

The companies, jurisdictions and business listed in columns 2-4 respectively of this Schedule (Parts I and II) may be amended or added to with the written agreement (in such person’s absolute discretion) of Converium, Global and Munich Re provided that the amendment would not result in a Trigger Event occurring, and that all relevant Fronting Insurance Contracts written after the date of the agreement are written in the name of the replacement companies, jurisdictions and business.

44

SCHEDULE 3

NATIONAL INDEMNITY GROUP FRONTING

Part I
National Indemnity Group Fronters

			4. Member of National Indemnity
			Group in whose name	5. Percentage of
			Fronting Insurance Contracts	Converium’s
1. Agent Accepting Business	2. Jurisdiction	3. Business	should be written	Respective Proportion
GAI	Nebraska	US National Accounts	NICS		50
GAI	New Jersey	US National Accounts	NIC		50
GAI	All States of the United States, except Nebraska and New Jersey, and Washington DC and Puerto Rico	US National Accounts	NFM		50
GAI	Hawaii, Louisiana, Massachusetts, New York, Oregon	US GA Accounts	CISCO		50
GAI	Florida	US GA	NICSO		50
GAI	New Jersey	US GA	USLIC		50
GAI	All other states of the United States and Washington DC	US GA	NIC		50
Global	Worldwide, subject to licencing restrictions	Business written in the UK	BHII		50

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			4. Member of National Indemnity
			Group in whose name	5. Percentage of
			Fronting Insurance Contracts	Converium’s
1. Agent Accepting Business	2. Jurisdiction	3. Business	should be written	Respective Proportion
GAI	Canada	Canadian Risks	NLF		50

NFM means National Fire and Marine Insurance Company

NICS means National Indemnity Company of the South

NIC means National Indemnity Company

CISCO means Central States Indemnity Company of Omaha

NICSO means National Indemnity Company of the South

BHII means Berkshire Hathaway International Insurance Ltd.

NLF means National Liability and Fire Insurance Company

The companies, jurisdictions and business listed in columns 2-4 respectively of this Schedule (Parts I and II) may be amended or added to with the written agreement (in such person’s absolute discretion) of Converium, Global and NIC provided that the amendment would not result in a Trigger Event occurring, and that all relevant Fronting Insurance Contracts written after the date of the agreement are written in the name of the replacement companies, jurisdictions and business.

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Part II
Jurisdictions in which National Indemnity is fronted

1. Agent Accepting Business	2. Jurisdiction	3. Business	4. Fronter for National Indemnity
Global	Mexico, Ecuador, Colombia and Venezuela written in the UK	Business written in the UK	RSAI
Global	US Surplus lines (except where written in BHII)	Business written in the UK	The Marine Insurance Company Limited

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SCHEDULE 4

MR STATEMENT DISPUTE RESOLUTION MECHANISM

1.     Each of Munich Re or Converium may request from the Agents such additional information as it reasonably requires to confirm whether it agrees with the MR Statement and the Agents or Munich Re shall provide such information, to the extent they have it or are entitled to it, promptly and in any case within 5 Business Days of the request.

2.     Munich Re or Converium may notify the Agents and Munich Re or Converium (as appropriate) in writing (such notification being an Objection Notice) within thirty (30) days after receipt that is disputes the MR Statement. Any notice indicating that Munich Re or Converium does not accept the MR Statement shall only be valid for the purposes of this Agreement if it sets out the reasons why the person serving the notice believes the MR Statement does not correctly state the profits attributable to the Fronting Insurance Contracts written by Munich Re and the members of its Group calculated in accordance with Clause 13 and specifies the adjustments which, in such person’s opinion, should be made to the MR Statement. The validity of any such notice shall be a matter for determination by the Independent Firm.

3.     If an Objection Notice is served in accordance with 2 above, then Munich Re and Converium shall use all reasonable endeavours (in conjunction with the Agents):

(a)	to meet and discuss the objections in the Objection Notice; and
(b)	to reach agreement upon the adjustments (if any) required to be made to the MR Statement, within a period of five (5) Business Days after receipt by the Agents of the Objection Notice.

4.     If both Munich Re and Converium notify the Agents in writing that they are satisfied with the MR Statement (either as originally submitted or after adjustments agreed between Munich Re and Converium pursuant to 3 above) or if neither Munich Re or Converium gives a valid Objection Notice within the thirty (30) day period referred to in 2 above, then the MR Statement (as so adjusted, if applicable) shall be final and binding for the purposes of this agreement.

5.     If Converium and Munich Re do not reach agreement within five (5) Business Days of receipt by the Agents of the Objection Notice, then the matters in dispute may be referred (on the application of either the Converium or Munich Re) for determination by such firm of actuaries of international standing as shall be agreed by Converium and Munich Re or, failing agreement, appointed by the President for the time being of the Institute of Actuaries in England and Wales on the application of Converium or Munich Re (the Independent Firm). Converium and Munich Re shall use all reasonable endeavours to agree with the Independent Firm the precise terms of reference to apply to its role as soon as reasonably practicable following a referral to the Independent Firm. Converium and Munich Re shall procure that the Agents

48

comply with any reasonable requests of the Independent Firm. The following general terms of reference and procedure shall apply in any event:

(a)	Converium and Munich Re shall each prepare a written statement within five (5) days of the formal appointment of the Independent Firm on the matters in dispute which (together with the relevant supporting documents) shall be submitted to the Independent Firm for determination. The matters in dispute shall be limited to the matters specified in the Objection Notice;
(b)	following delivery of their respective submissions, Converium, and Munich Re shall each have the opportunity to comment once only on the other’s submissions by written comment delivered to the Independent Firm not later than ten (10) days after receipt of the other’s submissions;
(c)	any response to a subsequent request by the Independent Firm for information from Converium, Munich Re or the Agents shall be copied to Converium and Munich Re at the same time and, unless otherwise directed by the Independent Firm, each person receiving a copy of the information may, within ten (10) days after it receives such information, comment once only on that information;
(d)	in giving its determination, the Independent Firm shall state what adjustments (if any) are necessary, solely for the purposes of this agreement, to the MR Statement in respect of the matters in dispute in order to comply with the requirements of this agreement and to determine finally the MR Statement;
(e)	the Independent Firm shall determine (using its own legal advice as appropriate) any question of the legal construction of this agreement but only insofar as it is relevant to the determination of the MR Statement;
(f)	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such determination and any such determination (including any determination of any fact which it has found it necessary to determine for the purposes of its determination) shall, in the absence of manifest error, be final and binding on the parties; and
(g)	without prejudice to any other rights which they may respectively have under this agreement, the parties expressly waive, to the extent permitted by law, any rights of recourse to the courts they may otherwise have to challenge the Independent Firm’s determination;

6.     Converium and Munich Re shall each be responsible for their own costs in connection with the preparation, review and agreement or determination of the MR Statement.

7.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between Converium and Munich Re or in such other proportions as the Independent Firm shall determine.

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SCHEDULE 5

NIC STATEMENT DISPUTE RESOLUTION MECHANISM

1.     Each of National Indemnity or Converium may request from the Agents such additional information as it reasonably requires to confirm whether it agrees with the NIC Statement and the Agents shall provide such information, to the extent they have it or are entitled to it, promptly and in any case within 5 Business Days of the request.

2     National Indemnity or Converium may notify the Agents and National Indemnity or Converium (as appropriate) in writing (such notification being a NICO Objection Notice) within thirty (30) days after receipt that it disputes the NIC Statement. Any notice indicating that National Indemnity or Converium does not accept the NIC Statement shall only be valid for the purposes of this Agreement if it sets out the reasons why the person serving the notice believes the NIC Statement does not correctly state the profits attributable to the Fronting Insurance Contracts written by National Indemnity and the members of its Group calculated in accordance with Clause 14 and specifies the adjustments which, in such person’s opinion, should be made to the NIC Statement. The validity of any such notice shall be a matter for determination by the Independent Firm.

3.     If a NICO Objection Notice is served in accordance with 2 above, then National Indemnity and Converium shall use all reasonable endeavours (in conjunction with the Agents):

(a)	to meet and discuss the objections in the Objection Notice; and
(b)	to reach agreement upon the adjustments (if any) required to be made to the NIC Statement, within a period of five (5) Business Days after receipt by the Agents of the Objection Notice.

4.     If both National Indemnity and Converium notify the Agents in writing that they are satisfied with the NIC Statement (either as originally submitted or after adjustments agreed between National Indemnity and Converium pursuant to 3 above) or if neither National Indemnity or Converium gives a valid Objection Notice within the thirty (30) day period referred to in 2 above, then the NIC Statement (as so adjusted, if applicable) shall be final and binding for the purposes of this agreement.

5.     If Converium and National Indemnity do not reach agreement within five (5) Business Days of receipt by the Agents of the Objection Notice, then the matters in dispute may be referred (on the application of either the Converium or National Indemnity) for determination by such firm of actuaries of international standing as shall be agreed by Converium and National Indemnity or, failing agreement, appointed by the President for the time being of the Institute of Actuaries in England and Wales on the application of Converium or National Indemnity (the Independent Firm). Converium and National Indemnity shall use all reasonable endeavours to agree with the Independent Firm the precise terms of reference to apply to its role as soon as reasonably practicable following a referral to the Independent Firm. Converium and National Indemnity shall procure that the Agents comply with any

50

reasonable requests of the Independent Firm. The following general terms of reference and procedure shall apply in any event:

(a)	Converium and National Indemnity shall each prepare a written statement within five (5) days of the formal appointment of the Independent Firm on the matters in dispute which (together with the relevant supporting documents) shall be submitted to the Independent Firm for determination. The matters in dispute shall be limited to the matters specified in the Objection Notice;
(b)	following delivery of their respective submissions, Converium, and National Indemnity shall each have the opportunity to comment once only on the other’s submissions by written comment delivered to the Independent Firm not later than ten (10) days after receipt of the other’s submissions;
(c)	any response to a subsequent request by the Independent Firm for information from Converium, National Indemnity or the Agents shall be copied to Converium and National Indemnity at the same time and, unless otherwise directed by the Independent Firm, each person receiving a copy of the information may, within ten (10) days after it receives such information, comment once only on that information;
(d)	in giving its determination, the Independent Firm shall state what adjustments (if any) are necessary, solely for the purposes of this agreement, to the NIC Statement in respect of the matters in dispute in order to comply with the requirements of this agreement and to determine finally the NIC Statement;
(e)	the Independent Firm shall determine (using its own legal advice as appropriate) any question of the legal construction of this agreement but only insofar as it is relevant to the determination of the NIC Statement;
(f)	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such determination and any such determination (including any determination of any fact which it has found it necessary to determine for the purposes of its determination) shall, in the absence of manifest error, be final and binding on the parties; and
(g)	without prejudice to any other rights which they may respectively have under this agreement, the parties expressly waive, to the extent permitted by law, any rights of recourse to the courts they may otherwise have to challenge the Independent Firm’s determination;

6.     Converium and National Indemnity shall each be responsible for their own costs in connection with the preparation, review and agreement or determination of the NIC Statement.

7.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between Converium and National Indemnity or in such other proportions as the Independent Firm shall determine.

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SCHEDULE 6

DISPUTE MECHANISM IN RELATION TO RESERVE CALCULATIONS

1.     Converium may dispute any calculation carried out by the Agents, Munich Re or National Indemnity or any reserves figure provided by the Agents, Munich Re or National Indemnity and Munich Re or National Indemnity may dispute any calculation carried out by the Agents as set out in this Schedule.

2.     The disputing party may request from the person providing the information in dispute or any other party such additional information as it reasonably requires and such person shall provide such information, to the extent they have it or are entitled to it, promptly and in any case within 5 Business Days of the request.

3.     The disputing party may notify the person providing the information in dispute in writing (such notification being an Objection Notice) within thirty (30) days after receipt that it disputes the information. Any notice indicating that the disputing party does not accept the information shall only be valid for the purposes of this Agreement if it sets out the reasons why the person serving the notice believes the information has not been properly calculated in accordance with the Agreement and specifies the adjustments which, in such person’s opinion, should be made to the information. Ultimately, the validity of any such notice shall be a matter for determination by the Independent Firm.

4.     If an Objection Notice is served in accordance with paragraph 3 above, then the disputing party and the disputer shall use all reasonable endeavours (in conjunction with the Agents):

(a)	to meet and discuss the objections in the Objection Notice; and
(b)	to reach agreement upon the adjustments (if any) required to be made to the information, within a period of five (5) Business Days after receipt of the Objection Notice.

5.     If the disputing party and the disputer agree in writing that they are satisfied with the information (either as originally submitted or after adjustments agreed between them above) then the information (as so adjusted, if applicable) shall be final and binding for the purposes of this agreement.

6.     The disputing party and the disputer do not reach agreement within five (5) Business Days of receipt of the Objection Notice, then the matters in dispute may be referred (on the application of either of them) for determination by such other firm of actuaries of international standing as shall be agreed by them or, failing agreement, appointed by the President for the time being of the Institute of Actuaries in England and Wales on the application of either of them (the Independent Firm). The disputing party and the disputer shall use all reasonable endeavours to agree with the Independent Firm the precise terms of reference to apply to its role as soon as reasonably practicable following a referral to the Independent Firm. The disputing party and the disputer shall procure that the Agents comply with any reasonable

52

requests of the Independent Firm. The following general terms of reference and procedure shall apply in any event:

(a)	the disputing party and the disputer shall each prepare a written statement within five (5) days of the formal appointment of the Independent Firm on the matters in dispute which (together with the relevant supporting documents) shall be submitted to the Independent Firm for determination. The matters in dispute shall be limited to the matters specified in the Objection Notice;
(b)	following delivery of their respective submissions, the disputing party and the disputer shall each have the opportunity to comment once only on the other’s submissions by written comment delivered to the Independent Firm not later than ten (10) days after receipt of the other’s submissions;
(c)	any response to a subsequent request by the Independent Firm for information from the disputing party and the disputer shall be copied to the other at the same time and, unless otherwise directed by the Independent Firm, each person receiving a copy of the information may, within ten (10) days after it receives such information, comment once only on that information;
(d)	in giving its determination, the Independent Firm shall state what adjustments (if any) are necessary, solely for the purposes of this agreement, to the information in respect of the matters in dispute in order to comply with the requirements of this Agreement;
(e)	the Independent Firm shall determine (using its own legal advice as appropriate) any question of the legal construction of this Agreement;
(f)	the Independent Firm shall act as an expert (and not as an arbitrator) in making any such determination and any such determination (including any determination of any fact which it has found it necessary to determine for the purposes of its determination) shall, in the absence of manifest error, be final and binding on the parties; and
(g)	without prejudice to any other rights which they may respectively have under this agreement, the parties expressly waive, to the extent permitted by law, any rights of recourse to the courts they may otherwise have to challenge the Independent Firm’s determination;

7.     The disputing party and the disputer shall each be responsible for their own costs in connection with the preparation, review and agreement or determination of the information.

8.     The fees and expenses of the Independent Firm and the Agents shall be shared equally between the disputing party and the disputer or in such other proportions as the Independent Firm shall determine.

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In witness whereof this Agreement has been signed by and on behalf of the parties on the day and year first before written.

SIGNED by for and on behalf of GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED	) ) ) ) ) )
SIGNED by for and on behalf of GLOBAL AEROSPACE, INC.	) ) ) )
SIGNED by and duly authorised representatives of MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT in MÜNCHEN	) ) ) ) ) ) ) )
SIGNED by Forrest N. Krutter, Secretary and for and on behalf of NATIONAL INDEMNITY COMPANY	) ) ) )

54

SIGNED by Christopher Bell
and
for and on behalf of
CONVERIUM AG )
)
)
)

55

ANNEXURE 1

FORM OF DEED OF ADHERENCE FOR USE BY SUBSIDIARIES OF

GLOBAL AND GAI

DEED OF ADHERENCE

THIS DEED is made the [               ] day of [               ], 20[ ] by

(1)	[               ] (No.               ) whose registered office is at [               ] hereinafter called [New Subsidiary];
(2)	GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED (registered number 2512067) whose registered office is at Fitzwilliam House, 10 St. Mary Axe, London EC3 8EQ (Global);
(3)	GLOBAL AEROSPACE, INC. a Delaware company (GAI);
(4)	NATIONAL INDEMNITY COMPANY, a company incorporated in Nebraska, United States of America, whose registered office is at 3024 Harney Street, Omaha, Nebraska, USA 68131 (National Indemnity);
(5)	CONVERIUM AG, a company incorporated in Switzerland whose registered office is at General Guisan-Quai 26, 8022 Zürich, Switzerland (Converium); and
(6)	MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN, whose registered office is at Königinstraße, 107, 80802 München, Germany (Munich Re).

Whereas:

(a)	[Global/GAI] has duly [incorporated] [acquired] [New Subsidiary] [to be] [as] its wholly owned subsidiary in accordance with the provisions of the reinsurance fronting and administration agreement made between Global, GAI, National Indemnity and Converium and Munich Re dated • November 2004 as it may have been subsequently amended (the Agreement).
(b)	Under the provisions of Clause 2.5 of the Agreement, [New Subsidiary] shall become a party to the Agreement by executing a Deed of Adherence in the form (or substantially in the form) set out in Annexure 1 to the Agreement and this Deed is in such form.

Now this deed witnesseth as follows:

1.     Words and phrases defined in the Agreement shall, unless the context otherwise requires, have the same meaning in this Deed.

56

2.     [New Subsidiary] agrees and undertakes to be bound by and to have the benefit of the Agreement as if it were named therein as a party in its capacity as and being a subsidiary of [Global/GAI].

3.     [New Subsidiary], subject to and in accordance with Clause 2.5 of the Agreement, agrees to act as agent for [XXX] on and in accordance with the terms of the Agreement including on and with effect from [INSERT EFFECTIVE DATE].

4.     This Deed and the relationship between the parties shall be governed by and interpreted in accordance with English law. For the benefit of the other parties hereto, each party to this Deed irrevocably agrees that the Courts of England are to have exclusive jurisdiction to settle any dispute which may arise in connection with this Deed and for any such purposes irrevocably submits to the jurisdiction of such Courts.

In witness whereof this document has been executed as a Deed the day and year first before written.

57

EX-7.1

Exhibit 7.1

Ratio of earnings to fixed charges

	As of December 31,
($ millions, except ratios)	2004			2003		2002		2001			2000
(Loss) income before taxes		(422.6	)		224.4		57.4		(537.3	)		(48.8	)
Fixed charges:
Interest expense		33.1			31.0		16.4		24.2			17.1
Interest portion of rental expense		5.2			5.2		4.9		3.6			3.4
(Loss) income before taxes plus fixed charges		(384.3	)		260.6		78.7		(509.5	)		(28.3	)
Fixed charges
Interest expense		33.1			31.0		16.4		24.2			17.1
Interest portion of rental expense		5.2			5.2		4.9		3.6			3.4
Total fixed charges		38.3			36.2		21.3		27.8			20.5
Ratio of earnings to fixed charges		(a	)		7.2		3.7		(b	)		(c	)

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 2004 the ratio coverage was less than 1:1. Converium would have needed to generate additional earnings of $422.6 million to achieve coverage of 1:1.

(b) 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.

(c) 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-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 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
Converium IP Management Ltd	Bermuda
Converium Finance (Bermuda) Ltd	Bermuda

EX-12.1

Exhibit 12.1

I, Terry G. Clarke, 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 and presented 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 has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

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: June • , 2005

By:	/s/ Terry G. Clarke
Terry G. Clarke Chief Executive Officer, Converium Holding AG

EX-12.2

Exhibit 12.2

I, Andreas Zdrenyk, 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 and presented 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 has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

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: June • , 2005

By:	/s/ Andreas Zdrenyk
Andreas Zdrenyk Chief Financial Officer, Converium Holding AG

EX-13.1

Exhibit 13.1

CERTIFICATION OF TERRY G. CLARKE, CHIEF EXECUTIVE OFFICER OF CONVERIUM
HOLDING AG, PURSUANT TO SECTION 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Converium Holding AG (the “Company”) on Form 20-F for the period ending December 31, 2004, as filed with the Securities and Exchange Commission on the date here of (the “Report”), the undersigned hereby certifies that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; 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: June • , 2005

By:	/s/ Terry G. Clarke
Terry G. Clarke Chief Executive Officer, Converium Holding AG

EX-13.2

Exhibit 13.2

CERTIFICATION OF ANDREAS ZDRENYK, CHIEF FINANCIAL OFFICER OF CONVERIUM
HOLDING AG, PURSUANT TO SECTION 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Converium Holding AG (the “Company”) on Form 20-F for the period ending December 31, 2004, as filed with the Securities and Exchange Commission on the date here of (the “Report”), the undersigned hereby certifies that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; 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: June • , 2005

By:	/s/ Andreas Zdrenyk
Andreas Zdrenyk Chief Financial Officer, Converium Holding AG

EX-14.1

Exhibit 14.1

Consent of PricewaterhouseCoopers Ltd, independent accountants

We hereby consent to the incorporation by reference in this Annual Report on Form 20-F of Converium Holding AG of our report dated March 4, 2005, except as to the subsequent events described in Note 27, as to which the date is June 30, 2005, 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, 2004.

PricewaterhouseCoopers Ltd

Andrew Hill            Martin Frei

Zurich, June 30, 2005