##### Table of Contents



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, 2005.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934Date of current requiring this shell company report
___________
 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)
Dammstrasse 19
CH-6301 Zug
Switzerland
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
 Name of each ExchangeTitle of each class
    
    on which registeredAmerican 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 ExchangeRegistered shares, nominal value CHF 5 per share*
    
    New York Stock Exchange8.25% Guaranteed Subordinated Notes due 2032 issued by Converium Finance S.A.
    
    New York Stock ExchangeSubordinated 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.
        Yes þ No o
 15(d)
 Yes o No þ
   Yes þ       No o
  þ o o
  Item 17 o       Item 18 þ
  Yes o       No þ




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##### 



TABLE OF CONTENTS
 PART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLEITEM 3. KEY INFORMATIONITEM 4. INFORMATION ON THE COMPANYITEM 4A. UNRESOLVED STAFF COMMENTSITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTSITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSITEM 8. FINANCIAL INFORMATIONITEM 9. THE OFFER AND LISTINGITEM 10. ADDITIONAL INFORMATIONITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESPART IIITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSITEM 15. CONTROLS AND PROCEDURESITEM 16. [RESERVED]Item 16A. AUDIT COMMITTEE FINANCIAL EXPERTItem 16B. CODE OF ETHICSItem 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICESItem 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESItem 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSPART IIIITEM 17. FINANCIAL STATEMENTSITEM 18. FINANCIAL STATEMENTSITEM 19. EXHIBITSSIGNATURESINDEX TO EXHIBITSEX-7.1EX-8.1EX-12.1EX-12.2EX-13.0EX-4.46EXHIBIT 1.3EXHIBIT 4.46EXHIBIT 7.1EXHIBIT 8.1EXHIBIT 12.1EXHIBIT 12.2EXHIBIT 13.0
  2




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PRESENTATION OF INFORMATION
   
  CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    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 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 and with regard to our internal review
and related Restatement.
    
    certain statements in Item 11.  Quantitative and Qualitative
Disclosures About Market Risk with regard to sensitivity analyses for
invested assets.
    
    certain statements in Item 15.  Controls and Procedures with
regard to our actions to remediate the material weaknesses identified
in our financial accounting and reporting function.
  
    
    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;
    
    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;
 3




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##### Table of Contents




    
    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 us and the insurance industry as a result of the investigations being carried out by US and international
regulatory authorities including 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 of our reinsurers;
    
    our failure to prevail in any current or future arbitration or litigation; and
    
    extraordinary events affecting our clients, such as bankruptcies and liquidations.
   4




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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 A. SELECTED FINANCIAL AND OTHER DATA
     For the year ended December 31,US$ millions (except per share data)
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Income statement data:Revenues:Gross premiums written
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4
    
    
    
    3,372.4
    
    
    
    2,846.8Less ceded premiums written
    
    
    -178.6
    
    
    
    -252.6
    
    
    
    -377.7
    
    
    
    -137.2
    
    
    
    -194.1Net premiums written
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7
    
    
    
    3,235.2
    
    
    
    2,652.7Net change in unearned premiums
    
    
    567.5
    
    
    
    156.1
    
    
    
    -154.9
    
    
    
    -157.7
    
    
    
    -204.2Net premiums earned
    
    
    2,383.2
    
    
    
    3,882.2
    
    
    
    3,767.8
    
    
    
    3,077.5
    
    
    
    2,448.5Net investment income
    
    
    324.9
    
    
    
    312.7
    
    
    
    234.4
    
    
    
    251.8
    
    
    
    234.9Net realized capital gains (losses)
    
    
    25.5
    
    
    
    46.5
    
    
    
    18.4
    
    
    
    -10.3
    
    
    
    -18.4
 5




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For the year ended December 31,US$ millions (except per share data)
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Other (loss) income
    
    
    -13.4
    
    
    
    -8.2
    
    
    
    17.5
    
    
    
    31.6
    
    
    
    2.9Total revenues
    
    
    2,720.2
    
    
    
    4,233.2
    
    
    
    4,038.1
    
    
    
    3,350.6
    
    
    
    2,667.9Benefits, losses and expenses:Losses, loss expenses and life benefits
    
    
    -1,775.9
    
    
    
    -3,342.5
    
    
    
    -2,760.1
    
    
    
    -2,491.1
    
    
    
    -2,460.6Total costs and expenses
    
    
    -818.0
    
    
    
    -1,165.3
    
    
    
    -1,065.5
    
    
    
    -841.6
    
    
    
    -687.5Impairment and amortization of
goodwill (1)
    
    
    
    
    
    
    -94.0
    
    
    
    
    
    
    
    
    
    
    
    -7.8Amortization of intangible assets
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8
    
    
    
    
    
    
    
    Restructuring costs
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    
    
    
    
    
    
    
    
    -50.0Total benefits, losses and expenses
    
    
    -2,635.9
    
    
    
    -4,614.4
    
    
    
    -3,827.4
    
    
    
    -3,332.7
    
    
    
    -3,205.9Income (loss) before taxes
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7
    
    
    
    17.9
    
    
    
    -538.0Income tax (expense) benefit
    
    
    -15.6
    
    
    
    -201.3
    
    
    
    -32.8
    
    
    
    17.9
    
    
    
    182.4Net income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
    
    
    
    35.8
    
    
    
    -355.6(Loss) earnings per share:Average number of shares (millions)
    
    
    146.4
    
    
    
    63.4
    
    
    
    39.8
    
    
    
    39.9
    
    
    
    40.0Basic earnings (loss) per share (2)
    
    
    0.47
    
    
    
    -9.19
    
    
    
    2.24
    
    
    
    0.45
    
    
    
    -4.46Diluted earnings (loss) per share (2)
    
    
    0.46
    
    
    
    -9.19
    
    
    
    2.23
    
    
    
    0.45
    
    
    
    -4.46Year ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001Balance sheet data:Total invested assets
    
    
    6,634.3
    
    
    
    7,786.2
    
    
    
    7,502.0
    
    
    
    6,117.3
    
    
    
    4,892.1Total assets
    
    
    11,825.9
    
    
    
    14,187.3
    
    
    
    13,280.4
    
    
    
    10,757.5
    
    
    
    8,862.1Reinsurance liabilities
    
    
    8,200.8
    
    
    
    9,898.9
    
    
    
    8,428.6
    
    
    
    6,986.7
    
    
    
    5,871.3Debt
    
    
    391.2
    
    
    
    391.1
    
    
    
    393.1
    
    
    
    392.9
    
    
    
    206.1Total liabilities
    
    
    10,172.5
    
    
    
    12,452.5
    
    
    
    11,352.4
    
    
    
    9,162.3
    
    
    
    7,361.3Total shareholders equity
    
    
    1,653.4
    
    
    
    1,734.8
    
    
    
    1,928.0
    
    
    
    1,595.2
    
    
    
    1,500.8Book value per share
    
    
    11.29
    
    
    
    11.86
    
    
    
    48.47
    
    
    
    39.97
    
    
    
    37.52For the year ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001Other data:Net premiums written by segment:Standard Property & Casualty Reinsurance
    
    
    739.0
    
    
    
    1,377.5
    
    
    
    1,299.9
    
    
    
    974.2
    
    
    
    1,015.0Specialty Lines
    
    
    737.7
    
    
    
    1,565.3
    
    
    
    1,119.0
    
    
    
    962.4
    
    
    
    443.3Life & Health Reinsurance
    
    
    306.4
    
    
    
    313.2
    
    
    
    254.5
    
    
    
    230.0
    
    
    
    196.0Run-Off
    
    
    32.6
    
    
    
    470.1
    
    
    
    1,249.3
    
    
    
    1,068.7
    
    
    
    998.4Total net premiums written
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7
    
    
    
    3,235.2
    
    
    
    2,652.7Ongoing non-life combined ratio
    
    
    107.2
    
    
    
    106.1
    
    
    
    91.9
    
    
    
    101.3
    
    
    
    116.4
    (3)Ratio of earnings to fixed charges (4)
    
    
    3.3
    
    
    
    (5
    )
    
    
    6.8
    
    
    
    1.8
    
    
    
    (6
    )
 
 (1)
    
    For a discussion of goodwill and other intangible assets and Converiums compliance with SFAS No.
142, Goodwill and Other Intangible Assets,see Notes 2 (n) and 9 to our 2005 consolidated
financial statements. In 2004, the amount represents impairment of goodwill, whereas in 2001 the
amount represent amortization of goodwill.(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 25 to our 2005
consolidated financial statements).(3)
    
    The impact on the ongoing non-life combined ratio of the September 11th terrorist attacks was 13.3%.(4)
    
    The ratio of earnings to fixed charges is calculated by
dividing income (loss) before taxes plus fixed charges by
fixed charges. Fixed charges consist of interest expense and the interest portion of rental
expense.(5)
    
    Due to Converiums loss in 2004 the ratio coverage was less than 1:1. Converium would have needed
to generate additional earnings of US$ 381.2 million to achieve coverage of 1:1.(6)
    
    Due to Converiums loss in 2001 the ratio coverage was less than 1:1. Converium would have needed
to generate additional earnings of US$ 538.0 million to achieve coverage of 1:1.  6




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##### Table of Contents



OtherNet
    
    
    Net
    
    
    Losses
    
    
    
    
    
    
    operating and
    
    
    Loss
    
    
    Acquisition
    
    
    Administrationpremiums
    
    
    premiums
    
    
    and loss
    
    
    Acquisition
    
    
    administration
    
    
    ratio
    
    
    costs ratio
    
    
    expense ratio
    
    
    CombinedCombined Ratio
    
    written
    
    
    earned
    
    
    expenses
    
    
    costs
    
    
    expenses
    
    
    (1)
    
    
    (2)
    
    
    (3)
    
    
    ratio (4)Analysis
    (US$ millions)
    
    
    (%)2005Standard Property &
Casualty
Reinsurance
    
    
    739.0
    
    
    
    880.8
    
    
    
    -729.6
    
    
    
    -181.3
    
    
    
    -45.2
    
    
    
    82.8
    
    
    
    20.6
    
    
    
    6.1
    
    
    
    109.5Specialty lines
    
    
    737.7
    
    
    
    1,059.2
    
    
    
    -772.5
    
    
    
    -263.8
    
    
    
    56.3
    
    
    
    72.9
    
    
    
    24.9
    
    
    
    7.6
    
    
    
    105.4Total Ongoing
Non-life
consolidated
    
    
    1,476.7
    
    
    
    1,940.0
    
    
    
    -1,502.1
    
    
    
    -445.1
    
    
    
    -101.5
    
    
    
    77.4
    
    
    
    22.9
    
    
    
    6.9
    
    
    
    107.22004Standard Property &
Casualty
Reinsurance
    
    
    1,377.5
    
    
    
    1,392.3
    
    
    
    -1,002.9
    
    
    
    -353.3
    
    
    
    -58.5
    
    
    
    72.0
    
    
    
    25.4
    
    
    
    4.2
    
    
    
    101.6Specialty lines
    
    
    1,565.3
    
    
    
    1,387.6
    
    
    
    -1,154.7
    
    
    
    -328.1
    
    
    
    -59.6
    
    
    
    83.2
    
    
    
    23.6
    
    
    
    3.8
    
    
    
    110.6Total Ongoing
Non-life
consolidated
    
    
    2,942.8
    
    
    
    2,779.9
    
    
    
    -2,157.6
    
    
    
    -681.4
    
    
    
    -118.1
    
    
    
    77.6
    
    
    
    24.5
    
    
    
    4.0
    
    
    
    106.12003Standard Property &
Casualty
Reinsurance
    
    
    1,299.9
    
    
    
    1,285.2
    
    
    
    -838.8
    
    
    
    -266.4
    
    
    
    -50.3
    
    
    
    65.3
    
    
    
    20.7
    
    
    
    3.9
    
    
    
    89.9Specialty lines
    
    
    1,119.0
    
    
    
    1,038.1
    
    
    
    -713.0
    
    
    
    -227.9
    
    
    
    -41.4
    
    
    
    68.7
    
    
    
    22.0
    
    
    
    3.7
    
    
    
    94.4Total Ongoing
Non-life
consolidated
    
    
    2,418.9
    
    
    
    2,323.3
    
    
    
    -1,551.8
    
    
    
    -494.3
    
    
    
    -91.7
    
    
    
    66.8
    
    
    
    21.3
    
    
    
    3.8
    
    
    
    91.92002Standard Property &
Casualty
Reinsurance
    
    
    974.2
    
    
    
    942.1
    
    
    
    -668.4
    
    
    
    -234.2
    
    
    
    -45.7
    
    
    
    70.9
    
    
    
    24.9
    
    
    
    4.7
    
    
    
    100.5Specialty lines
    
    
    962.4
    
    
    
    885.5
    
    
    
    -709.8
    
    
    
    -157.3
    
    
    
    -40.5
    
    
    
    80.2
    
    
    
    17.8
    
    
    
    4.2
    
    
    
    102.2Total Ongoing
Non-life
consolidated
    
    
    1936.6
    
    
    
    1827.6
    
    
    
    -1378.2
    
    
    
    -391.5
    
    
    
    -86.2
    
    
    
    75.4
    
    
    
    21.4
    
    
    
    4.5
    
    
    
    101.32001Standard Property &
Casualty
Reinsurance
    
    
    1015.0
    
    
    
    938.9
    
    
    
    -780.0
    
    
    
    -155.2
    
    
    
    -36.0
    
    
    
    83.1
    
    
    
    16.5
    
    
    
    3.5
    
    
    
    103.1Specialty lines
    
    
    443.3
    
    
    
    366.6
    
    
    
    -426.1
    
    
    
    -109.4
    
    
    
    -19.2
    
    
    
    116.2
    
    
    
    29.8
    
    
    
    4.3
    
    
    
    150.3Total Ongoing
Non-life
consolidated
    
    
    1458.3
    
    
    
    1305.5
    
    
    
    -1206.1
    
    
    
    -264.6
    
    
    
    -55.2
    
    
    
    92.4
    
    
    
    20.2
    
    
    
    3.8
    
    
    
    116.4
 
 (1)
    
    Losses divided by net premiums earned(2)
    
    Acquisition costs divided by net premiums earned(3)
    
    Other operating and administration expenses divided by net premiums written(4)
    
    Sum of the loss, acquisition costs and administration expense ratios Dividends
  B. CAPITALIZATION AND INDEBTEDNESS
  C. REASONS FOR THE OFFER AND USE OF PROCEEDS
  D. RISK FACTORS
 Risks relating to Converium and the reinsurance industry
 If we do not successfully implement our 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
  7




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The run-off of our North American business subjects us to particular risks
  
    
    CRNA has been placed into orderly run-off and will seek to commute its
liabilities wherever appropriate. In addition, CRNA hired an
experienced run-off professional as its President and CEO and has
restructured its organization and 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 Ltd.
(GAUM) pool; GAUM pool business is recognized in ongoing business
operations in the Specialty Lines segment and does not form part of
the Run-Off segment;
 
    
    CINA is now a limited writer, offering continuing coverage for only
one primary program, 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.
      Our current ratings or any further downgrade of our ratings, could have a material adverse effect
on our business, financial condition, result of operations or cash flows
 8




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Our loss reserves may not adequately cover future losses and benefits
      We may be unable to meet the collateral requirements necessary for our business
  9




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We are subject to the cyclicality of the reinsurance industry
  
    
    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.
  Securitization trend could disadvantage medium-sized players
  As a result of ongoing investigations of the insurance and reinsurance industry and non-traditional
insurance products, we conducted an internal review and analysis of certain of our reinsurance
transactions and restated our financial statements, however the governmental inquiries are ongoing
    10




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Our exposure to catastrophic events, both natural and man-made, may cause large losses
       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
   If we are unable to achieve our investment objectives, our investment results may be adversely
affected
  11




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Capital market fluctuations may adversely impact the value of our investments and shareholders
equity
    Foreign exchange rate fluctuations may impact our financial condition, results of operation and
cash flows
  
    
    78% of our net premiums written
    
    49% of our net investment income
    
    59% of our losses, loss expenses and life benefits, and
    
    64% of our operating expenses
  We may face competitive disadvantages in the reinsurance industry
  
    
    Munich Reinsurance Company;
    
    Swiss Reinsurance Company (including GE Insurance Solutions);
    
    General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.;
 12




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##### Table of Contents




    
    Hannover Re Group;
    
    SCOR;
    
    Companies active in the Bermuda market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.;
    
    Everest Reinsurance Company;
    
    Transatlantic Reinsurance Company; and
    
    Lloyds syndicates active in the London market.
  The loss of key employees and executive officers without suitable replacements being recruited
within a suitable period of time could adversely affect us
  We have identified material weaknesses in our internal control environment; investor confidence and
our share value may be adversely impacted if we are unable to remedy the material weaknesses .
      13




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##### Table of Contents



Consolidation in the insurance industry could lead to lower margins for us and less demand for our
reinsurance products and services
   Regulatory or legal changes could adversely affect our business
     We purchase retrocessional reinsurance, which may become unavailable on acceptable terms and
subjects us to credit risk
   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
  Our reliance on reinsurance brokers exposes us to their credit risk
  14




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We may be adversely affected if Zurich Financial Services or its subsidiaries fail to honor their
obligations to us or our clients
   We may be restricted from consummating a change of control transaction, disposing of assets or
entering new lines of business
    European Reinsurance Directive may disadvantage companies like us which are not established within
the European Union
  
 ITEM 4. INFORMATION ON THE COMPANY
  A. HISTORY AND DEVELOPMENT OF THE COMPANY
   15




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##### Table of Contents




    
    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 US$ 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 US$ 140 million of residential
and commercial rental properties located in Switzerland.
  
    
    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 US$ 140 million was used by Converium AG to acquire
residential and commercial rental properties located in Switzerland from
subsidiaries of Zurich Financial Services
        16




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##### Table of Contents



B. BUSINESS OVERVIEW
 Overview
     Our vision
  Our mission
  
    
    sustainable value growth for our shareholders;
    
    excellent service for our customers and intermediaries; and
    
    a fulfilling work environment for our employees.
 Our Strategy
  17




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Looking ahead
  Our core business
  Standard Property & Casualty Reinsurance
  Specialty Lines
     18




---



##### Table of Contents



Life & Health Reinsurance
   Run-Off
  Guiding principles for our business
  
    
    Our lead objective is to maximize economic value. The metrics we use to measure this are pre-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 portfolio 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.
 
    
    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.
  Cycle management.
 Risk management.
 Operational efficiency.
 Retention management.
 Investment policy.
 19




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##### Table of Contents



Capital management.
 Our business
     Gross premiums written
    
    Net premiums written
    
    Segment income (loss)(US$ millions)
    
    (US$ millions)
    
    (US$ millions)For the year ended December 31
    
    2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003Business Segment:Standard Property &
Casualty Reinsurance
    
    
    803.1
    
    
    
    1,509.1
    
    
    
    1,438.6
    
    
    
    739.0
    
    
    
    1,377.5
    
    
    
    1,299.9
    
    
    
    46.7
    
    
    
    91.5
    
    
    
    209.8Specialty Lines
    
    
    833.1
    
    
    
    1,655.3
    
    
    
    1,325.0
    
    
    
    737.7
    
    
    
    1,565.3
    
    
    
    1,119.0
    
    
    
    109.5
    
    
    
    -7.3
    
    
    
    159.6Life & Health Reinsurance
    
    
    318.8
    
    
    
    327.9
    
    
    
    280.7
    
    
    
    306.4
    
    
    
    313.2
    
    
    
    254.5
    
    
    
    17.6
    
    
    
    16.7
    
    
    
    -69.1Run-Off
    
    
    39.3
    
    
    
    486.4
    
    
    
    1,256.1
    
    
    
    32.6
    
    
    
    470.1
    
    
    
    1,249.3
    
    
    
    47.6
    
    
    
    -296.0
    
    
    
    -40.0Corporate Center
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3Total
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4
    
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7
    
    
    
    171.3
    
    
    
    -233.3
    
    
    
    226.0Other (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -13.4
    
    
    
    -8.2
    
    
    
    17.5Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -31.6
    
    
    
    -33.1
    
    
    
    -31.0Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -94.0
    
    
    
    Amortization of
intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8Restructuring costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -15.6
    
    
    
    -201.3
    
    
    
    -32.8Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
  20




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For the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    2003Change in
    
    
    
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    Change inReported
    
    Accrual
    
    Total
    
    Reported
    
    Accrual
    
    Total
    
    Reported
    
    Accrual
    
    Total(US$ millions)
    
    
    
    
    
    (US$ millions)
    
    
    
    
    
    (US$ millions)Gross Premiums WrittenStandard Property & Casualty ReinsuranceGeneral Third Party
Liability
    
    
    260.1
    
    
    
    -75.9
    
    
    
    184.2
    
    
    
    376.2
    
    
    
    28.5
    
    
    
    404.7
    
    
    
    466.3
    
    
    
    -104.8
    
    
    
    361.5Motor
    
    
    254.3
    
    
    
    -65.4
    
    
    
    188.9
    
    
    
    479.0
    
    
    
    -7.0
    
    
    
    472.0
    
    
    
    429.0
    
    
    
    -42.3
    
    
    
    386.7Personal Accident
(assumed from
non-life insurers)
    
    
    23.2
    
    
    
    -9.9
    
    
    
    13.3
    
    
    
    51.7
    
    
    
    -17.9
    
    
    
    33.8
    
    
    
    37.1
    
    
    
    1.0
    
    
    
    38.1Property
    
    
    444.5
    
    
    
    -27.8
    
    
    
    416.7
    
    
    
    631.1
    
    
    
    -32.5
    
    
    
    598.6
    
    
    
    685.6
    
    
    
    -33.3
    
    
    
    652.3Total Standard
Property & Casualty
Reinsurance
    
    
    982.1
    
    
    
    -179.0
    
    
    
    803.1
    
    
    
    1538.0
    
    
    
    -28.9
    
    
    
    1,509.1
    
    
    
    1618.0
    
    
    
    -179.4
    
    
    
    1,438.6Specialty LinesAgribusiness
    
    
    16.0
    
    
    
    20.7
    
    
    
    36.7
    
    
    
    10.7
    
    
    
    0.7
    
    
    
    11.4
    
    
    
    5.8
    
    
    
    2.0
    
    
    
    7.8Aviation & Space
    
    
    336.7
    
    
    
    -82.1
    
    
    
    254.6
    
    
    
    486.7
    
    
    
    -10.2
    
    
    
    476.5
    
    
    
    460.9
    
    
    
    37.2
    
    
    
    498.1Credit & Surety
    
    
    161.8
    
    
    
    -103.4
    
    
    
    58.4
    
    
    
    175.9
    
    
    
    33.2
    
    
    
    209.1
    
    
    
    182.4
    
    
    
    18.1
    
    
    
    200.5Engineering
    
    
    112.5
    
    
    
    -41.9
    
    
    
    70.6
    
    
    
    126.1
    
    
    
    -7.6
    
    
    
    118.5
    
    
    
    138.2
    
    
    
    6.7
    
    
    
    144.9Marine & Energy
    
    
    77.9
    
    
    
    -13.0
    
    
    
    64.9
    
    
    
    86.4
    
    
    
    -0.7
    
    
    
    85.7
    
    
    
    95.9
    
    
    
    -7.1
    
    
    
    88.8Professional
Liability and other
Special Liability
    
    
    346.4
    
    
    
    13.0
    
    
    
    359.4
    
    
    
    421.9
    
    
    
    18.3
    
    
    
    440.2
    
    
    
    368.4
    
    
    
    -19.4
    
    
    
    349.0Workers Compensation
    
    
    84.7
    
    
    
    -96.2
    
    
    
    -11.5
    
    
    
    225.2
    
    
    
    88.7
    
    
    
    313.9
    
    
    
    26.5
    
    
    
    9.4
    
    
    
    35.9Total Specialty Lines
    
    
    1,136.0
    
    
    
    -302.9
    
    
    
    833.1
    
    
    
    1,532.9
    
    
    
    122.4
    
    
    
    1,655.3
    
    
    
    1,278.1
    
    
    
    46.9
    
    
    
    1,325.0Life & Health ReinsuranceLife & Disability
    
    
    233.5
    
    
    
    14.1
    
    
    
    247.6
    
    
    
    231.0
    
    
    
    16.8
    
    
    
    247.8
    
    
    
    186.1
    
    
    
    12.8
    
    
    
    198.9Accident & Health
    
    
    67.0
    
    
    
    4.2
    
    
    
    71.2
    
    
    
    90.6
    
    
    
    -10.5
    
    
    
    80.1
    
    
    
    85.4
    
    
    
    -3.6
    
    
    
    81.8Total Life & Health
Reinsurance
    
    
    300.5
    
    
    
    18.3
    
    
    
    318.8
    
    
    
    321.6
    
    
    
    6.3
    
    
    
    327.9
    
    
    
    271.5
    
    
    
    9.2
    
    
    
    280.7Run-Off
    
    
    230.0
    
    
    
    -190.7
    
    
    
    39.3
    
    
    
    703.9
    
    
    
    -217.5
    
    
    
    486.4
    
    
    
    1,103.9
    
    
    
    152.2
    
    
    
    1,256.1Total
    
    
    2,648.6
    
    
    
    -654.3
    
    
    
    1,994.3
    
    
    
    4,096.4
    
    
    
    -117.7
    
    
    
    3,978.7
    
    
    
    4,271.5
    
    
    
    28.9
    
    
    
    4,300.4 ,
 21




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For the year ended December 31,2005
    
    2004
    
    2003(US$ millions)
    
    % of total
    
    (US$ millions)
    
    % of total
    
    (US$ millions)
    
    % of totalUnited Kingdom*
    
    
    481.0
    
    
    
    24.1
    
    
    
    1,160.8
    
    
    
    29.2
    
    
    
    1,188.0
    
    
    
    27.6Germany
    
    
    395.0
    
    
    
    19.8
    
    
    
    389.6
    
    
    
    9.8
    
    
    
    286.9
    
    
    
    6.7France
    
    
    86.1
    
    
    
    4.3
    
    
    
    158.2
    
    
    
    4.0
    
    
    
    160.4
    
    
    
    3.7Italy
    
    
    107.1
    
    
    
    5.4
    
    
    
    162.3
    
    
    
    4.1
    
    
    
    131.2
    
    
    
    3.1Rest of Europe
    
    
    251.4
    
    
    
    12.6
    
    
    
    379.8
    
    
    
    9.5
    
    
    
    338.9
    
    
    
    7.9Far East
    
    
    132.1
    
    
    
    6.6
    
    
    
    238.5
    
    
    
    6.0
    
    
    
    266.4
    
    
    
    6.2Near and Middle East
    
    
    103.1
    
    
    
    5.2
    
    
    
    124.3
    
    
    
    3.1
    
    
    
    134.3
    
    
    
    3.1North America
    
    
    346.0
    
    
    
    17.4
    
    
    
    1,235.2
    
    
    
    31.0
    
    
    
    1,642.6
    
    
    
    38.2Latin America
    
    
    92.5
    
    
    
    4.6
    
    
    
    130.0
    
    
    
    3.3
    
    
    
    151.7
    
    
    
    3.5Total
    
    
    1,994.3
    
    
    
    100.0
    
    
    
    3,978.7
    
    
    
    100.0
    
    
    
    4,300.4
    
    
    
    100.0
 
 *
    
    Premiums from the United Kingdom include business assumed through GAUM
and Lloyds syndicates for such lines of business as Aviation & 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.   22




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##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003Net
    
    Net
    
    Net
    
    Net
    
    Net

    Netpremiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums(US$ millions)
    
    written
    
    earned
    
    written
    
    earned
    
    written
    
    earnedStandard Property & Casualty ReinsuranceGeneral Third Party
Liability
    
    
    146.7
    
    
    
    204.1
    
    
    
    379.1
    
    
    
    348.1
    
    
    
    323.5
    
    
    
    336.9Motor
    
    
    188.4
    
    
    
    256.8
    
    
    
    437.4
    
    
    
    450.8
    
    
    
    356.1
    
    
    
    352.5Personal Accident
(assumed from
non-life insurers)
    
    
    13.3
    
    
    
    14.3
    
    
    
    34.5
    
    
    
    43.8
    
    
    
    35.3
    
    
    
    34.4Property
    
    
    390.6
    
    
    
    405.6
    
    
    
    526.5
    
    
    
    549.6
    
    
    
    585.0
    
    
    
    561.4Total Standard
Property & Casualty
Reinsurance
    
    
    739.0
    
    
    
    880.8
    
    
    
    1377.5
    
    
    
    1,392.3
    
    
    
    1,299.9
    
    
    
    1,285.2Specialty LinesAgribusiness
    
    
    36.7
    
    
    
    28.9
    
    
    
    11.4
    
    
    
    15.5
    
    
    
    7.8
    
    
    
    3.9Aviation & Space
    
    
    241.8
    
    
    
    352.4
    
    
    
    404.5
    
    
    
    327.3
    
    
    
    354.7
    
    
    
    325.2Credit & Surety
    
    
    58.4
    
    
    
    168.2
    
    
    
    204.3
    
    
    
    177.9
    
    
    
    195.6
    
    
    
    174.3Engineering
    
    
    65.5
    
    
    
    88.7
    
    
    
    112.2
    
    
    
    117.3
    
    
    
    139.9
    
    
    
    133.8Marine & Energy
    
    
    64.0
    
    
    
    71.7
    
    
    
    82.5
    
    
    
    85.1
    
    
    
    83.2
    
    
    
    81.6Professional
Liability and other
Special Liability
    
    
    282.8
    
    
    
    295.6
    
    
    
    436.5
    
    
    
    410.6
    
    
    
    301.9
    
    
    
    286.7Workers Compensation
    
    
    -11.5
    
    
    
    53.7
    
    
    
    313.9
    
    
    
    253.9
    
    
    
    35.9
    
    
    
    32.6Total Specialty Lines
    
    
    737.7
    
    
    
    1,059.2
    
    
    
    1,565.3
    
    
    
    1,387.6
    
    
    
    1,119.0
    
    
    
    1,038.1Total ongoing
non-life reinsurance
    
    
    1,476.7
    
    
    
    1,940.0
    
    
    
    2,942.8
    
    
    
    2,779.9
    
    
    
    2,418.9
    
    
    
    2,323.3Life & Health ReinsuranceLife & Disability
    
    
    235.2
    
    
    
    240.7
    
    
    
    234.9
    
    
    
    239.7
    
    
    
    172.8
    
    
    
    178.2Accident & Health
    
    
    71.2
    
    
    
    74.1
    
    
    
    78.3
    
    
    
    79.0
    
    
    
    81.7
    
    
    
    82.6Total Life & Health
Reinsurance
    
    
    306.4
    
    
    
    314.8
    
    
    
    313.2
    
    
    
    318.7
    
    
    
    254.5
    
    
    
    260.8Run-Off
    
    
    32.6
    
    
    
    128.4
    
    
    
    470.1
    
    
    
    783.6
    
    
    
    1,249.3
    
    
    
    1,183.7Total
    
    
    1,815.7
    
    
    
    2,383.2
    
    
    
    3,726.1
    
    
    
    3,882.2
    
    
    
    3,922.7
    
    
    
    3,767.8
 Types of Reinsurance
    23




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##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003(US$ millions)
    
    % of total
    
    (US$ millions)
    
    % of total
    
    (US$ millions)
    
    % of totalProportional
    
    
    1,374.7
    
    
    
    68.9
    
    
    
    3,388.5
    
    
    
    85.2
    
    
    
    3,125.4
    
    
    
    72.7Non-proportional
    
    
    619.6
    
    
    
    31.1
    
    
    
    590.2
    
    
    
    14.8
    
    
    
    1,175.0
    
    
    
    27.3Total
    
    
    1,994.3
    
    
    
    100.0
    
    
    
    3,978.7
    
    
    
    100.0
    
    
    
    4,300.4
    
    
    
    100.0
 Proportional and Non-proportional
   Structured/finite
  24




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Non-Life Operations
 Overview
   For the year ended December 31,2005
    
    2004
    
    2003Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Netpremiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums(US$ millions)
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earnedProportional
    
    
    1,017.8
    
    
    
    927.0
    
    
    
    1,362.3
    
    
    
    2,749.1
    
    
    
    2,601.1
    
    
    
    2,451.0
    
    
    
    2,106.9
    
    
    
    1,898.4
    
    
    
    1,802.9Non-Proportional
    
    
    618.4
    
    
    
    549.7
    
    
    
    577.7
    
    
    
    415.3
    
    
    
    341.7
    
    
    
    328.9
    
    
    
    656.7
    
    
    
    520.5
    
    
    
    520.4Total ongoing
non-life
    
    
    1,636.2
    
    
    
    1,476.7
    
    
    
    1,940.0
    
    
    
    3,164.4
    
    
    
    2,942.8
    
    
    
    2,779.9
    
    
    
    2,763.6
    
    
    
    2,418.9
    
    
    
    2,323.3
  Loss, Expense and Combined RatiosFor the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Loss
    
    
    Acq costs
    
    
    Combined
    
    
    Loss
    
    
    Acq costs
    
    
    Combined
    
    
    Loss
    
    
    Acq costs
    
    
    Combinedratio
    
    
    ratio
    
    
    ratio (1)
    
    
    ratio
    
    
    ratio
    
    
    ratio (1)
    
    
    ratio
    
    
    ratio
    
    
    ratio (1)General Third Party
Liability
    
    
    91.4
    %
    
    
    13.7
    %
    
    
    105.1
    %
    
    
    67.1
    %
    
    
    30.0
    %
    
    
    97.1
    %
    
    
    64.1
    %
    
    
    22.4
    %
    
    
    86.5
    %Motor
    
    
    96.4
    %
    
    
    16.1
    %
    
    
    112.5
    %
    
    
    103.7
    %
    
    
    17.9
    %
    
    
    121.6
    %
    
    
    89.0
    %
    
    
    15.4
    %
    
    
    104.5
    %Personal Accident
(assumed from
non-life insurers)
    
    
    27.3
    %
    
    
    25.9
    %
    
    
    53.1
    %
    
    
    54.1
    %
    
    
    38.4
    %
    
    
    92.5
    %
    
    
    68.4
    %
    
    
    21.2
    %
    
    
    89.6
    %Property
    
    
    71.8
    %
    
    
    26.7
    %
    
    
    98.5
    %
    
    
    50.6
    %
    
    
    27.6
    %
    
    
    78.2
    %
    
    
    50.8
    %
    
    
    23.0
    %
    
    
    73.9
    %Agribusiness
    
    
    78.9
    %
    
    
    17.3
    %
    
    
    96.2
    %
    
    
    94.8
    %
    
    
    21.9
    %
    
    
    116.8
    %
    
    
    61.5
    %
    
    
    12.8
    %
    
    
    74.4
    %Aviation & Space
    
    
    60.9
    %
    
    
    26.5
    %
    
    
    87.3
    %
    
    
    53.7
    %
    
    
    24.5
    %
    
    
    78.2
    %
    
    
    45.4
    %
    
    
    14.9
    %
    
    
    60.4
    %Credit & Surety
    
    
    59.2
    %
    
    
    34.3
    %
    
    
    93.5
    %
    
    
    50.2
    %
    
    
    30.0
    %
    
    
    80.1
    %
    
    
    73.1
    %
    
    
    32.0
    %
    
    
    105.1
    %Engineering
    
    
    71.4
    %
    
    
    31.3
    %
    
    
    102.7
    %
    
    
    76.6
    %
    
    
    25.5
    %
    
    
    102.1
    %
    
    
    64.8
    %
    
    
    29.7
    %
    
    
    94.5
    %Marine & Energy
    
    
    81.3
    %
    
    
    25.8
    %
    
    
    107.1
    %
    
    
    92.0
    %
    
    
    20.7
    %
    
    
    112.7
    %
    
    
    76.0
    %
    
    
    12.5
    %
    
    
    88.5
    %Professional
Liability and other
Special Liability
    
    
    89.5
    %
    
    
    17.3
    %
    
    
    106.8
    %
    
    
    112.3
    %
    
    
    19.8
    %
    
    
    132.1
    %
    
    
    77.4
    %
    
    
    30.6
    %
    
    
    108.0
    %Workers Compensation
    
    
    91.8
    %
    
    
    20.1
    %
    
    
    111.9
    %
    
    
    96.8
    %
    
    
    24.5
    %
    
    
    121.3
    %
    
    
    199.4
    %
    
    
    -45.1
    %
    
    
    154.3
    %Total ongoing non-life
    
    
    77.4
    %
    
    
    22.9
    %
    
    
    100.4
    %
    
    
    77.6
    %
    
    
    24.5
    %
    
    
    102.1
    %
    
    
    66.8
    %
    
    
    21.3
    %
    
    
    88.1
    %Proportional
    
    
    67.3
    %
    
    
    26.6
    %
    
    
    93.9
    %
    
    
    74.6
    %
    
    
    25.9
    %
    
    
    100.5
    %
    
    
    68.1
    %
    
    
    23.4
    %
    
    
    91.5
    %Non-Proportional
    
    
    101.2
    %
    
    
    14.4
    %
    
    
    115.7
    %
    
    
    100.3
    %
    
    
    14.1
    %
    
    
    114.4
    %
    
    
    62.4
    %
    
    
    13.9
    %
    
    
    76.3
    %Total ongoing non-life
    
    
    77.4
    %
    
    
    22.9
    %
    
    
    100.4
    %
    
    
    77.6
    %
    
    
    24.5
    %
    
    
    102.1
    %
    
    
    66.8
    %
    
    
    21.3
    %
    
    
    88.1
    %
 25




---



##### Table of Contents



(1)
    
    The combined ratios presented in this table exclude administration expenses. Loss ratio and acquisition costs ratio are based on net premiums earned.  Standard Property & Casualty Reinsurance
   General Third Party Liability
  Motor
  Personal Accident (assumed from non-life insurers)
  Property
   For the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    2003Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Netpremiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums(US$ millions)
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earnedStandard
Property & Casualty
Reinsurance:General Third Party
Liability
    
    
    184.2
    
    
    
    146.7
    
    
    
    204.1
    
    
    
    404.7
    
    
    
    379.1
    
    
    
    348.1
    
    
    
    361.5
    
    
    
    323.5
    
    
    
    336.9Motor
    
    
    188.9
    
    
    
    188.4
    
    
    
    256.8
    
    
    
    472.0
    
    
    
    437.4
    
    
    
    450.8
    
    
    
    386.7
    
    
    
    356.1
    
    
    
    352.5Personal Accident(assumed from
non-life insurers)
    
    
    13.3
    
    
    
    13.3
    
    
    
    14.3
    
    
    
    33.8
    
    
    
    34.5
    
    
    
    43.8
    
    
    
    38.1
    
    
    
    35.3
    
    
    
    34.4Property
    
    
    416.7
    
    
    
    390.6
    
    
    
    405.6
    
    
    
    598.6
    
    
    
    526.5
    
    
    
    549.6
    
    
    
    652.3
    
    
    
    585.0
    
    
    
    561.4Total Standard
Property & Casualty
Reinsurance
    
    
    803.1
    
    
    
    739.0
    
    
    
    880.8
    
    
    
    1,509.1
    
    
    
    1,377.5
    
    
    
    1,392.3
    
    
    
    1,438.6
    
    
    
    1,299.9
    
    
    
    1,285.2Proportional
    
    
    427.2
    
    
    
    390.8
    
    
    
    524.3
    
    
    
    1,186.6
    
    
    
    1,102.5
    
    
    
    1,133.7
    
    
    
    939.3
    
    
    
    879.9
    
    
    
    864.8Non-Proportional
    
    
    375.9
    
    
    
    348.2
    
    
    
    356.5
    
    
    
    322.5
    
    
    
    275.0
    
    
    
    258.6
    
    
    
    499.3
    
    
    
    420.0
    
    
    
    420.4Total Standard
Property & Casualty
Reinsurance
    
    
    803.1
    
    
    
    739.0
    
    
    
    880.8
    
    
    
    1,509.1
    
    
    
    1,377.5
    
    
    
    1,392.3
    
    
    
    1,438.6
    
    
    
    1,299.9
    
    
    
    1,285.2
 26




---



##### Table of Contents



Loss, Expense and Combined RatiosFor the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Acq costs
    
    
    Combined
    
    
    Loss
    
    
    Acq costs
    
    
    Combined
    
    
    Loss
    
    
    Acq costs
    
    
    CombinedLoss ratio
    
    
    ratio
    
    
    ratio (1)
    
    
    ratio
    
    
    ratio
    
    
    ratio (1)
    
    
    ratio
    
    
    ratio
    
    
    ratio (1)General Third Party Liability
    
    
    91.4
    %
    
    
    13.7
    %
    
    
    105.0
    %
    
    
    67.1
    %
    
    
    30.0
    %
    
    
    97.1
    %
    
    
    64.1
    %
    
    
    22.4
    %
    
    
    86.5
    %Motor
    
    
    96.4
    %
    
    
    16.1
    %
    
    
    112.5
    %
    
    
    103.7
    %
    
    
    17.9
    %
    
    
    121.6
    %
    
    
    89.0
    %
    
    
    15.4
    %
    
    
    104.5
    %Personal Accident (assumed
from non-life insurers)
    
    
    27.3
    %
    
    
    25.9
    %
    
    
    53.1
    %
    
    
    54.1
    %
    
    
    38.4
    %
    
    
    92.5
    %
    
    
    68.6
    %
    
    
    21.2
    %
    
    
    89.8
    %Property
    
    
    71.9
    %
    
    
    26.7
    %
    
    
    98.6
    %
    
    
    50.6
    %
    
    
    27.6
    %
    
    
    78.2
    %
    
    
    50.8
    %
    
    
    23.0
    %
    
    
    73.9
    %Total Standard Property &
Casualty Reinsurance
    
    
    82.8
    %
    
    
    20.6
    %
    
    
    103.4
    %
    
    
    72.0
    %
    
    
    25.4
    %
    
    
    97.4
    %
    
    
    65.3
    %
    
    
    20.7
    %
    
    
    86.0
    %Proportional
    
    
    75.8
    %
    
    
    26.8
    %
    
    
    102.6
    %
    
    
    69.6
    %
    
    
    27.7
    %
    
    
    97.4
    %
    
    
    57.8
    %
    
    
    24.9
    %
    
    
    82.7
    %Non-Proportional
    
    
    93.2
    %
    
    
    11.4
    %
    
    
    104.6
    %
    
    
    82.5
    %
    
    
    15.1
    %
    
    
    97.6
    %
    
    
    80.7
    %
    
    
    12.2
    %
    
    
    92.8
    %Total Standard Property &
Casualty Reinsurance
    
    
    82.8
    %
    
    
    20.6
    %
    
    
    103.4
    %
    
    
    72.0
    %
    
    
    25.4
    %
    
    
    97.4
    %
    
    
    65.3
    %
    
    
    20.7
    %
    
    
    86.0
    %
 
 (1)
    
    The combined ratios presented in this table exclude administration
expenses. Loss ratio and acquisition costs ratio are based on net premiums
earned.  Specialty Lines
       27




---



##### Table of Contents



Agribusiness
  Aviation & Space
  Credit & Surety
  Engineering
  Marine & Energy
  Professional Liability and other Special Liability
  Workers Compensation
   For the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    2003Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Net
    
    Gross
    
    Net
    
    Netpremiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums
    
    premiums(US$ millions)
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earned
    
    written
    
    written
    
    earnedSpecialty Lines:Agribusiness
    
    
    36.7
    
    
    
    36.7
    
    
    
    28.9
    
    
    
    11.4
    
    
    
    11.4
    
    
    
    15.5
    
    
    
    7.8
    
    
    
    7.8
    
    
    
    3.9Aviation & Space
    
    
    254.6
    
    
    
    241.8
    
    
    
    352.4
    
    
    
    476.5
    
    
    
    404.5
    
    
    
    327.3
    
    
    
    498.1
    
    
    
    354.7
    
    
    
    325.2Credit & Surety
    
    
    58.4
    
    
    
    58.4
    
    
    
    168.2
    
    
    
    209.1
    
    
    
    204.3
    
    
    
    177.9
    
    
    
    200.5
    
    
    
    195.6
    
    
    
    174.3Engineering
    
    
    70.6
    
    
    
    65.5
    
    
    
    88.7
    
    
    
    118.5
    
    
    
    112.2
    
    
    
    117.3
    
    
    
    144.9
    
    
    
    139.9
    
    
    
    133.8Marine & Energy
    
    
    64.9
    
    
    
    64.0
    
    
    
    71.7
    
    
    
    85.7
    
    
    
    82.5
    
    
    
    85.1
    
    
    
    88.8
    
    
    
    83.2
    
    
    
    81.6Professional
Liability and other
Special Liability
    
    
    359.4
    
    
    
    282.8
    
    
    
    295.6
    
    
    
    440.2
    
    
    
    436.5
    
    
    
    410.6
    
    
    
    349.0
    
    
    
    301.9
    
    
    
    286.7Workers Compensation
    
    
    -11.5
    
    
    
    -11.5
    
    
    
    53.7
    
    
    
    313.9
    
    
    
    313.9
    
    
    
    253.9
    
    
    
    35.9
    
    
    
    35.9
    
    
    
    32.6Total Specialty Lines
    
    
    833.1
    
    
    
    737.7
    
    
    
    1,059.2
    
    
    
    1,655.3
    
    
    
    1,565.3
    
    
    
    1,387.6
    
    
    
    1,325.0
    
    
    
    1,119.0
    
    
    
    1,038.1Proportional
    
    
    590.5
    
    
    
    536.0
    
    
    
    837.8
    
    
    
    1,562.3
    
    
    
    1,498.5
    
    
    
    1,317.3
    
    
    
    1,167.4
    
    
    
    1,018.4
    
    
    
    938.1Non-Proportional
    
    
    242.6
    
    
    
    201.7
    
    
    
    221.4
    
    
    
    93.0
    
    
    
    66.8
    
    
    
    70.3
    
    
    
    157.6
    
    
    
    100.6
    
    
    
    100.0Total Specialty Lines
    
    
    833.1
    
    
    
    737.7
    
    
    
    1,059.2
    
    
    
    1,655.3
    
    
    
    1,565.3
    
    
    
    1,387.6
    
    
    
    1,325.0
    
    
    
    1,119.0
    
    
    
    1,038.1
 28




---



##### Table of Contents



Loss, Expense and Combined RatiosFor the year ended December 31,2005
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    2003Acq costs
    
    Combined
    
    
    
    
    
    Acq costs
    
    Combined
    
    
    
    
    
    Acq costs
    
    CombinedLoss ratio
    
    ratio
    
    ratio (1)
    
    Loss ratio
    
    ratio
    
    ratio (1)
    
    Loss ratio
    
    ratio
    
    ratio (1)Specialty Lines:Agribusiness
    
    
    78.9
    %
    
    
    17.3
    %
    
    
    96.2
    %
    
    
    94.8
    %
    
    
    21.9
    %
    
    
    116.8
    %
    
    
    61.5
    %
    
    
    12.8
    %
    
    
    74.4
    %Aviation & Space
    
    
    60.9
    %
    
    
    26.4
    %
    
    
    87.3
    %
    
    
    53.7
    %
    
    
    24.5
    %
    
    
    78.2
    %
    
    
    45.4
    %
    
    
    14.9
    %
    
    
    60.4
    %Credit & Surety
    
    
    59.2
    %
    
    
    34.3
    %
    
    
    93.5
    %
    
    
    50.1
    %
    
    
    30.0
    %
    
    
    80.1
    %
    
    
    73.0
    %
    
    
    32.0
    %
    
    
    105.0
    %Engineering
    
    
    71.4
    %
    
    
    31.2
    %
    
    
    102.6
    %
    
    
    76.6
    %
    
    
    25.5
    %
    
    
    102.1
    %
    
    
    64.8
    %
    
    
    29.7
    %
    
    
    94.5
    %Marine & Energy
    
    
    81.2
    %
    
    
    25.8
    %
    
    
    107.0
    %
    
    
    92.0
    %
    
    
    20.7
    %
    
    
    112.7
    %
    
    
    76.0
    %
    
    
    12.5
    %
    
    
    88.5
    %Professional
Liability and other
Special Liability
    
    
    89.5
    %
    
    
    17.3
    %
    
    
    106.8
    %
    
    
    112.3
    %
    
    
    19.8
    %
    
    
    132.1
    %
    
    
    77.4
    %
    
    
    30.6
    %
    
    
    108.0
    %Workers Compensation
    
    
    91.8
    %
    
    
    20.1
    %
    
    
    111.9
    %
    
    
    96.8
    %
    
    
    24.5
    %
    
    
    121.3
    %
    
    
    199.4
    %
    
    
    -45.1
    %
    
    
    154.3
    %Total Specialty Lines
    
    
    72.9
    %
    
    
    24.9
    %
    
    
    97.8
    %
    
    
    83.2
    %
    
    
    23.6
    %
    
    
    106.9
    %
    
    
    68.7
    %
    
    
    22.0
    %
    
    
    90.6
    %Proportional
    
    
    62.0
    %
    
    
    26.4
    %
    
    
    88.5
    %
    
    
    78.8
    %
    
    
    24.3
    %
    
    
    103.2
    %
    
    
    77.5
    %
    
    
    22.1
    %
    
    
    99.6
    %Non-Proportional
    
    
    114.1
    %
    
    
    19.2
    %
    
    
    133.3
    %
    
    
    165.4
    %
    
    
    10.5
    %
    
    
    176.0
    %
    
    
    -14.1
    %
    
    
    21.0
    %
    
    
    6.9
    %Total Specialty Lines
    
    
    72.9
    %
    
    
    24.9
    %
    
    
    97.8
    %
    
    
    83.2
    %
    
    
    23.6
    %
    
    
    106.9
    %
    
    
    68.7
    %
    
    
    22.0
    %
    
    
    90.6
    %
 
 (1)
    
    The combined ratios presented in this table exclude administration
expenses. Loss ratio and acquisition costs ratio are based on net premiums
earned.  Life & Health Reinsurance
  
    
    Life & Disability; and
    
    Accident & Health.
    
    
    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.
  29




---



##### Table of Contents




    
    demutualizations of life insurance companies;
    
    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
    
    the increasing need for products that reduce the volatility of
earnings following the increasing adoption of international accounting
standards in many of the markets we serve.
  Competition
  
    
    financial strength;
    
    expertise, reputation, experience and qualifications of employees;
    
    local presence;
    
    client relationships;
    
    products and services offered;
    
    premium levels; and
    
    contract terms and conditions.
  
    
    Munich Reinsurance Company;
    
    Swiss Reinsurance Company (including GE Insurance Solutions);
    
    General Reinsurance Company, a subsidiary of Berkshire Hathaway, Inc.;
    
    Hannover Re Group;
    
    SCOR;
    
    Companies active in the Bermuda market, including the PartnerRe Group, XL Capital Ltd. and RenaissanceRe Holdings Ltd.;
    
    Everest Reinsurance Company;
    
    Transatlantic Reinsurance Company; and
    
    Lloyds syndicates active in the London market.
 Non-life underwriting, pricing/structuring and accumulation control
   30




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##### Table of Contents



31




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##### Table of Contents



Non-life claims management
       Life operations underwriting and claims
     32




---



##### Table of Contents



Catastrophe risk management and protection
      
    
    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.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.
 33




---



##### Table of Contents




    
    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.
   
    
    the lack of availability of high credit quality reinsurance protection at competitive
prices for peak risks such as 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.
        34




---



##### Table of Contents



Traditional Reinsurance
    
    HelixCatastrophic Event(1)
    
    Gross Loss
    
    Recovery(2)
    
    Recovery(4)
    
    Status1st Catastrophic Event
    
    $150 million to
    
    $61 million to
    
    N/A
    
    Cover triggered$250 million
    
    $91 million2nd Catastrophic Event
    
    $175 million to
    
    $61 million to
    
    $0 to
    
    Cover in effect$275 million
    
    $91 million (3)
    
    $100 million (4)
 
 (1)
    
    A catastrophic event in a defined peril region.(2)
    
    On a non-US basis in excess of US$ 20 million (for some perils first event coverage in excess of US$ 50 million).(3)
    
    Subject to a total recovery of US$ 147 million over the term of the contracts.(4)
    
    Recovery is based on modeled losses on a notional portfolio, not on actual losses.  Retrocessional reinsurance
   
    
    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.
       35




---



##### Table of Contents



Underwriting reservesand future life benefits
    
    
    
    
    
    S & P/A.M.Retrocessionaire
    
    Retrocessionaire Group
    
    (US$ million)
    
    % of total
    
    Best RatingLloyds Syndicates
    
    Lloyds
    
    
    212.6
    
    
    
    26.4
    
    
    A/AContinental Casualty Company
    
    CNA
    
    
    57.7
    
    
    
    7.2
    
    
    A /AZurich Financial Services
    
    Zurich Financial Services
    
    
    48.1
    
    
    
    6.0
    
    
    A+/AICM Re S.A.
    
    ICM Re
    
    
    35.7
    
    
    
    4.4
    
    
    NRAIOI Insurance Co., Ltd.
    
    AIOI Insurance Co., Ltd.
    
    
    35.7
    
    
    
    4.4
    
    
    ATransamerica Reinsurance
    
    AEGON Group
    
    
    35.1
    
    
    
    4.4
    
    
    AA /A+Hannover Ruckversicherung
    
    Hannover Re
    
    
    33.6
    
    
    
    4.2
    
    
    AA /AAXA Group
    
    AXA Group
    
    
    30.3
    
    
    
    3.8
    
    
    AAPartnerRe Global
    
    PartnerRe Group
    
    
    27.3
    
    
    
    3.4
    
    
    AA /A+GE Frankona
    
    Swiss Re
    
    
    22.0
    
    
    
    2.7
    
    
    A/ATotal underwriting reserves
and future life benefits of
top ten retrocessionaires
    
    
    
    
    538.2
    
    
    
    66.8All other retrocessionaires
    
    
    
    
    266.9
    
    
    
    33.2Total underwriting reserves
and future life benefits
    
    
    
    
    805.1
    
    
    
    100.0
    Loss and loss expense reserves
 Establishment of loss and loss expense reserves
    36




---



##### Table of Contents



Core Reserving Methodology
 Expected Loss/Expected Loss Ratio
     
    
    underlying risk (e.g. line of business), geographic region or treaty type (i.e. proportional or non-proportional); and
 
    
    the time period at which losses are expected to be paid and reported (i.e. expected paid loss development factors and
expected reported development factors).
  
    
    statistics developed by pricing actuaries, or
    
    actual paid loss and reported loss (of the reinsurance contracts assigned to a given
REC) aggregated into underwriting year triangles.
 37




---



##### Table of Contents




    
    Expected Loss Method (normally derived from pricing as described above)
 
    
    Paid Loss Bornhuetter Ferguson Method
 
    
    Incurred Loss Bornhuetter Ferguson Method
 
    
    Paid Loss Development Method
 
    
    Incurred Loss Development Method
  
    
    select a different actuarial method (i.e. to be more responsive to actual loss experience)
 
    
    revise the expected loss (see expected loss / expected loss ratio above)
 
    
    revise the expected paid loss and / or expected reporting loss patterns
    Adequacy of reserves
   Development of prior years reserves
 38




---



##### Table of Contents



Commutations:
  Effects of currency fluctuations
  39




---



##### Table of Contents



Loss reserve development
    As of December 31,(US$ millions, except percentages)
    
    1995
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005Gross reserves for losses and loss expenses
    
    
    1,891.4
    
    
    
    2,245.3
    
    
    
    2,636.4
    
    
    
    2,987.6
    
    
    
    3,482.3
    
    
    
    4,504.1
    
    
    
    5,642.3
    
    
    
    6,876.9
    
    
    
    7,879.7
    
    
    
    8,908.3
    
    
    
    7,568.9Reinsurance recoverable
    
    
    102.9
    
    
    
    106.9
    
    
    
    290.1
    
    
    
    457.3
    
    
    
    640.9
    
    
    
    892.3
    
    
    
    1,099.2
    
    
    
    1,085.7
    
    
    
    1,041.3
    
    
    
    914.5
    
    
    
    761.0Initial net reserves for losses and loss expenses
    
    
    1,788.5
    
    
    
    2,138.4
    
    
    
    2,346.3
    
    
    
    2,530.3
    
    
    
    2,841.4
    
    
    
    3,611.8
    
    
    
    4,543.1
    
    
    
    5,791.2
    
    
    
    6,838.4
    
    
    
    7,993.8
    
    
    
    6,807.9Cumulative paid as of:One year later
    
    
    443.9
    
    
    
    466.0
    
    
    
    514.5
    
    
    
    610.0
    
    
    
    850.6
    
    
    
    890.6
    
    
    
    1,171.0
    
    
    
    1,504.4
    
    
    
    1,938.9
    
    
    
    1,995.3Two years later
    
    
    669.4
    
    
    
    721.2
    
    
    
    843.0
    
    
    
    968.8
    
    
    
    1,339.2
    
    
    
    1,575.8
    
    
    
    2,119.4
    
    
    
    2,760.8
    
    
    
    3,321.3Three years later
    
    
    803.1
    
    
    
    921.7
    
    
    
    1,064.4
    
    
    
    1,250.7
    
    
    
    1,670.1
    
    
    
    2,180.9
    
    
    
    3,027.2
    
    
    
    3,755.0Four years later
    
    
    927.0
    
    
    
    1,062.2
    
    
    
    1,261.7
    
    
    
    1,438.6
    
    
    
    2,029.2
    
    
    
    2,749.6
    
    
    
    3,726.4Five years later
    
    
    1,007.7
    
    
    
    1,178.3
    
    
    
    1,336.5
    
    
    
    1,622.3
    
    
    
    2,312.8
    
    
    
    3,210.1Six years later
    
    
    1,093.8
    
    
    
    1,197.5
    
    
    
    1,436.7
    
    
    
    1,772.9
    
    
    
    2,594.4Seven years later
    
    
    1,087.1
    
    
    
    1,249.3
    
    
    
    1,545.8
    
    
    
    1,930.5Eight years later
    
    
    1,115.7
    
    
    
    1,319.4
    
    
    
    1,638.1Nine years later
    
    
    1,157.8
    
    
    
    1,374.0Ten years later
    
    
    1,194.4Net reserves re-estimated as of:One year later
    
    
    1,763.3
    
    
    
    1,901.5
    
    
    
    2,145.6
    
    
    
    2,292.6
    
    
    
    2,915.7
    
    
    
    3,727.5
    
    
    
    4,722.5
    
    
    
    5,995.3
    
    
    
    7,432.3
    
    
    
    7,407.9Two years later
    
    
    1,642.6
    
    
    
    1,853.5
    
    
    
    2,051.3
    
    
    
    2,276.7
    
    
    
    3,039.3
    
    
    
    3,932.6
    
    
    
    4,951.0
    
    
    
    6,490.6
    
    
    
    7,054.2Three years later
    
    
    1,617.7
    
    
    
    1,736.4
    
    
    
    1,970.4
    
    
    
    2,303.4
    
    
    
    3,039.2
    
    
    
    4,200.1
    
    
    
    5,441.2
    
    
    
    6,270.1Four years later
    
    
    1,541.1
    
    
    
    1,677.3
    
    
    
    1,989.1
    
    
    
    2,337.8
    
    
    
    3,189.2
    
    
    
    4,576.2
    
    
    
    5,323.5Five years later
    
    
    1,468.9
    
    
    
    1,661.2
    
    
    
    1,990.7
    
    
    
    2,414.7
    
    
    
    3,400.6
    
    
    
    4,519.8Six years later
    
    
    1,452.9
    
    
    
    1,645.9
    
    
    
    2,013.0
    
    
    
    2,504.1
    
    
    
    3,385.9Seven years later
    
    
    1,446.1
    
    
    
    1,649.3
    
    
    
    2,069.5
    
    
    
    2,493.1Eight years later
    
    
    1,448.7
    
    
    
    1,684.6
    
    
    
    2,049.1Nine years later
    
    
    1,476.8
    
    
    
    1,666.6Ten years later
    
    
    1,448.8Reinsurance recoverable re-estimated as of
December 31, 2005
    
    
    246.7
    
    
    
    336.7
    
    
    
    420.8
    
    
    
    695.3
    
    
    
    1,211.0
    
    
    
    1,206.2
    
    
    
    1,119.1
    
    
    
    1,021.8
    
    
    
    805.6
    
    
    
    877.6Gross reserves re-estimated as of December
31, 2005
    
    
    1,695.5
    
    
    
    2,003.3
    
    
    
    2,469.9
    
    
    
    3,188.4
    
    
    
    4,596.9
    
    
    
    5,726.0
    
    
    
    6,442.6
    
    
    
    7,291.9
    
    
    
    7,859.8
    
    
    
    8,285.5Cumulative net redundancy/(deficiency)
    
    
    339.7
    
    
    
    471.8
    
    
    
    297.2
    
    
    
    37.2
    
    
    
    -544.5
    
    
    
    -908.0
    
    
    
    -780.4
    
    
    
    -478.9
    
    
    
    -215.8
    
    
    
    585.9Cumulative redundancy/(deficiency) as a
percentage of initial net reserves
    
    
    19.0
    %
    
    
    22.1
    %
    
    
    12.7
    %
    
    
    1.5
    %
    
    
    -19.2
    %
    
    
    -25.1
    %
    
    
    -17.2
    %
    
    
    -8.3
    %
    
    
    -3.2
    %
    
    
    7.3
    %Cumulative gross redundancy/(deficiency)
    
    
    195.9
    
    
    
    242.0
    
    
    
    166.5
    
    
    
    -200.8
    
    
    
    -1,114.6
    
    
    
    -1,221.9
    
    
    
    -800.3
    
    
    
    -415.0
    
    
    
    19.9
    
    
    
    622.8Cumulative redundancy/(deficiency) as a
percentage of initial gross reserves
    
    
    10.4
    %
    
    
    10.8
    %
    
    
    6.3
    %
    
    
    -6.7
    %
    
    
    -32.0
    %
    
    
    -27.1
    %
    
    
    -14.2
    %
    
    
    -6.0
    %
    
    
    0.3
    %
    
    
    7.0
    %
  40




---



##### Table of Contents



As of December 31,(US$ millions, except percentages)
    
    1995
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005Initial net reserves for losses and
loss expenses
    
    
    1,788.5
    
    
    
    2,138.4
    
    
    
    2,346.3
    
    
    
    2,530.3
    
    
    
    2,841.4
    
    
    
    3,611.8
    
    
    
    4,543.1
    
    
    
    5,791.2
    
    
    
    6,838.4
    
    
    
    7,993.8
    
    
    
    6,807.9Net reserves re-estimated as of:One year later
    
    
    1,805.6
    
    
    
    2,004.9
    
    
    
    2,108.6
    
    
    
    2,394.7
    
    
    
    3,008.1
    
    
    
    3,779.5
    
    
    
    4,698.3
    
    
    
    5,735.4
    
    
    
    7,185.8
    
    
    
    7,808.4Two years later
    
    
    1,758.2
    
    
    
    1,925.4
    
    
    
    2,078.8
    
    
    
    2,414.4
    
    
    
    3,152.5
    
    
    
    3,935.5
    
    
    
    4,836.4
    
    
    
    6,103.4
    
    
    
    7,079.0Three years later
    
    
    1,707.3
    
    
    
    1,865.4
    
    
    
    2,016.6
    
    
    
    2,465.6
    
    
    
    3,130.1
    
    
    
    4,132.7
    
    
    
    5,211.6
    
    
    
    6,051.5Four years later
    
    
    1,674.5
    
    
    
    1,819.3
    
    
    
    2,035.0
    
    
    
    2,474.0
    
    
    
    3,230.8
    
    
    
    4,442.4
    
    
    
    5,205.1Five years later
    
    
    1,612.4
    
    
    
    1,799.4
    
    
    
    2,023.7
    
    
    
    2,511.6
    
    
    
    3,415.0
    
    
    
    4,455.0Six years later
    
    
    1,589.9
    
    
    
    1,775.9
    
    
    
    2,017.9
    
    
    
    2,588.8
    
    
    
    3,441.4Seven years later
    
    
    1,588.4
    
    
    
    1,755.5
    
    
    
    2,065.5
    
    
    
    2,609.8Eight years later
    
    
    1,574.4
    
    
    
    1,782.5
    
    
    
    2,069.3Nine years later
    
    
    1,595.9
    
    
    
    1,782.0Ten years later
    
    
    1,597.4Cumulative redundancy/(deficiency)
    
    
    191.1
    
    
    
    356.4
    
    
    
    277.0
    
    
    
    -79.5
    
    
    
    -600.0
    
    
    
    -843.2
    
    
    
    -662.0
    
    
    
    -260.3
    
    
    
    -240.6
    
    
    
    185.4Cumulative
redundancy/(deficiency) as a
percentage of initial net reserves
    
    
    10.7
    %
    
    
    16.7
    %
    
    
    11.8
    %
    
    
    -3.1
    %
    
    
    -21.1
    %
    
    
    -23.3
    %
    
    
    -14.6
    %
    
    
    -4.5
    %
    
    
    -3.5
    %
    
    
    2.3
    %
  Reconciliation of Beginning and Ending Loss and Loss Expense Reserves
  (US$ millions)
    
    2005
    
    
    2004
    
    
    2003As of January 1,Gross reserves for losses and loss expenses
    
    
    8,908.3
    
    
    
    7,879.7
    
    
    
    6,876.9Less reinsurance recoverable
    
    
    -914.5
    
    
    
    -1,041.3
    
    
    
    -1,085.7Net reserves for losses and loss expenses
    
    
    7,993.8
    
    
    
    6,838.4
    
    
    
    5,791.2Losses and loss expenses incurred (1)Current year
    
    
    1,922.3
    
    
    
    2,881.9
    
    
    
    2,736.1Prior years
    
    
    -186.1
    
    
    
    350.2
    
    
    
    -63.5Total
    
    
    1,736.2
    
    
    
    3,232.1
    
    
    
    2,672.6Losses and loss expenses paidCurrent year
    
    
    451.0
    
    
    
    541.4
    
    
    
    437.1Prior years
    
    
    1,995.3
    
    
    
    1,938.9
    
    
    
    1,504.4Total
    
    
    2,446.3
    
    
    
    2,480.3
    
    
    
    1,941.5Foreign currency translation effects
    
    
    -475.8
    
    
    
    403.6
    
    
    
    316.1As of December 31,
 41




---



##### Table of Contents



(US$ millions)
    
    2005
    
    
    2004
    
    
    2003Net reserves for losses and loss expenses
    
    
    6,807.9
    
    
    
    7,993.8
    
    
    
    6,838.4Reinsurance recoverable
    
    
    761.0
    
    
    
    914.5
    
    
    
    1,041.3Gross reserves for losses and loss expenses
    
    
    7,568.9
    
    
    
    8,908.3
    
    
    
    7,879.7
 
 (1)
    
    The totals above include non-life accident and health reserves for
losses and loss expenses that are reflected in the Life & Health
Reinsurance segment. The loss and loss expenses incurred includes
US$ 178.3 million, US$ 128.0 million and US$ 192.7 million of loss and
loss expenses included in the Life & Health Reinsurance segment for
the years ended December 31, 2005, 2004 and 2003, respectively.    Reserves for Asbestos and Environmental Losses
      Investments
  42




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For the year ended December 31,2005
    
    
    2004
    
    
    2003US$
    
    
    % of
    
    
    US$
    
    
    % of
    
    
    US$
    
    
    % ofmillions
    
    
    total
    
    
    millions
    
    
    total
    
    
    millions
    
    
    totalFixed maturities securities
    
    
    4,963.4
    
    
    
    74.8
    
    
    
    5,685.2
    
    
    
    73.0
    
    
    
    4,928.6
    
    
    
    65.7Equity securities
    
    
    362.6
    
    
    
    5.5
    
    
    
    399.4
    
    
    
    5.1
    
    
    
    834.9
    
    
    
    11.1Funds Withheld Asset
    
    
    1,020.1
    
    
    
    15.4
    
    
    
    1,305.1
    
    
    
    16.8
    
    
    
    1,530.6
    
    
    
    20.4Short-term investments
    
    
    253.1
    
    
    
    3.8
    
    
    
    117.3
    
    
    
    1.5
    
    
    
    55.7
    
    
    
    0.7Other investments
    
    
    35.1
    
    
    
    0.5
    
    
    
    279.2
    
    
    
    3.6
    
    
    
    152.2
    
    
    
    2.1Total investments
    
    
    6,634.3
    
    
    
    100.0
    
    
    
    7,786.2
    
    
    
    100.0
    
    
    
    7,502.0
    
    
    
    100.0
 Fixed Maturities
    (US$ millions, except percentages)
    
    Estimated fair value
    
    
    % of total
    
    
    Carrying value
    
    
    % of totalAs of December 31, 2005
    
    Available-for-sale (AFS)
    
    
    AFS
    
    
    Held-to-maturity (HTM)
    
    
    HTMLess than one year
    
    
    336.5
    
    
    
    8.1
    
    
    
    39.7
    
    
    
    5.0One year through five years
    
    
    2,216.2
    
    
    
    53.1
    
    
    
    513.9
    
    
    
    64.8Five years through ten years
    
    
    776.3
    
    
    
    18.6
    
    
    
    219.2
    
    
    
    27.6Over ten years
    
    
    110.9
    
    
    
    2.7
    
    
    
    20.8
    
    
    
    2.6Subtotal
    
    
    3,439.9
    
    
    
    82.5
    
    
    
    793.6
    
    
    
    100.0Mortgage and asset-backed
securities
    
    
    561.4
    
    
    
    13.5
    
    
    
    
    
    
    
    Unit trust bonds
    
    
    168.5
    
    
    
    4.0
    
    
    
    
    
    
    
    Total as of December 31, 2005
    
    
    4,169.8
    
    
    
    100.0
    
    
    
    793.6
    
    
    
    100.0
  43




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##### Table of Contents



(US$ millions, except percentages)
    
    Estimated fair value
    
    
    % of total
    
    
    Carrying value
    
    
    % of totalAs of December 31, 2005
    
    Available-for-sale (AFS)
    
    
    AFS
    
    
    Held-to-maturity (HTM)
    
    
    HTMAAA/Aaa
    
    
    3,224.7
    
    
    
    77.3
    
    
    
    769.5
    
    
    
    97.0AA/Aa2
    
    
    292.7
    
    
    
    7.0
    
    
    
    13.8
    
    
    
    1.7A/A2
    
    
    255.1
    
    
    
    6.1
    
    
    
    10.3
    
    
    
    1.3BBB/Baa2
    
    
    266.3
    
    
    
    6.4
    
    
    
    
    
    
    
    BB
    
    
    29.3
    
    
    
    0.8
    
    
    
    
    
    
    
    Not rated 1
    
    
    101.7
    
    
    
    2.4
    
    
    
    
    
    
    
    Total as of December 31, 2005
    
    
    4,169.8
    
    
    
    100.0
    
    
    
    793.6
    
    
    
    100.0
 
 (1)
    
    Includes US$ 77.1 million private collateralized loans issued by German banks with a credit rating equivalent to
S&P AAA .
 Equity Securities
      Funds Withheld Asset
   44




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##### Table of Contents



Short-Term Investments
  Real Estate
   Other Investments
  Premiums Receivable
  Reinsurance Assets
   Capital Expenditures
  45




---



##### Table of Contents



Ratings
  Regulation
 General
    Switzerland
    46




---



##### Table of Contents



United States
 Agreement with Connecticut Department of Insurance
  
    
    Making any payments pursuant to commutation agreements that result in decreasing CRNAs surplus;
 
    
    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; and
 
    
    Entering into any sales, purchases, exchanges, loans, extensions of credit or investments not in the ordinary course of
its run-off business.
    General US state supervision
  47




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##### Table of Contents



Insurance holding company regulation
    Insurance regulation
     48




---



##### Table of Contents



Reinsurance regulation
   US reinsurance regulation of our non-US reinsurance subsidiaries
  NAIC ratios
  Risk-based capital
   49




---



##### Table of Contents



The Gramm-Leach-Bliley Act
  Insurance Guaranty Association assessments
  Terrorism legislation
   Proposed US legislation regarding US asbestos liability
   European Union directives
  50




---



##### Table of Contents



Germany
        
    
    implementation of the principle of supervision in the member state of the companys head office;
 
    
    approval of the European stock corporation as a form of enterprise;
 
    
    additional supervision of reinsurers within an insurance group;
 
    
    introduction of regulations for finance reinsurance;
 
    
    supervision of special purpose vehicles; and
 
    
    introduction of the supervision of branches belonging to reinsurance companies in countries outside the EU-member countries.
  German
Branch Office
  51




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##### Table of Contents



Asia
 Restrictions imposed by the Monetary Authority of Singapore
  
    
    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
  C. ORGANIZATIONAL STRUCTURE
   52




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##### Table of Contents



D. PROPERTY, PLANTS AND EQUIPMENT
    
 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 A. OPERATING RESULTS
 The following discussion and analysis should be read in conjunction with our 2005 consolidated
financial statements, including the related notes to those financial statements. This discussion
contains forward-looking statements that involve risks and uncertainties and actual
 53




---



##### Table of Contents



results may
differ materially from the results described or implied by these forward-looking statements. See
Cautionary note regarding forward-looking statements.
 Overview
        
    
    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.
  
    
    losses and loss expenses, which include:
 
    
    non-life reinsurance and insurance losses and loss expenses;
    
    death and other life reinsurance benefits;
 
    
    operating and administration costs, which include:
 
    
    treaty and individual risk acquisition costs, commonly referred to as commissions;
    
    overhead costs, predominantly consisting of salaries and related costs;
 54




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##### Table of Contents




    
    interest expenses; and
    
    income taxes.
  
    
    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.
  Critical Accounting Policies
  Loss and loss expense reserves
   Total gross non-life lossCase reserves
    
    
    IBNR
    
    
    reserves(US$ millions)
    
    
    (US$ millions)
    
    
    (US$ millions)Standard Property & Casualty
    
    
    1,430.9
    
    
    
    1,010.8
    
    
    
    2,441.7Specialty Lines
    
    
    1,718.6
    
    
    
    1,653.1
    
    
    
    3,371.7Life & Health Reinsurance
    
    
    87.7
    
    
    
    203.7
    
    
    
    291.4Run-Off
    
    
    691.6
    
    
    
    772.5
    
    
    
    1,464.1Total
    
    
    3,928.8
    
    
    
    3,640.1
    
    
    
    7,568.9
    55




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##### Table of Contents



Adverse (favorable)development of priorNet loss reserves
    
    years loss reservesbeginning of year
    
    during the year
    
    Development on prior(US$ millions)
    
    (US$ millions)
    
    years loss reserves (%)2001
    
    
    3,611.8
    
    
    
    167.8
    
    
    
    4.62002
    
    
    4,543.1
    
    
    
    201.1
    
    
    
    4.42003
    
    
    5,791.2
    
    
    
    -63.5
    
    
    
    -1.12004
    
    
    6,838.4
    
    
    
    350.2
    
    
    
    5.12005
    
    
    7,993.8
    
    
    
    -186.1
    
    
    
    -2.3
     56




---



##### Table of Contents



Premiums
        57




---



##### Table of Contents



Deposit accounting
   Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer
Insurance Risk
  Reinsurance recoverables
   58




---



##### Table of Contents



Foreign currency translation
  Invested assets
   Other than temporary impairment
    Income taxes
  Accounting for Income Taxes  Special
Areas
 59




---



##### Table of Contents



Accounting for Contingencies.
 Goodwill and other intangible assets
 Goodwill and Other Intangible Assets
  Investment Results
    Net Investment Income and Net Realized and Unrealized Capital Gains (Losses)Year Ended December 31,2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Net
    
    
    
    
    
    
    Realized
    
    
    Net
    
    
    
    
    
    
    Realized
    
    
    Net
    
    
    
    
    
    
    Realizedinvestment
    
    
    Pre-tax
    
    
    gains
    
    
    investment
    
    
    Pre-tax
    
    
    gains
    
    
    investment
    
    
    Pre-tax
    
    
    gains(US$ millions, except yields)
    
    income
    
    
    yield (%)
    
    
    (losses)
    
    
    income
    
    
    yield (%)
    
    
    (losses)
    
    
    income
    
    
    yield (%)
    
    
    (losses)Fixed maturity securities
    
    
    221.3
    
    
    
    4.2
    
    
    
    -10.6
    
    
    
    198.3
    
    
    
    3.7
    
    
    
    5.7
    
    
    
    120.4
    
    
    
    2.9
    
    
    
    34.5Equity securities
    
    
    5.9
    
    
    
    1.5
    
    
    
    43.3
    
    
    
    14.8
    
    
    
    2.4
    
    
    
    48.0
    
    
    
    12.1
    
    
    
    1.8
    
    
    
    -16.1Funds Withheld Asset
    
    
    62.6
    
    
    
    5.3
    
    
    
    
    
    
    
    75.1
    
    
    
    5.4
    
    
    
    
    
    
    
    85.6
    
    
    
    5.4
    
    
    
    Short-term and other
    
    
    47.1
    
    
    
    4.7
    
    
    
    -7.2
    
    
    
    37.7
    
    
    
    4.8
    
    
    
    -7.2
    
    
    
    27.3
    
    
    
    3.9
    
    
    
    Less investment expenses
    
    
    -12.0
    
    
    
    
    
    
    
    
    
    
    
    -13.2
    
    
    
    
    
    
    
    
    
    
    
    -11.0
    
    
    
    Total
    
    
    324.9
    
    
    
    4.1
    
    
    
    
    
    
    
    312.7
    
    
    
    3.8
    
    
    
    
    
    
    
    234.4
    
    
    
    3.3Net realized capital gains
(losses)
    
    
    25.5
    
    
    
    
    
    
    
    
    
    
    
    46.5
    
    
    
    
    
    
    
    
    
    
    
    18.4Net investment income and
net realized capital gains
(losses)
    
    
    350.4
    
    
    
    4.4
    
    
    
    
    
    
    
    359.2
    
    
    
    4.4
    
    
    
    
    
    
    
    252.8
    
    
    
    3.5Change in net unrealized
gains (losses)
    
    
    -38.4
    
    
    
    
    
    
    
    
    
    
    
    -25.1
    
    
    
    
    
    
    
    
    
    
    
    154.2Total investment return
    
    
    312.0
    
    
    
    4.0
    
    
    
    
    
    
    
    334.1
    
    
    
    4.1
    
    
    
    
    
    
    
    407.0
    
    
    
    5.7
 60




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##### Table of Contents



Restructuring Costs
  Income Tax
   
   61




---



##### Table of Contents



Regulatory and Legislative Environment
  Results of Operations
  For the year ended December 31,2005
    
    2004
    
    2003(US$ millions)Revenues:Gross premiums written
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4Net premiums written
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7Net premiums earned
    
    
    2,383.2
    
    
    
    3,882.2
    
    
    
    3,767.8Net investment income
    
    
    324.9
    
    
    
    312.7
    
    
    
    234.4Net realized capital gains (losses)
    
    
    25.5
    
    
    
    46.5
    
    
    
    18.4Other (loss) income
    
    
    -13.4
    
    
    
    -8.2
    
    
    
    17.5Total revenues
    
    
    2,720.2
    
    
    
    4,233.2
    
    
    
    4,038.1Benefits, losses and expenses:Losses, loss expenses and life benefits
    
    
    -1,775.9
    
    
    
    -3,342.5
    
    
    
    -2,760.1Acquisition costs
    
    
    -575.6
    
    
    
    -912.4
    
    
    
    -832.0Other operating and administration expenses
    
    
    -210.8
    
    
    
    -219.8
    
    
    
    -202.5Interest expense
    
    
    -31.6
    
    
    
    -33.1
    
    
    
    -31.0Impairment of goodwill
    
    
    
    
    
    
    -94.0
    
    
    
    Amortization of other intangible assets
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8Restructuring costs
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    Total benefits, losses and expenses
    
    
    -2,635.9
    
    
    
    -4,614.4
    
    
    
    -3,827.4Income (loss) before taxes
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7Income tax (expense) benefit
    
    
    -15.6
    
    
    
    -201.3
    
    
    
    -32.8Net income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
   62




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##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003(US$ millions)Pre-tax operating income (loss)
    
    
    100.8
    
    
    
    -321.1
    
    
    
    194.1Net realized capital gains
    
    
    25.5
    
    
    
    46.5
    
    
    
    18.4Impairment of goodwill
    
    
    
    
    
    
    -94.0
    
    
    
    Amortization of other intangible assets
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8Restructuring costs
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    Income (loss) before taxes
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7Net income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Converium Consolidated Net (Loss) Income
      Converium Consolidated Premiums
    Converium Consolidated Net Investment Income and Net Realized Capital Gains (Losses)
  63




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##### Table of Contents



Converium Consolidated Other (Loss) Income
 usufruct
 Converium Consolidated Losses, Loss Expenses and Life Benefits
  Development of prior years loss reserves:
  64




---



##### Table of Contents



Impact of property catastrophe losses:
 (US$ millions)Winter Storm Erwin
    
    
    32.5Continental European Floods
    
    
    24.8Hurricane Katrina
    
    
    44.6
    *Hurricane Rita
    
    
    16.4
    *Hurricane Wilma
    
    
    46.5
    *Total
    
    
    164.8
 
    Commutations
 Guaranteed Minimum Death Benefit (GMDB) business
 September 11th terrorist attacks
 65




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##### Table of Contents



Asbestos and environmental exposures:
 Converium Consolidated Acquisition Costs
  Converium Consolidated Operating and Administration Expenses
  Converium Consolidated Interest Expense, Goodwill and Other Intangible Assets and Restructuring
costs
 Interest expense
 Goodwill and other intangible assets:
 Goodwill and Other
Intangible Assets,
  Restructuring costs:
 Converium Consolidated Income Tax Expense
  66




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##### Table of Contents



Accounting for Income Taxes,
  Converium Consolidated Combined Ratios
  Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Converium Consolidated Net (Loss) Income
     Adjustments of ultimate premium estimate
   67




---



##### Table of Contents



Converium Consolidated Premiums
  Special terminations:
   Converium Consolidated Net Investment Income and Net Realized Capital Gains (Losses)
     Converium Consolidated Other (Loss) Income
  68




---



##### Table of Contents



Converium Consolidated Losses, Loss Expenses and Life Benefits
  Development of prior years reserves:
   Commutations:
 Guaranteed Minimum Death Benefit (GMDB) business:
 69




---



##### Table of Contents



Impact
of Aviation & Space business:
 Impact of property catastrophe losses:
 September 11th terrorist attacks:
  Asbestos and environmental exposures:
 Converium Consolidated Acquisition Costs
  Converium Consolidated Operating and Administration Expenses
  Accounting for Stock Based Compensation
 Converium Consolidated Interest Expense, Goodwill and Other Intangible Assets and Restructuring
costs
 Interest expense:
 Goodwill and other intangible assets:
 70




---



##### Table of Contents



Restructuring costs:
 Converium Consolidated Income Tax Expense
       Converium Consolidated Combined Ratios
  Results of Operations by Operating Segment
 71




---



##### Table of Contents



Year ended December 31,2005
    
    2004
    
    2003(US$ millions)Segment income (loss):Standard Property & Casualty Reinsurance
    
    
    46.7
    
    
    
    91.5
    
    
    
    209.8Specialty Lines
    
    
    109.5
    
    
    
    -7.3
    
    
    
    159.6Life & Health Reinsurance
    
    
    17.6
    
    
    
    16.7
    
    
    
    -69.1Run-Off
    
    
    47.6
    
    
    
    -296.0
    
    
    
    -40.0Corporate Center
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3Total segment income (loss)
    
    
    171.3
    
    
    
    -233.3
    
    
    
    226.0Other (loss) income
    
    
    -13.4
    
    
    
    -8.2
    
    
    
    17.5Interest expense
    
    
    -31.6
    
    
    
    -33.1
    
    
    
    -31.0Impairment of goodwill
    
    
    
    
    
    
    -94.0
    
    
    
    Amortization of other intangible assets
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8Restructuring costs
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    Income (loss) before taxes
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7Income tax (expense) benefit
    
    
    -15.6
    
    
    
    -201.3
    
    
    
    -32.8Net income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
 Ongoing Non-Life
  Year ended December 31,2005
    
    2004
    
    2003(US$ millions, except ratios)Revenues:Gross premiums written
    
    
    1,636.2
    
    
    
    3,164.4
    
    
    
    2,763.6Net premiums written
    
    
    1,476.7
    
    
    
    2,942.8
    
    
    
    2,418.9Net premiums earned
    
    
    1,940.0
    
    
    
    2,779.9
    
    
    
    2,323.3Net investment income and net realized capital gains
    
    
    264.9
    
    
    
    261.4
    
    
    
    183.9Total revenues
    
    
    2,204.9
    
    
    
    3,041.3
    
    
    
    2,507.2Losses and expenses:Losses and loss expenses
    
    
    -1,502.1
    
    
    
    -2,157.6
    
    
    
    -1,551.8Acquisition costs
    
    
    -445.1
    
    
    
    -681.4
    
    
    
    -494.3Other operating and administration expenses
    
    
    -101.5
    
    
    
    -118.1
    
    
    
    -91.7Total losses and expenses
    
    
    -2,048.7
    
    
    
    -2,957.1
    
    
    
    -2,137.8Segment income
    
    
    156.2
    
    
    
    84.2
    
    
    
    369.4Ratios (%):Ongoing non-life loss ratio
    
    
    77.4
    
    
    
    77.6
    
    
    
    66.8Ongoing non-life acquisition costs ratio
    
    
    22.9
    
    
    
    24.5
    
    
    
    21.3Ongoing non-life administration expense ratio
    
    
    6.9
    
    
    
    4.0
    
    
    
    3.8Ongoing non-life combined ratio
    
    
    107.2
    
    
    
    106.1
    
    
    
    91.9
 Standard Property & Casualty Reinsurance
  72




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Year ended December 31,2005
    
    2004
    
    2003(US$ millions, except ratios)Revenues:Gross premiums written
    
    
    803.1
    
    
    
    1,509.1
    
    
    
    1,438.6Net premiums written
    
    
    739.0
    
    
    
    1,377.5
    
    
    
    1,299.9Net premiums earned
    
    
    880.8
    
    
    
    1,392.3
    
    
    
    1,285.2Net investment income and net realized capital gains
    
    
    122.0
    
    
    
    113.9
    
    
    
    80.1Total revenues
    
    
    1,002.8
    
    
    
    1,506.2
    
    
    
    1,365.3Losses and expenses:Losses and loss expenses
    
    
    -729.6
    
    
    
    -1,002.9
    
    
    
    -838.8Acquisition costs
    
    
    -181.3
    
    
    
    -353.3
    
    
    
    -266.4Other operating and administration expenses
    
    
    -45.2
    
    
    
    -58.5
    
    
    
    -50.3Total losses and expenses
    
    
    -956.1
    
    
    
    -1,414.7
    
    
    
    -1,155.5Segment income
    
    
    46.7
    
    
    
    91.5
    
    
    
    209.8Ratios (%):Loss ratio
    
    
    82.8
    
    
    
    72.0
    
    
    
    65.3Acquisition costs ratio
    
    
    20.6
    
    
    
    25.4
    
    
    
    20.7Administration expense ratio
    
    
    6.1
    
    
    
    4.2
    
    
    
    3.9Combined ratio
    
    
    109.5
    
    
    
    101.6
    
    
    
    89.9
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Standard Property & Casualty Reinsurance Segment Income
  
    
    The effect of large natural catastrophes that occurred in 2005. The Standard Property &
Casualty segment experienced a total net impact of US$ 78.4 million in losses from hurricanes
in the United States (Hurricane Katrina: US$ 25.6 million, Hurricane Rita: US$ 11.2 million
and Hurricane Wilma: US$ 41.6 million).In addition, in 2005, the Continental European floods in Switzerland, Germany, Austria and Romania
and Winter Storm Erwin resulted in net pre-tax losses of US$ 24.8 million and US$ 32.5 million,
respectively. The overall pre-tax effect from the natural catastrophes mentioned above was US$
135.7 million. In 2004, pre-tax results within the Standard Property & Casualty segment were
impacted by US$ 55.3 million related to natural catastrophes.
 
    
    Slightly offsetting the aforementioned items was the recognition of a
net favorable impact of prior accident years on the technical result
in the amount of US$ 19.7 million, resulting from net favorable
development of prior accident years loss reserves of US$ 30.7 million,
offset by reductions in premium, related losses and acquisition costs
of net US$ 11.0 million for the year ended December 31, 2005.
 
    
    In 2004, we recorded a net adverse impact of prior accident years on
the technical result in the amount of US$ 53.3 million, resulting from
net adverse development of prior accident years loss reserves of
US$ 11.3 million and reductions in premium, related losses and
acquisition costs of net US$ 42.0 million for the year ended December
31, 2004.
 Standard Property & Casualty Reinsurance Premiums
  
    
    Motor (decreased by 56.9% or US$ 249.0 million to US$ 188.4 million), largely reflecting reduced writings in the France and
United Kingdom books of business due to profitability considerations as well as cancellation of business due to the ratings
downgrades in 2004;
 
    
    Property (decreased by 25.8% or US$ 135.8 million to US$ 390.6 million), primarily due to the rating downgrades in 2004;
 
    
    General Third Party Liability (decreased by 61.3% or US$ 232.5 million to US$ 146.7 million), due to rating downgrades and
revisions of premium estimates on our London Market North America and United Kingdom books of business; and
 73




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
    
    Personal accident (assumed from non-life insurers) (decreased by 61.4% or US$ 21.2 million to US$ 13.3 million), primarily as
a result of the cancellation or non-renewal of business and reduced shares in current business due to the ratings
downgrades in 2004.
 Standard Property & Casualty Reinsurance Net Investment Income and Net Realized Capital Gains
(Losses)
  Standard Property & Casualty Reinsurance Losses and Loss Expenses
       Standard Property & Casualty Reinsurance Acquisition costs
  Standard Property & Casualty Reinsurance Operating and Administration Expenses
  Standard Property & Casualty Reinsurance Combined Ratios
  Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Standard Property & Casualty Reinsurance Segment Income
  74




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##### Table of Contents




    
    Although 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 US$ 19.8 million
in the second half of 2004, net premiums written increased by 6.0%.
    
    Hurricanes in the US and the Caribbean, the Japanese typhoons and the
tsunami in the Indian Ocean negatively impacted results by US$ 95.0
million.
    
    Net adverse development of prior years loss reserves of US$ 11.3 million.
 Standard Property & Casualty Reinsurance Premiums
   
    
    Motor, which increased by 18.6% or US$ 81.3 million to US$ 437.4 million, due to growth in Western Europe; and
    
    General Third Party Liability, which increased by 14.7% or US$ 55.6 million to US$ 379.1 million.
  
    
    Property, which decreased by 11.2% or US$ 58.8 million to US$ 526.4 million, due to additional expenses for catastrophe protection; and
    
    Personal accident (non-life), which decreased by 2.2% or US$ 0.8 million to US$ 34.5 million.
 Standard Property & Casualty Reinsurance Net Investment Income and Net Realized Capital Gains
(Losses)
  Standard Property & Casualty Reinsurance Losses and Loss Expenses
    Standard Property & Casualty Reinsurance Acquisition costs
  Standard Property & Casualty Reinsurance Operating and Administration Expenses
  75




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Standard Property & Casualty Reinsurance Combined Ratios
  Specialty Lines
  Year ended December 31,2005
    
    2004
    
    2003(US$ millions, except ratios)Revenues:Gross premiums written
    
    
    833.1
    
    
    
    1,655.3
    
    
    
    1,325.0Net premiums written
    
    
    737.7
    
    
    
    1,565.3
    
    
    
    1,119.0Net premiums earned
    
    
    1,059.2
    
    
    
    1,387.6
    
    
    
    1,038.1Net investment income and net realized capital gains (losses)
    
    
    142.9
    
    
    
    147.5
    
    
    
    103.8Total revenues
    
    
    1,202.1
    
    
    
    1,535.1
    
    
    
    1,141.9Losses and expenses:Losses and loss expenses
    
    
    -772.5
    
    
    
    -1,154.7
    
    
    
    -713.0Acquisition costs
    
    
    -263.8
    
    
    
    -328.1
    
    
    
    -227.9Other operating and administration expenses
    
    
    -56.3
    
    
    
    -59.6
    
    
    
    -41.4Total losses and expenses
    
    
    -1,092.6
    
    
    
    -1,542.4
    
    
    
    -982.3Segment income (loss)
    
    
    109.5
    
    
    
    -7.3
    
    
    
    159.6Ratios (%):Loss ratio
    
    
    72.9
    
    
    
    83.2
    
    
    
    68.7Acquisition costs ratio
    
    
    24.9
    
    
    
    23.6
    
    
    
    22.0Administration expense ratio
    
    
    7.6
    
    
    
    3.8
    
    
    
    3.7Combined ratio
    
    
    105.4
    
    
    
    110.6
    
    
    
    94.4
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Specialty Lines Segment Income (Loss)
  
    
    The recognition of the net favorable impact of prior accident years
on the technical result in the amount of US$ 23.1 million, resulting
from net favorable development of prior accident years loss reserves
of US$ 55.3 million, offset by reductions in premium, related losses
and acquisition costs of net US$ 32.2 million.
 
    
    In 2004, we recorded a net adverse impact of prior accident years on
the technical results in the amount of US$ 69.7 million, resulting from
net adverse development of prior accident years loss reserves of
US$ 61.5 million, and reductions in premium, related losses and
acquisition costs of net US$ 8.2 million for the year ended December
31, 2004.
 
    
    Slightly offsetting the increase in segment income in 2005 was the net
impact of losses arising from Hurricanes Katrina, Rita and Wilma
within the United States in the amount of US$ 13.5 million.
 Specialty Lines Premiums
  76




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
    
    Aviation & Space (decreased by 40.2% or US$ 162.7 million to US$ 241.8 million);
    
    Credit & Surety (decreased by 71.4% or US$ 145.9 million to US$ 58.4 million);
    
    Professional Liability and other Special Liability (decreased by 35.2% or US$ 153.7 million to US$ 282.8 million);
    
    Engineering (decreased by 41.6% or US$ 46.7 million to US$ 65.5 million);
    
    Marine & Energy (decreased by 22.4% or US$ 18.5 million to US$ 64.0 million); and
    
    Workers Compensation (decreased by 103.7% or US$ 325.4 million to US$ (11.5) million); which in addition to the reduction
caused by the ratings downgrades was further impacted by a reduction in premium estimates.
  Specialty Lines Net Investment Income and Net Realized Capital Gains (Losses)
  Specialty Lines Losses and Loss Expenses
    Specialty Lines Acquisition costs
  Specialty Lines Operating and Administration Expenses
  Specialty Lines Combined Ratios
  77




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Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Specialty Lines Segment (Loss) Income
  
    
    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 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 due to the implementation of enhanced procedures for
establishing written premium estimates throughout 2004.
    
    The adverse impact of prior accident years on the technical result was
US$ 69.7 million, resulting from net adverse development of prior
accident years loss reserves of US$ 61.5 million, and reductions in
premium, related losses and acquisition costs of net US$ 8.2 million
for the year ended December 31, 2004. In 2003, the Specialty Lines
segment recorded US$ 101.0 million of net favorable development.
 Specialty Lines Premiums
   
    
    Workers Compensation, which increased by 774.3% or US$ 278.0 million to US$ 313.9 million, due to business which was novated
from North America to Zurich at the end of 2004;
    
    Professional Liability and other Special Liability, which increased by 44.6% or US$ 134.7 million to US$ 436.6 million due to
increased shares, novated contracts and third party business written out of Bermuda;
    
    Aviation & Space, which increased by 14.0% or US$ 49.9 million to US$ 404.5 million due to increased shares for the GAUM business;
    
    Credit & Surety, which increased by 4.4% or US$ 8.7 million to US$ 204.3 million; and
    
    Agribusiness, which increased by 45.4% or US$ 3.6 million to US$ 11.4 million.
  Specialty Lines Net Investment Income and Net Realized Capital Gains (Losses)
  Specialty Lines Losses and Loss Expenses
   78




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Specialty Lines Acquisition costs
  Specialty Lines Operating and Administration Expenses
  Specialty Lines Combined Ratios
  Life & Health Reinsurance
  Year ended December 31,2005
    
    2004
    
    2003(US$ millions, except ratios)Revenues:Gross premiums written
    
    
    318.8
    
    
    
    327.9
    
    
    
    280.7Net premiums written
    
    
    306.4
    
    
    
    313.2
    
    
    
    254.5Net premiums earned
    
    
    314.8
    
    
    
    318.7
    
    
    
    260.8Net investment income and net realized capital gains (losses)
    
    
    29.2
    
    
    
    20.9
    
    
    
    14.7Total revenues
    
    
    344.0
    
    
    
    339.6
    
    
    
    275.5Losses and expenses:Losses, loss expenses and life benefits
    
    
    -218.0
    
    
    
    -237.3
    
    
    
    -280.0Acquisition costs
    
    
    -92.3
    
    
    
    -72.5
    
    
    
    -52.4Other operating and administration expenses
    
    
    -16.1
    
    
    
    -13.1
    
    
    
    -12.2Total benefits, losses and expenses
    
    
    -326.4
    
    
    
    -322.9
    
    
    
    -344.6Segment income (loss)
    
    
    17.6
    
    
    
    16.7
    
    
    
    -69.1Ratios (%):Acquisition costs ratio
    
    
    29.3
    
    
    
    22.7
    
    
    
    20.1Administration expense ratio
    
    
    5.3
    
    
    
    4.2
    
    
    
    4.8
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Life & Health Reinsurance Segment Income
    79




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Life & Health Reinsurance Premiums
  Life & Health Reinsurance Net Investment Income and Net Realized Capital Gains (Losses)
  Life & Health Reinsurance Losses, Loss Expenses and Life Benefits
  Life & Health Reinsurance Acquisition costs
  Life & Health Reinsurance Operating and Administration Expenses
  Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Life & Health Reinsurance Segment Income (Loss)
  
    
    Growth in premium volume driven by the expansion of existing
reinsurance transactions in Continental Europe and increased shares of
current 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 US$ 36.9 million. The
provisions for this termination led to a realization of a profit of
US$ 3.4 million in 2004.
    
    The development of our GMDB book during 2004 as compared to 2003. In
2003 net reserves were strengthened by US$ 55.5 million, while no
actions were required in 2004.
 80




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##### Table of Contents



Life & Health Reinsurance Premiums
   
    
    Life, which increased by 26.7% or US$ 46.6 million to US$ 221.0 million. This growth was mainly based on the expansion of
existing financing reinsurance transactions in Continental Europe and increased shares of current business;
    
    Personal Accident, which increased by 35.3% or US$ 11.7 million; and
    
    Disability, showing an increase of 9.4% or US$ 2.3 million.
  Life & Health Reinsurance Net Investment Income and Net Realized Capital Gains (Losses)
  Life & Health Reinsurance Losses, Loss Expenses and Life Benefits
   Life & Health Reinsurance Acquisition costs
  Life & Health Reinsurance Operating and Administration Expenses
 81




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##### Table of Contents



Run-Off
  Year ended December 31,2005
    
    2004
    
    2003(US$ millions)Revenues:Gross premiums written
    
    
    39.3
    
    
    
    486.4
    
    
    
    1,256.1Net premiums written
    
    
    32.6
    
    
    
    470.1
    
    
    
    1,249.3Net premiums earned
    
    
    128.4
    
    
    
    783.6
    
    
    
    1,183.7Net investment income and net realized capital gains
    
    
    56.3
    
    
    
    76.9
    
    
    
    54.2Total revenues
    
    
    184.7
    
    
    
    860.5
    
    
    
    1,237.9Losses and expenses:Losses, loss expenses and life benefits
    
    
    -55.8
    
    
    
    -947.6
    
    
    
    -928.3Acquisition costs
    
    
    -38.2
    
    
    
    -158.5
    
    
    
    -285.3Other operating and administration expenses
    
    
    -43.1
    
    
    
    -50.4
    
    
    
    -64.3Total benefits, losses and expenses
    
    
    -137.1
    
    
    
    -1,156.5
    
    
    
    -1,277.9Segment income (loss)
    
    
    47.6
    
    
    
    -296.0
    
    
    
    -40.0
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
    Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
   Corporate Center
  82




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##### Table of Contents



Year ended December 31,2005
    
    2004
    
    2003(US$ millions)Other operating and administration expenses
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3Segment loss
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Corporate Center Operating and Administration Expenses
  Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Corporate Center Operating and Administration Expenses
  B. LIQUIDITY AND CAPITAL RESOURCES
   Liquidity requirements
     Liquidity sources
  83




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##### Table of Contents



Asset/Liability Management
  Dividends from Subsidiaries
  Debt Outstanding
    Capital Requirements
  84




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##### Table of Contents



Year ended December 31,2005
    
    2004
    
    2003(US$ millions)Cash flow data:Cash (used in) provided by operating activities
    
    
    -399.9
    
    
    
    358.7
    
    
    
    917.2Net cash provided by (used in) investing activities
    
    
    363.8
    
    
    
    -315.4
    
    
    
    -1,314.2Net cash (used in) provided by financing activities
    
    
    -36.8
    
    
    
    347.8
    
    
    
    252.9Effect of exchange rate changes on cash and cash equivalents
    
    
    39.3
    
    
    
    9.0
    
    
    
    23.7Change in cash and cash equivalents
    
    
    -33.6
    
    
    
    400.1
    
    
    
    -120.4Cash and cash equivalents, beginning of period
    
    
    680.9
    
    
    
    280.8
    
    
    
    401.2Cash and cash equivalents, end of period
    
    
    647.3
    
    
    
    680.9
    
    
    
    280.8
      New Accounting Standards
  SFAS 123 (revised 2004), Share-Based Payment
  FASB Interpretation No (FIN) 47, Accounting for Conditional Asset Retirement Obligations
  85




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##### Table of Contents



FASB Staff Position (FSP) FIN 46(R)-5, Implicit Variable Interests Under FASB Interpretation
No. 46(R)
  SFAS 154, Accounting Changes and Error Corrections
  EITF Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a
Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain
Rights
  FASB Staff Position (FSP) APB 18-1,Accounting by an Investor for Its Proportionate Share of
Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method In
Accordance With APB Opinion No. 18 upon a Loss of Significant Influence
  FASB Staff Position (FSP) FAS 123(R)-1, Classification and Measurement of Freestanding
Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement No.
123(R)
  FASB Staff Position (FSP) FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments
  86




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##### Table of Contents



FASB Staff Position (FSP) FAS 123R-3, Transition Election Related to Accounting for the Tax
Effects of Share-Based Payment Awards
  C. RESEARCH AND DEVELOPMENT, PATENTS, LICENSES
  D. TREND INFORMATION
  E. OFF-BALANCE SHEET ARRANGEMENTS
  F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
 Contractual Obligations
    
    Payment due by periodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than(US$ thousands)
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-Term Debt Obligations  Principal
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000Long-Term Debt Obligations  Interest
    
    
    702,000
    
    
    
    30,750
    
    
    
    61,500
    
    
    
    61,500
    
    
    
    548,250Operating Lease Obligations
    
    
    64,500
    
    
    
    11,000
    
    
    
    21,200
    
    
    
    17,800
    
    
    
    14,500Losses and loss expenses, gross (1)
    
    
    7,568,900
    
    
    
    1,816,500
    
    
    
    2,308,500
    
    
    
    1,362,400
    
    
    
    2,081,500Total
    
    
    8,735,400
    
    
    
    1,858,250
    
    
    
    2,391,200
    
    
    
    1,441,700
    
    
    
    3,044,250
 
 (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, 2005 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.  
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A. DIRECTORS AND SENIOR MANAGEMENT
 Board of Directors
  87




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##### Table of Contents



Name
    
    Date of Birth
    
    Nationality
    
    Term Expires inPeter C. Colombo (Chairman)(1)(2)(4)(6)
    
    June 15, 1934
    
    Swiss
    
    2007Georg Mehl (Vice-Chairman)(2)(3)(4)(6)
    
    August 11, 1939
    
    German
    
    2006Terry G. Clarke (5)(6)
    
    October 31, 1941
    
    British
    
    2007Markus Dennler (1)(3)(4)
    
    January 24, 1956
    
    Swiss
    
    2008Derrell J. Hendrix
    
    August 9, 1953
    
    American
    
    2007Rudolf Kellenberger (1)(2)(3)
    
    April 30, 1945
    
    Swiss
    
    2008George G. C. Parker (3)(4)(6)
    
    March 29, 1939
    
    American
    
    2006Anton K. Schnyder (1)(2)(6)
    
    November 29, 1952
    
    Swiss
    
    2006The following new Directors were elected at the Annual General Meeting on April 11, 2006:Lennart Blecher
    
    August 30, 1955
    
    Swedish
    
    2009Detlev Bremkamp
    
    March 2, 1944
    
    German
    
    2009Harald Wiedmann
    
    February 15, 1945
    
    German
    
    2009
 
 (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)
    
    Stepped down from the Board of Directors at the Annual General Meeting on April 11, 2006. Curricula Vitae of the Board members
 Peter C. Colombo
 88




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##### Table of Contents



Georg Mehl
 Terry G. Clarke
 Markus Dennler
 Derrell J. Hendrix
 Rudolf Kellenberger
 George G. C. Parker
 Anton K. Schnyder
  Lennart Blecher
 89




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##### Table of Contents



Detlev Bremkamp
 Harald Wiedmann
  Global Executive Committee
   Name
    
    Date of Birth
    
    Nationality
    
    Position HeldInga K. Beale (1)
    
    May 15, 1963
    
    British
    
    Chief Executive OfficerHans Peter Boller (5)
    
    October 25, 1962
    
    German
    
    Chief Risk OfficerTerry G. Clarke (2)
    
    October 31, 1941
    
    British
    
    Chief Executive OfficerChristian Felderer
    
    January 5, 1954
    
    Swiss
    
    General Legal CounselBenjamin Gentsch
    
    April 21, 1960
    
    Swiss
    
    Executive Vice President for Specialty LinesChristoph Ludemann
    
    January 12, 1956
    
    German
    
    Executive Vice President for Life & Health ReinsuranceFrank Schaar
    
    April 16, 1960
    
    German
    
    Executive Vice President for Standard Property & Casualty ReinsuranceAndreas Zdrenyk (3)
    
    June 5, 1959
    
    Swiss
    
    Interim Chief Financial OfficerPaolo De Martin (4)
    
    October 25, 1969
    
    Italian
    
    Chief Financial OfficerMarkus Krall (6)
    
    October 10, 1962
    
    German
    
    Chief Risk Officer
 
 (1)
    
    Appointed as Chief Executive Officer of the Company on December 14, 2005. Ms. Beale took up her new role on February
1, 2006, replacing Terry G. Clarke.(2)
    
    On February 24, 2005, the Board of Directors appointed Terry G. Clarke as Chief Executive Officer and replaced Dirk
Lohmann with immediate effect.(3)
    
    Appointed interim Chief Financial Officer of the Company as of February 28, 2005. As of July 1, 2006 Mr. Zdrenyk will
assume the position of Chief Operating Officer and is a member of the GEC.(4)
    
    Appointed as Chief Financial Officer of the Company on May 17, 2006. Mr. De Martin will assume the position as of
July 1, 2006.(5)
    
    Mr. Boller will leave the Company as of June 30, 2006. His position will be replaced by Mr. Krall. 90




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##### Table of Contents



(6)
    
    Appointed as Chief Risk Officer of the Company on May 23, 2006. Mr. Krall will assume the position as of July 1, 2006. Inga K.
Beale
 Hans Peter Boller
 Christian Felderer
 Benjamin Gentsch
 Christoph Ludemann
 Frank Schaar
 Andreas Zdrenyk
 Paolo De Martin
 91




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##### Table of Contents



Markus Krall
   B. COMPENSATION
 Compensation of Directors
  Board remuneration
  
 
 
   
    
    US$ 4,019 for any additional meeting with physical presence by the member
    
    US$ 2,009 for a meeting with attendance by phone or video conference by a member
    92




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##### Table of Contents



Shares
    
    
    Shares held at
    
    
    Options
    
    
    Options heldCash
    
    
    allocated in
    
    
    December 31,
    
    
    allocated in
    
    
    at Decembercompensation
    
    
    2005
    
    
    2005 (1)
    
    
    2005 (2)
    
    
    31, 2005 (3)Board MemberPeter C. Colombo
    
    
    130,216
    
    
    
    1,128
    
    
    
    4,623
    
    
    
    4,889
    
    
    
    11,264Georg Mehl
    
    
    110,121
    
    
    
    940
    
    
    
    3,098
    
    
    
    4,074
    
    
    
    9,246Terry G. Clarke
    
    
    1,475,123
    (5)
    
    
    752
    
    
    
    7,315
    
    
    
    3,259
    
    
    
    7,252Markus Dennler
    
    
    45,013
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Derrell J. Hendrix
    
    
    80,380
    
    
    
    752
    
    
    
    1,179
    
    
    
    3,259
    
    
    
    7,508Rudolf Kellenberger
    
    
    43,003
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0George G.C. Parker
    
    
    87,614
    
    
    
    752
    
    
    
    1,979
    (4)
    
    
    3,259
    
    
    
    7,508Anton K. Schnyder
    
    
    83,595
    
    
    
    752
    
    
    
    1,179
    
    
    
    3,259
    
    
    
    7,508
 
 (1)
    
    Includes shares personally bought.(2)
    
    Options vest immediately, have a term of 10.5 years and an exercise price equal to fair market value at the beginning of the
period for which they were granted.(3)
    
    An adjustment to the exercise price of all options outstanding prior to the 2004 rights offering was completed in 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 fair value of the option before and after the 2004 rights offering. Upon
termination of their mandate, the Directors have to exercise any options within 24 months otherwise they are forfeited.(4)
    
    1,679 shares and 600 ADSs.(5)
    
    Includes compensation for services rendered as member of the
Board of Directors, Managing Director and Chief Executive Officer.   Compensation of Senior Management
 Global Executive Committee remuneration
       93




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##### Table of Contents



Employee Incentive and Benefit Plans
   Share Plan
       Grants to Global Executive Committee
  Options vested ofShares held at
    
    
    
    
    
    Options held at
    
    options held atGlobal Executive
    
    Shares granted
    
    December 31,
    
    Options granted
    
    December 31,
    
    December 31,Committee member
    
    in 2005 (1)
    
    2005 (2)
    
    in 2005 (3)
    
    2005
    
    2005Terry G. Clarke
    
    
    752
    
    
    
    7,315
    
    
    
    3,259
    
    
    
    7,252
    
    
    
    7,252Dirk Lohmann (4)
    
    
    1,849
    
    
    
    102,168
    
    
    
    
    
    
    
    432,755
    
    
    
    432,755Hans Peter Boller
    
    
    18,319
    
    
    
    20,500
    
    
    
    53,640
    
    
    
    132,801
    
    
    
    68,928Christian Felderer
    
    
    16,283
    
    
    
    9,003
    
    
    
    47,681
    
    
    
    93,009
    
    
    
    38,802Benjamin Gentsch
    
    
    24,849
    
    
    
    48,887
    
    
    
    67,349
    
    
    
    167,021
    
    
    
    85,841Christoph Ludemann
    
    
    17,377
    
    
    
    5,935
    
    
    
    50,885
    
    
    
    97,866
    
    
    
    37,470Frank Schaar
    
    
    23,064
    
    
    
    14,630
    
    
    
    67,538
    
    
    
    197,536
    
    
    
    116,296Andreas Zdrenyk
    
    
    13,046
    
    
    
    6,788
    
    
    
    37,639
    
    
    
    68,335
    
    
    
    28,692Martin Kauer (5)
    
    
    12,931
    
    
    
    
    
    
    
    35,461
    
    
    
    92,046
    
    
    
    92,046
 94




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##### Table of Contents



(1)
    
    Shares granted in 2005 include shares awarded under the AIP and LTIP, which are subjected to various vesting schedules, and shares
purchased through the employee stock purchase plan.(2)
    
    Includes only vested shares (includes shares held by closely related parties).(3)
    
    Options have an exercise price equal to the market value of the shares or ADSs on date of grant, vest 25% immediately on the
grant date and 25% each year thereafter, and have a 10.5-year term.(4)
    
    Resigned on February 24, 2005.(5)
    
    Resigned on February 28, 2005.  Annual Incentive Plan
   Employee Stock Purchase Plan
  Employee retention plan
  Long Term Incentive Plan (LTIP)
   Executive IPO Option Plan
  95




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##### Table of Contents



C. BOARD PRACTICES
 Board Committees
  The Nomination Committee
  The Remuneration Committee
  The Finance Committee
  The Audit Committee
   96




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##### Table of Contents




    
    To evaluate the reliability and controls of the financial and risk reporting systems and processes as well as 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.
    
    To coordinate and manage, on behalf of the Audit Committee, the relationships with the public
accounting firms working for Converium.
 www.converium.com
  Managing Director
  Indemnification of Officers and Directors
   New Committee Structure
 (www.converium.com)
 D. EMPLOYEES
    As of December 31,2005
    
    2004
    
    2003Number of employees
    
    
    594
    
    
    
    771
    
    
    
    847Breakdown by geographic location:Switzerland
    
    
    294
    
    
    
    369
    
    
    
    332United States
    
    
    89
    
    
    
    138
    
    
    
    231Germany
    
    
    143
    
    
    
    169
    
    
    
    160Asia-Pacific region
    
    
    28
    
    
    
    33
    
    
    
    31Other regions
    
    
    40
    
    
    
    62
    
    
    
    59Breakdown by main category of activity:Underwriting
    
    
    195
    
    
    
    257
    
    
    
    290Finance
    
    
    153
    
    
    
    212
    
    
    
    200Actuarial
    
    
    50
    
    
    
    67
    
    
    
    77Other
    
    
    196
    
    
    
    235
    
    
    
    246
 97




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##### Table of Contents



E. SHARE OWNERSHIP
  
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 A. MAJOR SHAREHOLDERS
    
    
    Dodge & Cox, San Francisco, California, United States: 5.04% (date of notification June 16, 2005). Dodge & Cox provides investment management to institutions and individuals through separately managed portfolios and mutual funds.
    
    Patinex AG, Wilen, Switzerland: 12.49% (date of notification December 19, 2005), 5.06% in the form of 7,425,000 registered shares and 7.43% in the form of purchase rights with entitlement to purchase 10,900,000 registered shares.
    
    Zurich Cantonal Bank, Zurich, Switzerland: 6.92% (date of
notification June 28, 2006).
  B. RELATED PARTY TRANSACTIONS
  GAUM
     98




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##### Table of Contents



MDU
     SATEC
 usufruct usufruct usufruct usufruct
 usufruct
 RISC Ventures
 99




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##### Table of Contents



C. INTERESTS OF EXPERTS AND COUNSEL
  
 ITEM 8. FINANCIAL INFORMATION
 A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
 Financial Statements
  Legal Proceedings, Claims and Litigation
  Canada Life
    Review of Certain of our Reinsurance Transactions
   100




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##### Table of Contents



Class action lawsuits
      Investigation by the Swiss Federal Banking Commission
 101




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##### Table of Contents



Dividends and Dividend Policy
      B. SIGNIFICANT CHANGES
  
 ITEM 9. THE OFFER AND LISTING
 A. OFFER AND LISTING DETAILS
 Market Price Information
 Trading on the SWX Swiss Exchange
  High
    
    LowCHF
    
    CHFCalendar Year 2001 (from December 11, 2001)
    
    
    82.10
    
    
    
    79.00Calendar Year 2002
    
    
    89.75
    
    
    
    54.85Calendar Year 2003
    
    
    74.50
    
    
    
    49.60Calendar Year 2004 (1):
    
    
    73.75
    
    
    
    7.42First Quarter
    
    
    73.75
    
    
    
    60.25Second Quarter
    
    
    68.95
    
    
    
    60.50Third Quarter
    
    
    65.05
    
    
    
    16.25Fourth Quarter (1)
    
    
    17.05
    
    
    
    7.42Calendar Year 2005:
    
    
    14.60
    
    
    
    9.00First Quarter
    
    
    12.20
    
    
    
    10.05
 102




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##### Table of Contents



High
    
    LowCHF
    
    CHFSecond Quarter
    
    
    12.50
    
    
    
    9.00Third Quarter
    
    
    13.40
    
    
    
    9.90Fourth Quarter
    
    
    14.60
    
    
    
    12.05Calendar Year 2006 (through May 31, 2006):
    
    
    16.55
    
    
    
    13.40First Quarter 2006
    
    
    16.55
    
    
    
    13.40Last 6 Months:December 2005
    
    
    14.60
    
    
    
    12.60January 2006
    
    
    15.20
    
    
    
    13.40February 2006
    
    
    14.60
    
    
    
    13.55March 2006
    
    
    16.55
    
    
    
    13.95April 2006
    
    
    16.40
    
    
    
    15.50May 2006
    
    
    16.30
    
    
    
    13.75
 
 (1)
    
    Includes the effect of the 2004 rights offering. Trading on the New York Stock Exchange
  High
    
    LowUS$
    
    US$Calendar Year 2001 (from December 11, 2001)
    
    
    27.40
    
    
    
    23.02Calendar Year 2002
    
    
    28.52
    
    
    
    18.30Calendar Year 2003
    
    
    26.63
    
    
    
    19.15Calendar Year 2004:
    
    
    29.57
    
    
    
    3.15First Quarter
    
    
    29.57
    
    
    
    23.55Second Quarter
    
    
    26.80
    
    
    
    23.70Third Quarter
    
    
    26.04
    
    
    
    6.76Fourth Quarter
    
    
    6.85
    
    
    
    3.15Calendar Year 2005:
    
    
    5.54
    
    
    
    3.59First Quarter
    
    
    5.18
    
    
    
    4.44Second Quarter
    
    
    5.20
    
    
    
    3.59Third Quarter
    
    
    5.09
    
    
    
    3.96Fourth Quarter
    
    
    5.54
    
    
    
    4.58Calendar Year 2006 (through May 31, 2006):
    
    
    6.77
    
    
    
    5.23First Quarter 2006
    
    
    6.45
    
    
    
    5.23Last 6 Months:December 2005
    
    
    5.54
    
    
    
    4.81January 2006
    
    
    5.99
    
    
    
    5.38February 2006
    
    
    5.67
    
    
    
    5.23March 2006
    
    
    6.45
    
    
    
    5.31April 2006
    
    
    6.45
    
    
    
    6.04May 2006
    
    
    6.77
    
    
    
    5.65
 B. PLAN OF DISTRIBUTION
  C. MARKETS
   103




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D. SELLING SHAREHOLDERS
  E. DILUTION
  F. EXPENSES OF THE ISSUE
  
 ITEM 10. ADDITIONAL INFORMATION
 A. SHARE CAPITAL
  B. MEMORANDUM AND ARTICLES OF INCORPORATION
  Issued Share Capital
  Authorized Share Capital
    Conditional Share Capital
    104




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##### Table of Contents



Information Policy
  Statutory Quorums
   
    
    an alteration of the purpose of Converium
    
    the creation of super-voting shares
    
    restrictions on the transfer of registered shares and the removal of such
restrictions as well as restrictions to vote and the removal of such restrictions
    
    an authorized or contingent increase of share capital
    
    an increase of share capital by conversion of capital surplus, by contribution in
kind or for the purpose of an acquisition of assets and the grant of special
rights
    
    a restriction or exclusion of the subscription right or advance subscription right
    
    a change of Converiums registered office
    
    the dissolution of Converium without liquidation
 Convocation of the General Meeting of the Shareholders
   Registration in the Share Register
   Shareholder Votes on Equity-Based Compensation plans
  C. MATERIAL CONTRACTS
 The Master Agreement
 105




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##### Table of Contents




    
    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.
    
    
    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.
  September 11th Coverage
  Acquisition of the Converium AG Business
   Quota Share Retrocession Agreement
   106




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##### Table of Contents



Acquisition of the Converium Reinsurance (North America) Inc. Business
  Assumption of US$ 200 Million Public Notes
  CENY Arrangements
   107




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##### Table of Contents



Supplementary Agreements and Arrangements
    Acquisition of the Converium Rückversicherung (Deutschland) AG Business
   GRI Retained Business
   Other Indemnity Matters
   
    
    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 avoid, resist
or defend against liabilities assumed by or indemnified against by us.
 108




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##### Table of Contents




    
    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.
      Tax Sharing Agreements
  
    
    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.
    Swiss Tax Consequences to Converium of the Formation Transactions
   109




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##### Table of Contents



Continuing Relationships with Zurich Financial Services
  Continuing Aggregate Excess of Loss Agreements
 1993 Aggregate excess of loss agreement
  1997 Aggregate excess of loss agreement
  
    
    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;
    
    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.
  Other Agreements and Arrangements
  Lease Arrangements
    110




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##### Table of Contents



D. EXCHANGE CONTROLS AND OTHER LIMITATIONS
   E. TAXATION
  Swiss Taxation
   Withholding Tax on Dividends and Distributions
  Obtaining a Refund of Swiss Withholding Tax for US Residents
  111




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##### Table of Contents



Income Tax on Dividends
   Capital Gains Tax upon Disposal of Shares
    Stamp Duties upon Transfer of Shares
  United States Federal Income Taxation
    112




---



##### Table of Contents



Taxation of Dividends
      Sale or Exchange
   PFIC Rules
   113




---



##### Table of Contents



Backup Withholding
  F. DIVIDENDS AND PAYING AGENTS
  G. STATEMENT BY EXPERTS
  H. DOCUMENTS ON DISPLAY
  
    I. SUBSIDIARY INFORMATION
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    114




---



##### Table of Contents



Sensitivity Analyses for Invested Assets
   Interest rate risk
     Foreign exchange risk
    115




---



##### Table of Contents



Adverse exchange rate movement against
    
    
    Approximate declinethe US dollar
    
    
    in shareholdersequityEuro
    
    
    10
    %
    
    US$
    50.9 millionSwiss franc
    
    
    10
    %
    
    US$
    22.4 millionUK pound
    
    
    10
    %
    
    US$
    14.5 million
    US
    
    
    
    
    
    
    U.K
    
    
    Swiss
    
    
    JapaneseDollar
    
    
    Euro
    
    
    Pound
    
    
    franc
    
    
    yen
    
    
    Other
    
    
    TotalIncome statementNet premiums written
    
    
    22
    %
    
    
    36
    %
    
    
    22
    %
    
    
    2
    %
    
    
    4
    %
    
    
    14
    %
    
    
    100
    %Net investment income
    
    
    51
    %
    
    
    15
    %
    
    
    29
    %
    
    
    1
    %
    
    
    
    
    
    
    4
    %
    
    
    100
    %Losses, loss expenses and life benefits
    
    
    41
    %
    
    
    27
    %
    
    
    23
    %
    
    
    1
    %
    
    
    1
    %
    
    
    7
    %
    
    
    100
    %Acquisition costs
    
    
    33
    %
    
    
    37
    %
    
    
    14
    %
    
    
    1
    %
    
    
    3
    %
    
    
    12
    %
    
    
    100
    %Other operating and administration expenses
    
    
    36
    %
    
    
    13
    %
    
    
    3
    %
    
    
    46
    %
    
    
    
    
    
    
    2
    %
    
    
    100
    %Interest expense
    
    
    98
    %
    
    
    2
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    %Balance sheetTotal invested assets
    
    
    55
    %
    
    
    18
    %
    
    
    20
    %
    
    
    4
    %
    
    
    
    
    
    
    3
    %
    
    
    100
    %Reinsurance assets
    
    
    74
    %
    
    
    6
    %
    
    
    19
    %
    
    
    
    
    
    
    
    
    
    
    1
    %
    
    
    100
    %Losses and loss expenses, gross
    
    
    53
    %
    
    
    19
    %
    
    
    23
    %
    
    
    1
    %
    
    
    
    
    
    
    4
    %
    
    
    100
    %Unearned premiums, gross
    
    
    39
    %
    
    
    14
    %
    
    
    36
    %
    
    
    1
    %
    
    
    
    
    
    
    10
    %
    
    
    100
    %Future life benefits, gross
    
    
    41
    %
    
    
    58
    %
    
    
    1
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    %Debt
    
    
    100
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    %
 Equity market risk
     
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  116




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##### Table of Contents



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
    Material Weaknesses  Identified Weaknesses
    First Material Weakness  Remediated
  Other Material Weaknesses  Remediation in progress
   117




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##### Table of Contents



Other enhancements of internal controls
  Whistleblower Procedure
  
 ITEM 16. [RESERVED]
 
 Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 Item 16B. CODE OF ETHICS
    
 Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Duration of the Mandate and Terms of Office of the Independent Auditors
  Policy on Pre-Approval and Non-Audit Services of Independent Auditors
  118




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##### Table of Contents



Independent Auditor Fees
  (US$ thousands)
    
    2005
    
    
    Approved (1)
    
    
    2004Audit Fees
    
    
    11,130
    
    
    
    100
    %
    
    
    4,741Audit-Related Fees
    
    
    666
    
    
    
    100
    %
    
    
    1,060Tax Fees
    
    
    96
    
    
    
    100
    %
    
    
    189All Other Fees
    
    
    105
    
    
    
    100
    %
    
    
    145Total fees
    
    
    11,997
    
    
    
    100
    %
    
    
    6,135
 
 (1)
    
    Represents percentage of fees approved by the Audit Committee. Audit Fees
 Audit-Related Fees
 Tax Fees
 All Other Fees
 
 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
 119




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##### Table of Contents



ITEM 19. EXHIBITS
 Exhibit Number
    
    Description1.1
    
    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 April 11, 2006.1.4
    
    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 US$ 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, amending the Indenture
dated as of October 20, 1993.* (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 US$ 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 US$
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 US$
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 Holdings, Inc. and Converium
Holdings (North America) Inc., dated as of October 1, 2001.*4.3
    
    Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln)
Aktiengesellschaft, dated September 28, 2001.*4.4
    
    Quota Share Retrocession Agreement between Zurich Insurance Company (including
its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1,
2001.*4.5
    
    Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd.
and Converium AG, dated October 1, (and effective as of July 1, 2001).*4.6
    
    Asset purchase and Assumption of Liability Agreement between Zurich Insurance
Company and Converium AG, dated September 28, 2001.*4.7
    
    Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc.
and Zurich Insurance Company, dated as of October 1, 2001.*4.8
    
    Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North
America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*4.9
    
    Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung
(Köln) 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.*
 120




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##### Table of Contents



Exhibit Number
    
    Description4.15
    
    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. *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 US$ 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
US$ 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. \
 121




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##### Table of Contents



Exhibit Number
    
    Description4.42
    
    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. \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. \4.46
    
    Amendment No. 1 to the Quota Share Retrocession Agreement between Zurich
Insurance Company (Including its Bermuda Branch) and Converium AG, dated as of
October 1, 2001 and effective as of July 1, 2001.7.1
    
    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.13.0
    
    906 Certification of Chief Executive Officer and Chief Financial Officer.
 
 *
    
    Incorporated by reference to the Companys Registration Statement filed on Form F-1, on December 10, 2001.+
    
    Incorporated by reference to the Companys Registration Statement filed on Form F-1, on December 18, 2002.^
    
    Incorporated by reference to the Companys Annual Report on Form 20-F for the year ended December 31, 2002, filed on April 18,
2003.#
    
    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.\
    
    Incorporated by reference to the Companys Annual Report on Form 20-F for the year ended December 31, 2004, filed on June 30, 2005. 122




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##### Table of Contents



CONVERIUM
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
 PageReport of the independent Group Auditors on the Financial Statements
    
    
    F-2Consolidated Statements of Income (loss) for the years ended December 31, 2005, 2004 and 2003
    
    
    F-3Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    F-5Consolidated Statements of Changes in Equity for the years ended December 31, 2005, 2004 and 2003
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-7SchedulesReport of the Group Auditors on the Financial Statement Schedules
    
    
    S-1I Summary of Investments Other than Investments in Related Parties as of December 31, 2005 and 2004
    
    
    S-2II Condensed Financial Information of the RegistrantStatements of Income for the years ended December 31, 2005, 2004 and 2003
    
    
    S-3Balance Sheets as of December 31, 2005 and 2004
    
    
    S-4Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
    
    
    S-5IV Reinsurance for the years ended December 31, 2005, 2004 and 2003
    
    
    S-6




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##### Table of Contents



To the Board of Directors of Converium Holding AG, Zug
       A. Hill
    
    M. Frei
 
 F-2




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##### Table of Contents



(US$ million, except per share information)
    
    Notes
    
    
    2005
    
    
    2004
    
    
    2003Year ended December 31
    
    
    
    
    
    
    
    Restated
    
    
    RestatedRevenuesGross premiums written
    
    
    
    
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4Less ceded premiums written
    
    
    
    
    
    
    -178.6
    
    
    
    -252.6
    
    
    
    -377.7Net premiums written
    
    
    12
    
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7Net change in unearned premiums
    
    
    
    
    
    
    567.5
    
    
    
    156.1
    
    
    
    -154.9Net premiums earned
    
    
    12
    
    
    
    2,383.2
    
    
    
    3,882.2
    
    
    
    3,767.8Net investment income
    
    
    8
    
    
    
    324.9
    
    
    
    312.7
    
    
    
    234.4Net realized capital gains (losses)
    
    
    8
    
    
    
    25.5
    
    
    
    46.5
    
    
    
    18.4Other (loss) income
    
    
    
    
    
    
    -13.4
    
    
    
    -8.2
    
    
    
    17.5Total revenues
    
    
    
    
    
    
    2,720.2
    
    
    
    4,233.2
    
    
    
    4,038.1Benefits, losses and expensesLosses, loss expenses and life benefits
    
    
    10,12
    
    
    
    -1,775.9
    
    
    
    -3,342.5
    
    
    
    -2,760.1Acquisition costs
    
    
    12
    
    
    
    -575.6
    
    
    
    -912.4
    
    
    
    -832.0Other operating and administration expenses
    
    
    
    
    
    
    -210.8
    
    
    
    -219.8
    
    
    
    -202.5Interest expense
    
    
    13
    
    
    
    -31.6
    
    
    
    -33.1
    
    
    
    -31.0Impairment of goodwill
    
    
    9
    
    
    
    
    
    
    
    -94.0
    
    
    
    Amortization of other intangible assets
    
    
    9
    
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8Restructuring costs
    
    
    5
    
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    Total benefits, losses and expenses
    
    
    
    
    
    
    -2,635.9
    
    
    
    -4,614.4
    
    
    
    -3,827.4Income (loss) before taxes
    
    
    
    
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7Income tax expense
    
    
    14
    
    
    
    -15.6
    
    
    
    -201.3
    
    
    
    -32.8Net income (loss)
    
    
    
    
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9Basic earnings (loss) per share
    
    
    25
    
    
    
    0.47
    
    
    
    -9.19
    
    
    
    2.24Diluted earnings (loss) per share
    
    
    25
    
    
    
    0.46
    
    
    
    -9.19
    
    
    
    2.23
  F-3




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##### Table of Contents



(US$ million, except share information)
    
    Notes
    
    
    2005
    
    
    2004Year ended December 31
    
    
    
    
    
    
    
    RestatedAssetsInvested assetsHeld-to-maturity securities:Fixed maturities
    
    
    8
    
    
    
    793.6
    
    
    
    850.4Available-for-sale securities:Fixed maturities
    
    
    8
    
    
    
    4,169.8
    
    
    
    4,834.8Equity securities
    
    
    8
    
    
    
    362.6
    
    
    
    399.4Other investments
    
    
    
    
    
    
    253.1
    
    
    
    279.2Short-term investments
    
    
    
    
    
    
    35.1
    
    
    
    117.3Total investments
    
    
    
    
    
    
    5,614.2
    
    
    
    6,481.1Funds Withheld Asset
    
    
    8
    
    
    
    1,020.1
    
    
    
    1,305.1Total invested assets
    
    
    
    
    
    
    6,634.3
    
    
    
    7,786.2Other assetsCash and cash equivalents
    
    
    
    
    
    
    647.3
    
    
    
    680.9Premiums receivable
    
    
    
    
    
    
    1,059.3
    
    
    
    1,832.2Reserves for unearned premiums, retro
    
    
    
    
    
    
    37.8
    
    
    
    55.2Reinsurance assets:Underwriting reserves
    
    
    12
    
    
    
    805.1
    
    
    
    937.9Insurance and reinsurance balances receivable
    
    
    
    
    
    
    37.6
    
    
    
    139.3Funds held by reinsureds
    
    
    
    
    
    
    1,817.4
    
    
    
    1,737.7Deposit assets
    
    
    
    
    
    
    183.4
    
    
    
    170.4Deferred policy acquisition costs
    
    
    
    
    
    
    304.3
    
    
    
    482.7Deferred income taxes
    
    
    14
    
    
    
    1.0
    
    
    
    6.2Other assets
    
    
    9
    
    
    
    298.4
    
    
    
    358.6Total assets
    
    
    
    
    
    
    11,825.9
    
    
    
    14,187.3Liabilities and shareholders equityLiabilitiesReinsurance liabilitiesUnpaid losses and loss expenses
    
    
    10
    
    
    
    7,568.9
    
    
    
    8,908.3Future life benefits, gross
    
    
    12
    
    
    
    405.6
    
    
    
    407.1Insurance and reinsurance balances payable
    
    
    
    
    
    
    226.3
    
    
    
    583.5Reserves for unearned premiums, gross
    
    
    12
    
    
    
    610.8
    
    
    
    1,247.7Other reinsurance liabilities
    
    
    
    
    
    
    127.8
    
    
    
    70.8Funds held under reinsurance contracts
    
    
    
    
    
    
    332.9
    
    
    
    194.8Deposit liabilities
    
    
    
    
    
    
    300.6
    
    
    
    356.5Deferred income taxes
    
    
    14
    
    
    
    8.1
    
    
    
    8.2Accrued expenses and other liabilities
    
    
    
    
    
    
    200.3
    
    
    
    284.5Debt
    
    
    13
    
    
    
    391.2
    
    
    
    391.1Total liabilities
    
    
    
    
    
    
    10,172.5
    
    
    
    12,452.5Shareholders equityCommon stock CHF 5 nominal value,
146,689,462 and
146,689,462 shares issued,
respectively (146,473,231 and 146,272,886 shares outstanding,
respectively)
    
    
    17
    
    
    
    554.9
    
    
    
    554.9Additional paid-in capital
    
    
    
    
    
    
    1,354.2
    
    
    
    1,360.5Treasury stock (216,231 and 416,576 shares, respectively)
    
    
    
    
    
    
    -1.5
    
    
    
    -7.7Unearned stock compensation
    
    
    16
    
    
    
    -3.5
    
    
    
    -7.5Total accumulated other comprehensive income:Minimum pension liabilities, net of taxes
    
    
    15
    
    
    
    -4.9
    
    
    
    -7.7Net unrealized gains on investments, net of taxes
    
    
    8
    
    
    
    42.7
    
    
    
    105.2Cumulative translation adjustments, net of taxes
    
    
    6
    
    
    
    96.9
    
    
    
    191.2Total accumulated other comprehensive income
    
    
    
    
    
    
    134.7
    
    
    
    288.7Retained deficit
    
    
    
    
    
    
    -385.4
    
    
    
    -454.1Total shareholders equity
    
    
    
    
    
    
    1,653.4
    
    
    
    1,734.8Total liabilities and shareholders equity
    
    
    
    
    
    
    11,825.9
    
    
    
    14,187.3
  F-4




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##### Table of Contents



(US$ million)
    
    2005
    
    
    2004
    
    
    2003Year ended December 31
    
    
    
    
    Restated
    
    
    RestatedCash flows from operating activitiesNet income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9Adjustments forNet realized capital (gains) losses on investments
    
    
    -25.5
    
    
    
    -46.5
    
    
    
    -18.4Amortization of premium/discount
    
    
    50.7
    
    
    
    59.1
    
    
    
    43.9Depreciation and amortization
    
    
    39.6
    
    
    
    34.2
    
    
    
    30.5(Reduction) increase of valuation allowance
    
    
    -17.1
    
    
    
    473.7
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    94.0
    
    
    
    Total adjustments
    
    
    47.7
    
    
    
    614.5
    
    
    
    56.0Changes in operational assets and liabilitiesPremiums receivable
    
    
    567.3
    
    
    
    -106.7
    
    
    
    -438.6Reserves for unearned premiums, retro
    
    
    13.1
    
    
    
    54.1
    
    
    
    -67.0Reinsurance assets
    
    
    200.2
    
    
    
    129.6
    
    
    
    136.4Funds held by reinsureds
    
    
    -180.2
    
    
    
    -332.9
    
    
    
    -305.1Funds Withheld Asset
    
    
    197.5
    
    
    
    283.8
    
    
    
    230.6Deferred policy acquisition costs
    
    
    149.3
    
    
    
    -80.8
    
    
    
    -90.6Unpaid losses and loss expenses
    
    -1,053.3
    
    
    
    716.6
    
    
    
    585.0Future life benefits, gross
    
    
    -4.9
    
    
    
    41.2
    
    
    
    131.4Insurance and reinsurance balances payable
    
    
    -104.8
    
    
    
    378.9
    
    
    
    280.9Reserves for unearned premiums, gross
    
    
    -596.3
    
    
    
    -224.4
    
    
    
    213.3Other reinsurance liabilities
    
    
    50.2
    
    
    
    -94.3
    
    
    
    -65.6Funds held under reinsurance contracts
    
    
    161.8
    
    
    
    -5.0
    
    
    
    67.3Income taxes, net
    
    
    32.7
    
    
    
    -240.1
    
    
    
    35.6Net changes in all other operational assets and liabilities
    
    
    51.1
    
    
    
    -193.3
    
    
    
    -30.3Total changes in operational assets and liabilities
    
    
    -516.3
    
    
    
    326.7
    
    
    
    683.3Cash (used in) provided by operating activities
    
    
    -399.9
    
    
    
    358.7
    
    
    
    917.2Cash flows from investing activitiesPurchases of fixed maturities held-to-maturity
    
    
    -4.7
    
    
    
    -228.2
    
    
    
    -192.4Proceeds from sales and maturities of fixed maturities
    
    
    4,301.4
    
    
    
    4,116.0
    
    
    
    3,813.4Purchases of fixed maturities available-for-sale
    
    -4,063.6
    
    
    
    -4,420.2
    
    
    
    -5,054.0Cash flows from investing activities (fixed maturities)
    
    
    233.1
    
    
    
    -532.4
    
    
    
    -1,433.0Proceeds from sales of equity securities
    
    
    186.7
    
    
    
    983.1
    
    
    
    94.3Purchases of equity securities
    
    
    -125.8
    
    
    
    -537.5
    
    
    
    -244.3Cash flows from investing activities (equity securities)
    
    
    60.9
    
    
    
    445.6
    
    
    
    -150.0Net (increase) decrease in short-term investments
    
    
    73.4
    
    
    
    -55.3
    
    
    
    277.2Proceeds from sales of other assets
    
    
    52.8
    
    
    
    82.3
    
    
    
    47.4Purchases of other assets
    
    
    -43.4
    
    
    
    -144.0
    
    
    
    -42.7Net (increase) decrease in deposit assets
    
    
    -13.0
    
    
    
    -111.6
    
    
    
    -13.1Cash flows from investing activities (other)
    
    
    69.8
    
    
    
    -228.6
    
    
    
    268.8Net cash provided by (used in) investing activities
    
    
    363.8
    
    
    
    -315.4
    
    
    -1,314.2Cash flows from financing activitiesNet purchases of common shares
    
    
    -1.5
    
    
    
    -6.0
    
    
    
    -17.3Dividends to shareholders
    
    
    
    
    
    
    -47.8
    
    
    
    -29.9Proceeds from Rights Offering
    
    
    
    
    
    
    428.4
    
    
    
    Rights Offering issuance costs
    
    
    
    
    
    
    -25.1
    
    
    
    Net (decrease) increase in deposit liabilities
    
    
    -35.3
    
    
    
    -1.7
    
    
    
    300.1Net cash (used in) provided by financing activities
    
    
    -36.8
    
    
    
    347.8
    
    
    
    252.9Effect of exchange rate changes on cash and cash equivalents
    
    
    39.3
    
    
    
    9.0
    
    
    
    23.7Change in cash and cash equivalents
    
    
    -33.6
    
    
    
    400.1
    
    
    
    -120.4Cash and cash equivalents as of January 1
    
    
    680.9
    
    
    
    280.8
    
    
    
    401.2Cash and cash equivalents as of December 31
    
    
    647.3
    
    
    
    680.9
    
    
    
    280.8
  F-5




---



##### Table of Contents



AccumulatedAdditional
    
    
    
    
    
    
    Unearned
    
    
    other
    
    
    Retained
    
    
    TotalCommon
    
    
    paid-in
    
    
    Treasury
    
    
    stock
    
    
    comprehensive
    
    
    (deficit)/
    
    
    shareholdersstock
    
    
    capital
    
    
    stock
    
    
    compensation
    
    
    income
    
    
    earnings
    
    
    equityBalance, December 31, 2002 (Restated)
    
    
    253.0
    
    
    
    1,260.8
    
    
    
    -3.3
    
    
    
    -10.0
    
    
    
    58.9
    
    
    
    35.8
    
    
    
    1,595.2Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177.9
    
    
    
    177.9Change in minimum pension liability,
net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1.2
    
    
    
    
    
    
    
    -1.2Change in net unrealized gains (losses)
on investments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148.6
    
    
    
    
    
    
    
    148.6Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48.1
    
    
    
    
    
    
    
    48.1Dividends to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -29.9
    
    
    
    -29.9Transfer to general legal reserve
    
    
    
    
    
    
    3.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -3.7
    
    
    
    Purchases of common shares
    
    
    
    
    
    
    
    
    
    
    -17.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -17.3Releases of common shares from treasury
    
    
    
    
    
    
    -14.0
    
    
    
    10.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -3.4Net amortization of stock compensation
    
    
    
    
    
    
    6.1
    
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    
    
    
    
    10.0Balance, December 31, 2003 (Restated)
    
    
    253.0
    
    
    
    1,256.6
    
    
    
    -10.0
    
    
    
    -6.1
    
    
    
    254.4
    
    
    
    180.1
    
    
    
    1,928.0Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -582.5
    
    
    
    -582.5Change in minimum pension liability,
net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -6.5
    
    
    
    
    
    
    
    -6.5Change in net unrealized gains (losses)
on investments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -40.6
    
    
    
    
    
    
    
    -40.6Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81.4
    
    
    
    
    
    
    
    81.4Dividends to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -47.8
    
    
    
    -47.8Transfer to general legal reserve
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -3.9
    
    
    
    Purchases of common shares
    
    
    
    
    
    
    
    
    
    
    -6.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -6.0Releases of common shares from treasury
    
    
    
    
    
    
    -8.2
    
    
    
    8.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Net amortization of stock compensation
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    -1.4
    
    
    
    
    
    
    
    
    
    
    
    9.6Increase in capital due to rights offering
    
    
    428.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    428.4Decrease of nominal value
    
    -126.5
    
    
    
    126.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rights offering issuance costs
    
    
    
    
    
    
    -29.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -29.3Balance, December 31, 2004 (Restated)
    
    
    554.9
    
    
    
    1,360.5
    
    
    
    -7.7
    
    
    
    -7.5
    
    
    
    288.7
    
    
    
    -454.1
    
    
    
    1,734.8Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68.7
    
    
    
    68.7Change in minimum pension liability,
net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.8
    
    
    
    
    
    
    
    2.8Change in net unrealized gains (losses)
on investments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -62.5
    
    
    
    
    
    
    
    -62.5Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -94.3
    
    
    
    
    
    
    
    -94.3Purchases of common shares
    
    
    
    
    
    
    
    
    
    
    -1.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1.5Releases of common shares from treasury
    
    
    
    
    
    
    -7.7
    
    
    
    7.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net amortization of stock compensation
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    4.0
    
    
    
    
    
    
    
    
    
    
    
    5.4Balance, December 31, 2005
    
    
    554.9
    
    
    
    1,354.2
    
    
    
    -1.5
    
    
    
    -3.5
    
    
    
    134.7
    
    
    -385.4
    
    
    
    1,653.4
  F-6




---



##### Table of Contents



Standard
Property & Casualty
 Reinsurance
    
    
    Specialty Lines
    
    

TotalNon-life consolidatedYear ended December 31
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Restated
    
    
    Restated
    
    
    
    
    
    
    Restated
    
    
    Restated
    
    
    
    
    
    
    Restated
    
    
    RestatedGross premiums written
    
    
    803.1
    
    
    
    1,509.1
    
    
    
    1,438.6
    
    
    
    833.1
    
    
    
    1,655.3
    
    
    
    1,325.0
    
    
    
    1,636.2
    
    
    
    3,164.4
    
    
    
    2,763.6Less ceded premiums written
    
    
    -64.1
    
    
    
    -131.6
    
    
    
    -138.7
    
    
    
    -95.4
    
    
    
    -90.0
    
    
    
    -206.0
    
    
    
    -159.5
    
    
    
    -221.6
    
    
    
    -344.7Net premiums written
    
    
    739.0
    
    
    
    1,377.5
    
    
    
    1,299.9
    
    
    
    737.7
    
    
    
    1,565.3
    
    
    
    1,119.0
    
    
    
    1,476.7
    
    
    
    2,942.8
    
    
    
    2,418.9Net change in unearned premiums
    
    
    141.8
    
    
    
    14.8
    
    
    
    -14.7
    
    
    
    321.5
    
    
    
    -177.7
    
    
    
    -80.9
    
    
    
    463.3
    
    
    
    -162.9
    
    
    
    -95.6Net premiums earned
    
    
    880.8
    
    
    
    1,392.3
    
    
    
    1,285.2
    
    
    
    1,059.2
    
    
    
    1,387.6
    
    
    
    1,038.1
    
    
    
    1,940.0
    
    
    
    2,779.9
    
    
    
    2,323.3Total investment results
    
    
    122.0
    
    
    
    113.9
    
    
    
    80.1
    
    
    
    142.9
    
    
    
    147.5
    
    
    
    103.8
    
    
    
    264.9
    
    
    
    261.4
    
    
    
    183.9Revenues
    
    
    1,002.8
    
    
    
    1,506.2
    
    
    
    1,365.3
    
    
    
    1,202.1
    
    
    
    1,535.1
    
    
    
    1,141.9
    
    
    
    2,204.9
    
    
    
    3,041.3
    
    
    
    2,507.2Losses, loss expenses and life benefits
    
    
    -729.6
    
    
    
    -1,002.9
    
    
    
    -838.8
    
    
    
    -772.5
    
    
    
    -1,154.7
    
    
    
    -713.0
    
    
    
    -1,502.1
    
    
    
    -2,157.6
    
    
    
    -1,551.8Acquisition costs
    
    
    -181.3
    
    
    
    -353.3
    
    
    
    -266.4
    
    
    
    -263.8
    
    
    
    -328.1
    
    
    
    -227.9
    
    
    
    -445.1
    
    
    
    -681.4
    
    
    
    -494.3Other operating and administration
expenses
    
    
    -45.2
    
    
    
    -58.5
    
    
    
    -50.3
    
    
    
    -56.3
    
    
    
    -59.6
    
    
    
    -41.4
    
    
    
    -101.5
    
    
    
    -118.1
    
    
    
    -91.7Benefits, losses and expenses
    
    
    -956.1
    
    
    
    -1,414.7
    
    
    
    -1,155.5
    
    
    
    -1,092.6
    
    
    
    -1,542.4
    
    
    
    -982.3
    
    
    
    -2,048.7
    
    
    
    -2,957.1
    
    
    
    -2,137.8Segment income (loss)
    
    
    46.7
    
    
    
    91.5
    
    
    
    209.8
    
    
    
    109.5
    
    
    
    -7.3
    
    
    
    159.6
    
    
    
    156.2
    
    
    
    84.2
    
    
    
    369.4Other (loss) incomeInterest expenseImpairment of goodwillAmortization of other intangible assetsRestructuring costsIncome (loss) before taxesIncome tax expenseNet income (loss)As of December 31Reinsurance assets - underwriting reserves
    
    
    265.7
    
    
    
    201.1
    
    
    
    264.6
    
    
    
    323.5
    
    
    
    312.7
    
    
    
    238.7
    
    
    
    589.2
    
    
    
    513.8
    
    
    
    503.3Losses and loss expenses, gross
    
    
    2,441.7
    
    
    
    2,881.4
    
    
    
    2,378.9
    
    
    
    3,371.7
    
    
    
    3,193.8
    
    
    
    2,525.5
    
    
    
    5,813.4
    
    
    
    6,075.2
    
    
    
    4,904.4Future life benefits, gross
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    RatiosLoss ratio (Losses divided by net premiums earned)
    
    
    82.8
    %
    
    
    72.0
    %
    
    
    65.3
    %
    
    
    72.9
    %
    
    
    83.2
    %
    
    
    68.7
    %
    
    
    77.4
    %
    
    
    77.6
    %
    
    
    66.8
    %Acquisition
costs ratio (Acquisition costs divided
by net premiums earned)
    
    
    20.6
    %
    
    
    25.4
    %
    
    
    20.7
    %
    
    
    24.9
    %
    
    
    23.6
    %
    
    
    22.0
    %
    
    
    22.9
    %
    
    
    24.5
    %
    
    
    21.3
    %Administration
expense ratio (Other operating and administration
expenses divided by net premiums written)
    
    
    6.1
    %
    
    
    4.2
    %
    
    
    3.9
    %
    
    
    7.6
    %
    
    
    3.8
    %
    
    
    3.7
    %
    
    
    6.9
    %
    
    
    4.0
    %
    
    
    3.8
    %Combined
ratio (Sum of the loss, acquisition costs
and administration expense ratios)
    
    
    109.5
    %
    
    
    101.6
    %
    
    
    89.9
    %
    
    
    105.4
    %
    
    
    110.6
    %
    
    
    94.4
    %
    
    
    107.2
    %
    
    
    106.1
    %
    
    
    91.9
    %
 
 *
    
    US$ 20.5 million has been expensed related to the costs associated with global
restructurings, of which US$ 5.1 million were attributable to the Standard Property & Casualty
Reinsurance segment, US$ 5.5 million were attributable to the Specialty Lines segment, US$ 1.5
million were attributable to the Life & Health Reinsurance segment and US$ 8.4 were
attributable to the Run-Off segment.**
    
    Run - Off is comprised of business formerly reported in all three of
the ongoing business segments.
 Segment data for all years is
presented in line with the new reporting segments. F-7




---



##### Table of Contents



Life & Health Reinsurance
    
    
    Total ongoing business
    
    

Run-off**
    
    
    Corporate Center
    
    
    Total consolidated2005
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Restated
    
    
    Restated
    
    
    
    
    
    Restated
    
    
    Restated
    
    
    
    
    
    Restated
    
    
    Restated
    
    
    
    
    
    Restated
    
    
    Restated
    
    
    
    
    
    Restated
    
    
    Restated318.8
    
    
    327.9
    
    
    
    280.7
    
    
    
    1,955.0
    
    
    
    3,492.3
    
    
    
    3,044.3
    
    
    
    39.3
    
    
    
    486.4
    
    
    
    1,256.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4-12.4
    
    
    -14.7
    
    
    
    -26.2
    
    
    
    -171.9
    
    
    
    -236.3
    
    
    
    -370.9
    
    
    
    -6.7
    
    
    
    -16.3
    
    
    
    -6.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -178.6
    
    
    
    -252.6
    
    
    
    -377.7306.4
    
    
    313.2
    
    
    
    254.5
    
    
    
    1,783.1
    
    
    
    3,256.0
    
    
    
    2,673.4
    
    
    
    32.6
    
    
    
    470.1
    
    
    
    1,249.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.78.4
    
    
    5.5
    
    
    
    6.3
    
    
    
    471.7
    
    
    
    -157.4
    
    
    
    -89.3
    
    
    
    95.8
    
    
    
    313.5
    
    
    
    -65.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    567.5
    
    
    
    156.1
    
    
    
    -154.9314.8
    
    
    318.7
    
    
    
    260.8
    
    
    
    2,254.8
    
    
    
    3,098.6
    
    
    
    2,584.1
    
    
    
    128.4
    
    
    
    783.6
    
    
    
    1,183.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,383.2
    
    
    
    3,882.2
    
    
    
    3,767.829.2
    
    
    20.9
    
    
    
    14.7
    
    
    
    294.1
    
    
    
    282.3
    
    
    
    198.6
    
    
    
    56.3
    
    
    
    76.9
    
    
    
    54.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350.4
    
    
    
    359.2
    
    
    
    252.8344.0
    
    
    339.6
    
    
    
    275.5
    
    
    
    2,548.9
    
    
    
    3,380.9
    
    
    
    2,782.7
    
    
    
    184.7
    
    
    
    860.5
    
    
    
    1,237.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,733.6
    
    
    
    4,241.4
    
    
    
    4,020.6-218.0
    
    
    -237.3
    
    
    
    -280.0
    
    
    
    -1,720.1
    
    
    
    -2,394.9
    
    
    
    -1,831.8
    
    
    
    -55.8
    
    
    
    -947.6
    
    
    
    -928.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1,775.9
    
    
    
    -3,342.5
    
    
    
    -2,760.1-92.3
    
    
    -72.5
    
    
    
    -52.4
    
    
    
    -537.4
    
    
    
    -753.9
    
    
    
    -546.7
    
    
    
    -38.2
    
    
    
    -158.5
    
    
    
    -285.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -575.6
    
    
    
    -912.4
    
    
    
    -832.0-16.1
    
    
    -13.1
    
    
    
    -12.2
    
    
    
    -117.6
    
    
    
    -131.2
    
    
    
    -103.9
    
    
    
    -43.1
    
    
    
    -50.4
    
    
    
    -64.3
    
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3
    
    
    
    -210.8
    
    
    
    -219.8
    
    
    
    -202.5-326.4
    
    
    -322.9
    
    
    
    -344.6
    
    
    
    -2,375.1
    
    
    
    -3,280.0
    
    
    
    -2,482.4
    
    
    
    -137.1
    
    
    
    -1,156.5
    
    
    
    -1,277.9
    
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3
    
    
    
    -2,562.3
    
    
    
    -4,474.7
    
    
    
    -3,794.617.6
    
    
    16.7
    
    
    
    -69.1
    
    
    
    173.8
    
    
    
    100.9
    
    
    
    300.3
    
    
    
    47.6
    
    
    
    -296.0
    
    
    
    -40.0
    
    
    
    -50.1
    
    
    
    -38.2
    
    
    
    -34.3
    
    
    
    171.3
    
    
    
    -233.3
    
    
    
    226.0-13.4
    
    
    
    -8.2
    
    
    
    17.5-31.6
    
    
    
    -33.1
    
    
    
    -31.0
    
    
    
    -94.0
    
    
    
    -21.5
    
    
    
    -9.9
    
    
    
    -1.8*
    
    
    
    -20.5
    
    
    
    -2.7
    
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7-15.6
    
    
    
    -201.3
    
    
    
    -32.868.7
    
    
    
    -582.5
    
    
    
    177.961.5
    
    
    39.4
    
    
    
    87.7
    
    
    
    650.7
    
    
    
    553.2
    
    
    
    591.0
    
    
    
    154.4
    
    
    
    384.7
    
    
    
    503.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    805.1
    
    
    
    937.9
    
    
    
    1,094.1291.4
    
    
    272.3
    
    
    
    248.5
    
    
    
    6,104.8
    
    
    
    6,347.5
    
    
    
    5,152.9
    
    
    
    1,464.1
    
    
    
    2,560.8
    
    
    
    2,726.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,568.9
    
    
    
    8,908.3
    
    
    
    7,879.7405.6
    
    
    407.1
    
    
    
    344.3
    
    
    
    405.6
    
    
    
    407.1
    
    
    
    344.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    405.6
    
    
    
    407.1
    
    
    
    344.329.3
    %
    
    22.7
    %
    
    
    20.1
    %5.3
    %
    
    4.2
    %
    
    
    4.8
    %
 F-8




---



##### Table of Contents



th
    (a) Basis of preparation
   Reclassifications
  Segment presentation
   F-9




---



##### Table of Contents



(b) Use of estimates
   (c) Foreign currency translation and transactions
 Foreign currency translation:
 Foreign currency transactions:
 (d) Non-life reinsurance
 Premiums:
  Deferred policy acquisition costs:
 Losses:
 F-10




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##### Table of Contents



Deferred charges reinsurance assumed:
 (e) Life reinsurance
 Recognition of reinsurance revenue and related expenses:
 Deferred policy acquisition costs:
 Future life benefits reserves and contract deposits:
 (f) Retrocessions
   (g) Deposit accounting transactions
 Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer
Insurance Risk
 F-11




---



##### Table of Contents



(h) Invested assets
          (i) Other than temporary impairments
   F-12




---



##### Table of Contents



(j) Derivative instruments
   Accounting for Derivative
Instruments and Hedging Activities.
  (k) Obligation to repurchase securities
  (l) Cash and cash equivalents
  (m) Fixed assets
  (n) Goodwill and other intangible assets
   F-13




---



##### Table of Contents



(o) Recognition and measurement of long-lived assets
  (p) Income taxes
  Accounting for Income Taxes (SFAS No.109)
 Accounting for Income TaxesSpecial Areas
 Accounting for Contingencies (SFAS No.5).
 (q) Employee benefits
    (r) Restructuring costs
  (s) Contingencies
 .
 F-14




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##### Table of Contents



(t) New accounting pronouncements
  SFAS 123 (revised 2004), Share-Based Payment
  FASB Interpretation No (FIN). 47, Accounting for Conditional Asset Retirement Obligations
  FASB Staff Position (FSP) FIN 46(R)-5, Implicit Variable Interests Under FASB Interpretation No.
46(R)
  SFAS 154, Accounting Changes and Error Corrections
  EITF Issue No.04-5, Determining Whether a General Partner, or the General Partners as a Group,
Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights
  F-15




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##### Table of Contents



FASB Staff Position (FSP) APB 18-1,Accounting by an Investor for Its Proportionate Share of
Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method In
Accordance With APB Opinion No.18 upon a Loss of Significant Influence
  FASB Staff Position (FSP) FAS 123(R)-1, Classification and Measurement of Freestanding Financial
Instruments Originally Issued in Exchange for Employee Services under FASB Statement No. 123(R)
  FASB Staff Position (FSP) FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments
  FASB Staff Position (FSP) FAS 123R-3, Transition Election Related to Accounting for the Tax
Effects of Share-Based Payment Awards
  F-16




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##### Table of Contents



Background to the restatement: internal review
   Restatement overview
 Accounting and
Reporting for Reinsurance of Short-Duration and Long-Duration Contracts.
   Increase (decrease) for the years ended December 31(US$ million)
    
    2004
    
    
    2003Gross premiums written
    
    
    137.8
    
    
    
    76.5Net premiums written
    
    
    173.1
    
    
    
    95.7Net premiums earned
    
    
    197.1
    
    
    
    91.3Income (loss) before taxes
    
    
    41.4
    
    
    
    -13.7Income taxes
    
    
    136.9
    
    
    
    6.5Net income (loss)
    
    
    178.3
    
    
    
    -7.2Increase (decrease) as of December 31(US$ million)Shareholders equity
    
    
    14.6
    
    
    
    -155.3
 F-17




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##### Table of Contents



(US$)
    
    2004
    
    
    2003Basic (loss) earnings per share as previously reported
    
    
    -12.00
    
    
    
    2.33Adjustments to basic earnings (loss) per share
    
    
    2.81
    
    
    
    -0.09Basic (loss) earnings per share as restated
    
    
    -9.19
    
    
    
    2.24
   
    
    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 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 Ltd. (GAUM) pool; GAUM pool business is recognized in
ongoing business operations in the specialty segment and does not form part of the run-off
segment.
    
    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 originated business to select US based clients. This
business will be underwritten and managed through Converium AG, Zurich.
      Table 6.1
 Statements of income (loss)Balance sheets
    
    
    and cash flowsExchange rates against US$
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003UK pound
    
    
    1.7167
    
    
    
    1.9199
    
    
    
    1.8195
    
    
    
    1.8324
    
    
    
    1.6349Euro
    
    
    1.1795
    
    
    
    1.3593
    
    
    
    1.2446
    
    
    
    1.2439
    
    
    
    1.1317100 Japanese yen
    
    
    0.8472
    
    
    
    0.9759
    
    
    
    0.9099
    
    
    
    0.9254
    
    
    
    0.8637Swiss franc
    
    
    0.7587
    
    
    
    0.8794
    
    
    
    0.8038
    
    
    
    0.8059
    
    
    
    0.7441
 F-18




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##### Table of Contents



Standard Property & Casualty Reinsurance:
 Specialty Lines:
 Life & Health Reinsurance:
   F-19




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##### Table of Contents



Table 7.1
 Net premiums written by line of business
 (US$million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Standard Property & Casualty Reinsurance:General Third Party Liability
    
    
    146.7
    
    
    
    379.2
    
    
    
    323.4Motor
    
    
    188.4
    
    
    
    437.4
    
    
    
    356.1Personal Accident (assumed from non-life insurers)
    
    
    13.3
    
    
    
    34.5
    
    
    
    35.3Property
    
    
    390.6
    
    
    
    526.4
    
    
    
    585.1Total Standard Property & Casualty Reinsurance
    
    
    739.0
    
    
    
    1,377.5
    
    
    
    1,299.9Specialty Lines:Agribusiness
    
    
    36.7
    
    
    
    11.4
    
    
    
    7.8Aviation & Space
    
    
    241.8
    
    
    
    404.5
    
    
    
    354.7Credit & Surety
    
    
    58.4
    
    
    
    204.3
    
    
    
    195.6Engineering
    
    
    65.5
    
    
    
    112.2
    
    
    
    139.9Marine & Energy
    
    
    64.0
    
    
    
    82.5
    
    
    
    83.2Professional Liability and other Special Liability
    
    
    282.8
    
    
    
    436.5
    
    
    
    301.9Workers Compensation
    
    
    -11.5
    
    
    
    313.9
    
    
    
    35.9Total Specialty Lines
    
    
    737.7
    
    
    
    1,565.3
    
    
    
    1,119.0Total non-life reinsurance
    
    
    1,476.7
    
    
    
    2,942.8
    
    
    
    2,418.9Life & Health Reinsurance:Life & Disability
    
    
    235.2
    
    
    
    234.9
    
    
    
    172.8Accident & Health
    
    
    71.2
    
    
    
    78.3
    
    
    
    81.7Total Life & Health Reinsurance
    
    
    306.4
    
    
    
    313.2
    
    
    
    254.5Run-Off
    
    
    32.6
    
    
    
    470.1
    
    
    
    1,249.3Total
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7
  Table 7.2
 Gross premiums written by geographic area of ceding company
 (US$million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003United Kingdom*
    
    
    481.0
    
    
    
    1,160.8
    
    
    
    1,188.0Germany
    
    
    395.0
    
    
    
    389.6
    
    
    
    286.9France
    
    
    86.1
    
    
    
    158.2
    
    
    
    160.4Italy
    
    
    107.1
    
    
    
    162.3
    
    
    
    131.2Rest of Europe
    
    
    251.4
    
    
    
    379.8
    
    
    
    338.9Far East
    
    
    132.1
    
    
    
    238.5
    
    
    
    266.4Near and Middle East
    
    
    103.1
    
    
    
    124.3
    
    
    
    134.3North America
    
    
    346.0
    
    
    
    1,235.2
    
    
    
    1,642.6Latin America
    
    
    92.5
    
    
    
    130.0
    
    
    
    151.7Total
    
    
    1,994.3
    
    
    
    3,978.7
    
    
    
    4,300.4
 
 *
    
    Premiums from the United Kingdom include business assumed through GAUM and Lloyds
syndicates for such lines of business as Aviation & 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.
  F-20




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##### Table of Contents



Table 8.1
 Net investment income
 (US$ million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Investment income:Fixed maturities
    
    
    221.3
    
    
    
    198.3
    
    
    
    120.4Equity securities
    
    
    5.9
    
    
    
    14.8
    
    
    
    12.1Short-term investments and cash and cash equivalents
    
    
    14.0
    
    
    
    8.0
    
    
    
    7.4Real estate
    
    
    8.4
    
    
    
    9.4
    
    
    
    11.5Other
    
    
    24.7
    
    
    
    20.3
    
    
    
    8.4Funds Withheld Asset
    
    
    62.6
    
    
    
    75.1
    
    
    
    85.6Total investment income
    
    
    336.9
    
    
    
    325.9
    
    
    
    245.4Investment expenses
    
    
    -9.8
    
    
    
    -11.5
    
    
    
    -8.0Real estate expenses
    
    
    -2.2
    
    
    
    -1.7
    
    
    
    -3.0Net investment income
    
    
    324.9
    
    
    
    312.7
    
    
    
    234.4
  Table 8.2
 Net realized capital gains (losses)
 (US$ million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Fixed maturities:Realized capital gains
    
    
    18.9
    
    
    
    23.9
    
    
    
    46.1Realized capital losses
    
    
    -29.5
    
    
    
    -18.2
    
    
    
    -11.3Equity securities:Realized capital gains
    
    
    45.3
    
    
    
    61.2
    
    
    
    9.1Realized capital losses
    
    
    -2.0
    
    
    
    -10.0
    
    
    
    -1.7Write-down of impaired investments
    
    
    -9.2
    
    
    
    -6.2
    
    
    
    -27.4Other
    
    
    2.0
    
    
    
    -4.2
    
    
    
    3.6Net realized capital gains (losses)
    
    
    25.5
    
    
    
    46.5
    
    
    
    18.4
    F-21




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##### Table of Contents



Table 8.3
 Unrealized investment gains (losses)
 (included in other comprehensive income)
 Net change for the
    
    
    Total as(US$ million)
    
    year ended December 31
    
    
    of December 312005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004Fixed maturities held-to-maturity
    
    
    -3.0
    
    
    
    -4.3
    
    
    
    14.1
    
    
    
    6.8
    
    
    
    9.8Fixed maturities available-for-sale
    
    
    -46.5
    
    
    
    0.9
    
    
    
    -8.0
    
    
    
    -19.8
    
    
    
    26.7Equity securities available-for-sale
    
    
    4.6
    
    
    
    -24.2
    
    
    
    148.1
    
    
    
    74.9
    
    
    
    70.3Hedge funds and others
    
    
    6.5
    
    
    
    2.5
    
    
    
    
    
    
    
    9.0
    
    
    
    2.5Less amounts of net unrealized
investment gains (losses)
attributable to:Net deferred income taxes
    
    
    -24.1
    
    
    
    -15.3
    
    
    
    -5.6
    
    
    
    -28.2
    
    
    
    -4.1Foreign currency effect
    
    
    
    
    
    
    
    
    
    
    50.3
    
    
    
    
    
    
    
    Total
    
    
    -62.5
    
    
    
    -40.4
    
    
    
    198.9
    
    
    
    42.7
    
    
    
    105.2
 Table 8.4
 Investments in fixed maturities
 and equity securities
 (US$ million)
    
    
    Cost or
    
    
    
    Gross
    
    
    
    Gross
    
    
    
    EstimatedAs of December 31
    
    
    amortized cost
    
    
    
    unrealized gains
    
    
    
    unrealized losses
    
    
    
    fair value2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Held-to-maturityFixed maturities:Transferred in:US government
    
    
    389.1
    
    
    
    414.2
    
    
    
    
    
    
    
    
    
    
    
    -16.7
    
    
    
    -11.3
    
    
    
    372.4
    
    
    
    402.9Other governments
    
    
    13.1
    
    
    
    15.3
    
    
    
    0.7
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    13.8
    
    
    
    15.8Newly invested:US government
    
    
    169.1
    
    
    
    170.1
    
    
    
    
    
    
    
    0.9
    
    
    
    -3.1
    
    
    
    -0.2
    
    
    
    166.0
    
    
    
    170.8Other governments
    
    
    222.3
    
    
    
    250.8
    
    
    
    4.3
    
    
    
    3.7
    
    
    
    
    
    
    
    
    
    
    
    226.6
    
    
    
    254.5Total held-to-maturity
    
    
    793.6
    
    
    
    850.4
    
    
    
    5.0
    
    
    
    5.1
    
    
    
    -19.8
    
    
    
    -11.5
    
    
    
    778.8
    
    
    
    844.0Available-for-saleFixed maturities:US government
    
    
    1,166.3
    
    
    
    1,765.6
    
    
    
    2.9
    
    
    
    9.1
    
    
    
    -21.5
    
    
    
    -11.6
    
    
    
    1,147.7
    
    
    
    1,763.1Other governments
    
    
    1,566.6
    
    
    
    1,769.3
    
    
    
    14.6
    
    
    
    15.7
    
    
    
    -6.0
    
    
    
    -2.0
    
    
    
    1,575.2
    
    
    
    1,783.0Corporate and other
debt securities
    
    
    888.6
    
    
    
    661.1
    
    
    
    6.4
    
    
    
    13.4
    
    
    
    -9.5
    
    
    
    -2.4
    
    
    
    885.5
    
    
    
    672.1Mortgage and
asset-backed
securities
    
    
    568.1
    
    
    
    612.2
    
    
    
    0.3
    
    
    
    5.7
    
    
    
    -7.0
    
    
    
    -1.3
    
    
    
    561.4
    
    
    
    616.6Total
    
    
    4,189.6
    
    
    
    4,808.2
    
    
    
    24.2
    
    
    
    43.9
    
    
    
    -44.0
    
    
    
    -17.3
    
    
    
    4,169.8
    
    
    
    4,834.8Equity securities
    
    
    287.7
    
    
    
    328.9
    
    
    
    76.0
    
    
    
    73.0
    
    
    
    -1.1
    
    
    
    -2.5
    
    
    
    362.6
    
    
    
    399.4Total
available-for-sale
    
    
    4,477.3
    
    
    
    5,137.1
    
    
    
    100.2
    
    
    
    116.9
    
    
    
    -45.1
    
    
    
    -19.8
    
    
    
    4,532.4
    
    
    
    5,234.2
  Table 8.5
 Maturities of unrealized investment losses on
 fixed maturities and equity securities
 (US$ million)
    
    
    
    
    
    Gross unrealized lossesAs of December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total grossEstimated fair
    
    
    Less than
    
    
    Greater
    
    
    unrealizedvalue
    
    
    one year
    
    
    than one year
    
    
    lossesHeld-to-maturityFixed maturities
    
    
    522.1
    
    
    
    -19.5
    
    
    
    -0.3
    
    
    
    -19.8Available-for-sale:Fixed maturities
    
    
    2,402.0
    
    
    
    -27.7
    
    
    
    -16.3
    
    
    
    -44.0Equity securities
    
    
    15.2
    
    
    
    -1.1
    
    
    
    
    
    
    
    -1.1Total available-for-sale
    
    
    2,417.2
    
    
    
    -28.8
    
    
    
    -16.3
    
    
    
    -45.1
 F-22




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##### Table of Contents



Table 8.6
 Fixed maturity schedule by maturity
 (US$ million)
    
    Estimated fair value
    
    
    % of total
    
    
    Carrying value
    
    
    % of totalAs of December 31, 2005
    
    Available-for-sale (AFS)
    
    
    AFS
    
    
    Held-to-maturity (HTM)
    
    
    HTMLess than one year
    
    
    336.5
    
    
    
    8.1
    
    
    
    39.7
    
    
    
    5.0One year through five
years
    
    
    2,216.2
    
    
    
    53.1
    
    
    
    513.9
    
    
    
    64.8Five years through ten
years
    
    
    776.3
    
    
    
    18.6
    
    
    
    219.2
    
    
    
    27.6Over ten years
    
    
    110.9
    
    
    
    2.7
    
    
    
    20.8
    
    
    
    2.6Subtotal
    
    
    3,439.9
    
    
    
    82.5
    
    
    
    793.6
    
    
    
    100.0Mortgage and
asset-backed
securities
    
    
    561.4
    
    
    
    13.5
    
    
    
    
    
    
    
    Unit trust bonds
    
    
    168.5
    
    
    
    4.0
    
    
    
    
    
    
    
    Total
    
    
    4,169.8
    
    
    
    100.0
    
    
    
    793.6
    
    
    
    100.0
       Goodwill and Other Intangible Assets,
   F-23




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##### Table of Contents



F-24




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##### Table of Contents



Reserves for losses and loss expense(US$ million)
    
    2005
    
    
    2004
    
    
    2003As of January 1Gross reserves for losses and loss expenses
    
    
    8,908.3
    
    
    
    7,879.7
    
    
    
    6,876.9Less reinsurance recoverable
    
    
    -914.5
    
    
    
    -1,041.3
    
    
    
    -1,085.7Net reserves for losses and loss expenses
    
    
    7,993.8
    
    
    
    6,838.4
    
    
    
    5,791.2Loss and loss expenses incurred1Current year
    
    
    1,922.3
    
    
    
    2,881.9
    
    
    
    2,736.1Prior years
    
    
    -186.1
    
    
    
    350.2
    
    
    
    -63.5Total
    
    
    1,736.2
    
    
    
    3,232.1
    
    
    
    2,672.6Losses and loss expenses paidCurrent year
    
    
    451.0
    
    
    
    541.4
    
    
    
    437.1Prior years
    
    
    1,995.3
    
    
    
    1,938.9
    
    
    
    1,504.4Total
    
    
    2,446.3
    
    
    
    2,480.3
    
    
    
    1,941.5Foreign currency translation effects
    
    
    -475.8
    
    
    
    403.6
    
    
    
    316.1As of December 31Net reserves for losses and loss expenses
    
    
    6,807.9
    
    
    
    7,993.8
    
    
    
    6,838.4Reinsurance recoverable
    
    
    761.0
    
    
    
    914.5
    
    
    
    1,041.3Gross reserves for losses and loss expenses
    
    
    7,568.9
    
    
    
    8,908.3
    
    
    
    7,879.7
 
 1
    
    The totals above include non-life accident and health reserves for losses and loss
expenses that are reflected in the Life & Health Reinsurance
segment. The loss and loss expenses incurred includes US$ 178.3 million, US$ 128.0 million and US$ 192.7
million of loss and loss expenses included in the Life & Health Reinsurance segment for the years
ended December 31, 2005, 2004 and 2003, respectively.    F-25




---



##### Table of Contents



Impact of property catastrophe losses
  Commutations
  F-26




---



##### Table of Contents



September 11 th , 2001 terrorist attacks
 th th th
 th
 Segment
 Retrocessionalreinsurance(US$ million)
    
    Gross losses
    
    
    recoveries
    
    
    Net lossesStandard Property & Casualty Reinsurance
    
    
    160.1
    
    
    
    111.3
    
    
    
    48.8Specialty Lines
    
    
    297.8
    
    
    
    127.6
    
    
    
    170.2Life & Health Reinsurance
    
    
    25.5
    
    
    
    13.5
    
    
    
    12.0Run-Off
    
    
    76.5
    
    
    
    18.3
    
    
    
    58.2Total
    
    
    559.9
    
    
    
    270.7
    
    
    
    289.2
  th
 th th th
 th
  Asbestos and environmental exposures
  F-27




---



##### Table of Contents




    
    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 
1-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.
      Table 11.1
 (US$ million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GrossAverage
    
    
    
    
    
    
    Account
    
    
    
    
    
    
    SOP 03-1Guarantee type
    
    age
    
    
    GMDB
    
    
    value
    
    
    NAR
    
    
    reserveRatchet
    
    
    66.3
    
    
    
    1,813.5
    
    
    
    1,581.9
    
    
    
    285.4
    
    
    
    23.3Rollup
    
    
    71.2
    
    
    
    546.8
    
    
    
    385.5
    
    
    
    166.9
    
    
    
    24.0Rollup & ratchet
    
    
    67.0
    
    
    
    21.8
    
    
    
    17.7
    
    
    
    5.8
    
    
    
    0.4Return of premium
    
    
    64.0
    
    
    
    18.8
    
    
    
    19.8
    
    
    
    1.8
    
    
    
    0.1Reset
    
    
    59.7
    
    
    
    256.8
    
    
    
    283.1
    
    
    
    14.2
    
    
    
    1.1Reset & return of premium
    
    
    61.4
    
    
    
    114.6
    
    
    
    122.7
    
    
    
    4.1
    
    
    
    0.3Total
    
    
    67.8
    
    
    
    2,772.3
    
    
    
    2,410.7
    
    
    
    478.2
    
    
    
    49.2
 F-28




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##### Table of Contents



Table 11.2
 (US$ million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Received reinsurance premium, net of commission and brokerage
    
    
    3.3
    
    
    
    5.1
    
    
    
    4.5Paid losses
    
    
    12.1
    
    
    
    13.3
    
    
    
    20.4As of December 31
    
    
    2005
    
    
    
    2004Claim reserves (including case reserves and IBNR)
    
    
    5.4
    
    
    
    4.9
    Retrocessional reinsurance
   National Indemnity Cover
    F-29




---



##### Table of Contents



Master Retrocession Agreement
  Table 12.1
Loss reserves and unearned premium
 (US$ million)
    
    Gross

    
    Reinsurance assets
    

    Net of reinsuranceYear ended December 31
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Non-life loss reserves
    
    
    7,568.9
    
    
    
    8,908.3
    
    
    
    761.0
    
    
    
    914.5
    
    
    
    6,807.9
    
    
    
    7,993.8Future life benefits
    
    
    405.6
    
    
    
    407.1
    
    
    
    44.1
    
    
    
    23.4
    
    
    
    361.5
    
    
    
    383.7Total loss reserves
    
    
    7,974.5
    
    
    
    9,315.4
    
    
    
    805.1
    
    
    
    937.9
    
    
    
    7,169.4
    
    
    
    8,377.5Unearned premiums
    
    
    610.8
    
    
    
    1,247.7
    
    
    
    37.8
    
    
    
    55.2
    
    
    
    573.0
    
    
    
    1,192.5
    Table 12.2
Net premiums written and earned
 (US$ million)
    
    Net premiums written
    
    
    Net premiums earnedFor the years ended December 31
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Direct premiums
    
    
    529.1
    
    
    
    490.9
    
    
    
    561.4
    
    
    
    561.6
    
    
    
    574.1
    
    
    
    325.9Assumed premiums
    
    
    1,465.2
    
    
    
    3,487.8
    
    
    
    3,739.0
    
    
    
    2,013.5
    
    
    
    3,617.1
    
    
    
    3,737.6Ceded premiums
    
    
    -178.6
    
    
    
    -252.6
    
    
    
    -377.7
    
    
    
    -191.9
    
    
    
    -309.0
    
    
    
    -295.7Total
    
    
    1,815.7
    
    
    
    3,726.1
    
    
    
    3,922.7
    
    
    
    2,383.2
    
    
    
    3,882.2
    
    
    
    3,767.8
 Table 12.3
Benefits, losses and expenses
 (US$ million)For the years ended December 31
    
    2005
    
    
    2004
    
    
    2003Losses, loss expenses and life benefitsDirect
    
    
    -4.7
    
    
    
    -205.6
    
    
    
    -13.3Assumed
    
    
    1,885.8
    
    
    
    3,695.9
    
    
    
    2,905.4Ceded
    
    
    -105.2
    
    
    
    -147.8
    
    
    
    -132.0Total
    
    
    1,775.9
    
    
    
    3,342.5
    
    
    
    2,760.1Acquisition costsDirect
    
    
    49.1
    
    
    
    -12.7
    
    
    
    7.0Assumed
    
    
    538.1
    
    
    
    967.7
    
    
    
    852.9Ceded
    
    
    -11.6
    
    
    
    -42.6
    
    
    
    -27.9Total
    
    
    575.6
    
    
    
    912.4
    
    
    
    832.0
 F-30




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##### Table of Contents



Catastrophe protection




---



##### Table of Contents



Table 14.1
Income tax expense (benefit)
 (US$ million)For the years ended December 31
    
    2005
    
    
    2004
    
    
    2003CurrentSwitzerland
    
    
    -1.1
    
    
    
    -1.8
    
    
    
    5.4Non-Switzerland
    
    
    12.3
    
    
    
    14.1
    
    
    
    -46.1Total current
    
    
    11.2
    
    
    
    12.3
    
    
    
    -40.7DeferredSwitzerland
    
    
    0.1
    
    
    
    -17.5
    
    
    
    33.3Non-Switzerland
    
    
    4.3
    
    
    
    206.5
    
    
    
    40.2Total deferred
    
    
    4.4
    
    
    
    189.0
    
    
    
    73.5Total income tax expense (benefit)
    
    
    15.6
    
    
    
    201.3
    
    
    
    32.8
  Table 14.2
Expected and actual income tax expense (benefit)
 (US$ million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Income (loss) before tax
    
    
    84.3
    
    
    
    -381.2
    
    
    
    210.7Statutory average tax rate
    
    
    21.4
    %
    
    
    21.4
    %
    
    
    21.4
    %Expected income tax expense (benefit)
    
    
    18.0
    
    
    
    -81.5
    
    
    
    45.1Increase (reduction) in taxes resulting from:Change in valuation allowance
    
    
    -17.1
    
    
    
    473.7
    
    
    
    Foreign tax-rate differential
    
    
    19.7
    
    
    
    -216.7
    
    
    
    -27.3Accrued income taxes
    
    
    
    
    
    
    
    
    
    
    38.0Tax exempt realized gains (losses) from equity securities
    
    
    -6.1
    
    
    
    -3.3
    
    
    
    1.8Changes in applicable tax rate
    
    
    
    
    
    
    1.2
    
    
    
    3.9Prior year adjustments
    
    
    -4.2
    
    
    
    -3.7
    
    
    
    -0.8Change in net operating loss
    
    
    
    
    
    
    -6.0
    
    
    
    -29.8Impairment of goodwill
    
    
    
    
    
    
    32.9
    
    
    
    Hedge agreement
    
    
    -6.1
    
    
    
    -2.3
    
    
    
    Reinsurance transactions
    
    
    12.7
    
    
    
    
    
    
    
    Other reconciling items
    
    
    -1.3
    
    
    
    7.0
    
    
    
    1.9Actual income tax expense
    
    
    15.6
    
    
    
    201.3
    
    
    
    32.8Effective tax rate
    
    
    18.5
    %
    
    
    -52.8
    %
    
    
    15.6
    %




---



##### Table of Contents



Table 14.3
Deferred income taxes
 (US$ million)
    
    2005
    
    
    2004Deferred income tax assetsLoss reserve discount
    
    
    69.0
    
    
    
    106.9Other technical adjustments
    
    
    25.2
    
    
    
    32.9Accruals not currently deductible
    
    
    30.8
    
    
    
    20.5Partnership loss
    
    
    2.5
    
    
    
    2.6Net operating loss carryforwards
    
    
    513.7
    
    
    
    490.0Goodwill
    
    
    4.9
    
    
    
    8.1Unrealized currency losses
    
    
    33.1
    
    
    
    21.4Other
    
    
    14.3
    
    
    
    14.2Total deferred income tax assets
    
    
    693.5
    
    
    
    696.6Valuation allowance
    
    
    -549.1
    
    
    
    -534.1Net deferred income tax assets
    
    
    144.4
    
    
    
    162.5Deferred income tax liabilitiesLoss and benefit reserves
    
    
    36.2
    
    
    
    25.5Deferred policy acquisition costs
    
    
    40.2
    
    
    
    74.3Unrealized appreciation of investments
    
    
    35.1
    
    
    
    21.9Unrealized currency gains
    
    
    10.7
    
    
    
    Investments
    
    
    8.8
    
    
    
    10.2Other technical adjustments
    
    
    10.5
    
    
    
    27.4Other
    
    
    10.0
    
    
    
    5.2Total deferred income tax liabilities
    
    
    151.5
    
    
    
    164.5Net deferred income taxes as of December 31
    
    
    -7.1
    
    
    
    -2.0




---



##### Table of Contents



Defined benefit pension plans
         Table 15.1
 Weighted average
 2005
    
    
    2004
    
    
    2003Discount rate
    
    
    3.02
    %
    
    
    3.46
    %
    
    
    3.99
    %Expected long-term rate of return on assets
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    6.00
    %Future salary increases
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.00
    %Future pension increases
    
    
    0.65
    %
    
    
    0.89
    %
    
    
    0.90
    %




---



##### Table of Contents



Table 15.2
 (US$ million)
    
    2005
    
    
    2004
    
    
    2003Change in projected benefit obligationProjected benefit obligation as of January 1
    
    
    109.4
    
    
    
    80.3
    
    
    
    64.9Service cost
    
    
    7.3
    
    
    
    7.4
    
    
    
    7.6Interest cost
    
    
    3.1
    
    
    
    3.2
    
    
    
    2.6Settlements/curtailments
    
    
    -19.7
    
    
    
    
    
    
    
    Actuarial losses (gains)
    
    
    5.2
    
    
    
    10.1
    
    
    
    -3.8Foreign currency translation effects
    
    
    -14.0
    
    
    
    9.3
    
    
    
    8.8Benefits paid
    
    
    -2.3
    
    
    
    -0.9
    
    
    
    0.2Projected benefit obligation as of December 31
    
    
    89.0
    
    
    
    109.4
    
    
    
    80.3Change in fair value of plan assetsFair value of plan assets as of January 1
    
    
    68.2
    
    
    
    50.6
    
    
    
    35.6Actual return on plan assets
    
    
    4.4
    
    
    
    2.5
    
    
    
    2.9Employee contributions
    
    
    2.6
    
    
    
    3.1
    
    
    
    2.6Employer contributions
    
    
    5.6
    
    
    
    7.1
    
    
    
    4.4Settlements/curtailments
    
    
    -13.8
    
    
    
    
    
    
    
    Foreign currency translation effects
    
    
    -9.2
    
    
    
    5.8
    
    
    
    4.9Benefits paid
    
    
    -2.3
    
    
    
    -0.9
    
    
    
    0.2Fair value of plan assets as of December 31
    
    
    55.5
    
    
    
    68.2
    
    
    
    50.6Reconciliation of funded statusFunded status
    
    
    -33.5
    
    
    
    -41.2
    
    
    
    -29.7Unrecognized net actuarial losses (gains)
    
    
    11.9
    
    
    
    18.9
    
    
    
    6.6Unrecognized prior service cost
    
    
    -0.9
    
    
    
    -1.7
    
    
    
    -1.7Net amount recognized
    
    
    -22.5
    
    
    
    -24.0
    
    
    
    -24.8Amounts recognized in the consolidated balance sheetsAccrued benefit liability
    
    
    -26.3
    
    
    
    -31.7
    
    
    
    -26.0Accumulated other comprehensive income
    
    
    3.8
    
    
    
    7.7
    
    
    
    1.2Net amount recognized
    
    
    -22.5
    
    
    
    -24.0
    
    
    
    -24.8
    Table 15.3
Net periodic benefit expense
 (US$ million)For the years ended December 31
    
    2005
    
    
    2004
    
    
    2003Service cost
    
    
    7.3
    
    
    
    7.4
    
    
    
    7.6Interest cost
    
    
    3.1
    
    
    
    3.2
    
    
    
    2.6Expected return on plan assets
    
    
    -3.6
    
    
    
    -3.1
    
    
    
    -2.4Employee contributions
    
    
    -2.6
    
    
    
    -3.1
    
    
    
    -2.6Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    0.6Amortization of actuarial (gains) losses
    
    
    0.7
    
    
    
    
    
    
    
    0.4Amortization of past service cost
    
    
    -0.2
    
    
    
    -0.2
    
    
    
    -0.2Loss on settlements/curtailments
    
    
    2.2
    
    
    
    
    
    
    
    Net periodic benefit expense
    
    
    6.9
    
    
    
    4.2
    
    
    
    6.0
 F-35




---



##### Table of Contents



Table 15.4
Accrued benefit liability
 (US$ million)Year ended December 31
    
    2005
    
    
    2004
    
    
    2003Balance at January 1
    
    
    -31.7
    
    
    
    -26.0
    
    
    
    -21.1Current year expense
    
    
    -6.9
    
    
    
    -4.2
    
    
    
    -6.0Contributions paid
    
    
    5.6
    
    
    
    7.1
    
    
    
    4.4Foreign currency translation effects
    
    
    3.9
    
    
    
    -2.1
    
    
    
    -2.1Change in minimum pension liabilities
    
    
    2.8
    
    
    
    -6.5
    
    
    
    -1.2Balance at December 31
    
    
    -26.3
    
    
    
    -31.7
    
    
    
    -26.0
  Table 15.5
Expected future cash flows
 (US$ million)Employer contributions2006 (estimate)
    
    
    3.7Expected future benefit payments2006
    
    
    2.42007
    
    
    2.62008
    
    
    2.72009
    
    
    2.82010
    
    
    3.02011-2015
    
    
    16.4
  Table 15.6
Weighted average assets allocation of defined benefit plans
 Year ended December 31
    
    Long-term target
    
    2005
    
    2004Debt securities
    
    
    19%-33
    %
    
    
    55
    %
    
    
    50
    %Equity securities
    
    
    46%-70
    %
    
    
    24
    %
    
    
    31
    %Real estate
    
    
    14%-20
    %
    
    
    17
    %
    
    
    17
    %Cash and other investments
    
    
    0%- 8
    %
    
    
    4
    %
    
    
    2
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
 Defined contribution plans




---



##### Table of Contents



(a) Cash-based incentive plans
  Employee retention plan
  (b) Share-based incentive plans
  Employee Stock Purchase Plan
  Annual Incentive Share Plan
   Table 16.1
 2005
    
    
    2004
    
    
    2003Unvested shares at beginning of year
    
    
    457,182
    
    
    
    160,859
    
    
    
    363,278Shares granted
    
    
    262,158
    
    
    
    438,795
    
    
    
    133,930Shares vested
    
    
    -220,109
    
    
    
    -30,288
    
    
    
    -311,587Shares forfeited
    
    
    -71,855
    
    
    
    -112,185
    
    
    
    -24,762Unvested shares at end of year
    
    
    427,376
    
    
    
    457,181
    
    
    
    160,859
 Long-Term Incentive Plan (LTIP)




---



##### Table of Contents



Executive IPO option plan
   Table 16.2
 2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseOptions
    
    
    price
    
    
    Options
    
    
    price
    
    
    Options
    
    
    priceOutstanding at
beginning of year
    
    
    2,359,954
    
    
    
    45.88
    
    
    
    1,728,744
    
    
    
    CHF 71.17
    
    
    
    1,115,424
    
    
    
    CHF 79.28Granted
    
    
    760,325
    
    
    
    12.87
    
    
    
    1,238,640
    
    
    
    17.75
    
    
    
    699,555
    
    
    
    58.14Exercised
    
    
    -123,637
    
    
    
    9.59
    
    
    
    -39,806
    
    
    
    68.64
    
    
    
    -23,450
    
    
    
    60.10Forfeited
    
    
    -388,850
    
    
    
    14.59
    
    
    
    -567,624
    
    
    
    59.90
    
    
    
    -62,785
    
    
    
    74.31Outstanding at
end of year
    
    
    2,607,792
    
    
    
    14.95
    
    
    
    2,359,954
    
    
    
    45.88
    
    
    
    1,728,744
    
    
    
    71.17Options
exercisable at
end of year
    
    
    1,709,400
    
    
    
    16.73
    
    
    
    1,311,491
    
    
    
    61.38
    
    
    
    901,933
    
    
    
    75.74
  Table 16.3
Weighted average
 2005
    
    
    2004
    
    
    2003Risk-free rate
    
    
    2.20
    %
    
    
    2.11
    %
    
    
    1.51
    %Expected life
    
    3 years
    
    3 years
    
    3 yearsExpected volatility
    
    
    31.22
    %
    
    
    31.74
    %
    
    
    27.24
    %Dividend yield
    
    
    1.50
    %
    
    
    2.00
    %
    
    
    1.78
    %Fair value of options granted
    
    US$
    3.13
    
    
    US$
    3.38
    
    
    US$
    7.43
  Table 16.4
 Options outstanding
    
    
    Options exercisableWeightedRange of
    
    Number
    
    
    average remaining
    
    
    Weighted average
    
    
    Number
    
    
    Weighted averageexercise prices
    
    outstanding
    
    
    contractual life
    
    
    exercise price
    
    
    exercisable
    
    
    exercise priceCHF 8.64-13.05
    
    
    1,484,695
    
    
    
    9.8
    
    
    
    CHF 10.58
    
    
    
    685,939
    
    
    
    CHF 10.03CHF 14.10-18.99
    
    
    644,127
    
    
    
    7.9
    
    
    
    16.09
    
    
    
    544,491
    
    
    
    16.17CHF 25.56- 33.22
    
    
    478,970
    
    
    
    6.6
    
    
    
    26.96
    
    
    
    478,970
    
    
    
    26.96CHF 8.64-33.22
    
    
    2,607,792
    
    
    
    8.7
    
    
    
    14.95
    
    
    
    1,709,400
    
    
    
    16.73
 (c) Compensation expense
  (d) Repricing of options




---



##### Table of Contents



(a) Issued share capital
   (b) Authorized share capital
   (c) Contingent share capital
    (d) Dividend restrictions, reductions in the registered shares nominal value and capital and
solvency requirements




---



##### Table of Contents



Quota Share Retrocession Agreement
      th
  Other transactions




---



##### Table of Contents




    
    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,
    
    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.
   GAUM
          MDU




---



##### Table of Contents



SATEC
 usufruct usufruct usufruct usufruct
 usufruct
 RISC Ventures
   Table 20.1
Supplemental cash flow disclosures
 (US$ million)
    
    2005
    
    
    2004
    
    
    2003Income taxes paid
    
    
    -6.4
    
    
    
    -10.2
    
    
    
    -2.7Interest expense paid
    
    
    -31.6
    
    
    
    -33.1
    
    
    
    -31.0




---



##### Table of Contents




    
    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 21.1
Fair value of financial instruments
 Total
    
    
    Total
    
    
    Total
    
    
    Totalfair
    
    
    carrying
    
    
    fair
    
    
    carrying(US$ million)
    
    value
    
    
    value
    
    
    value
    
    
    valueAs of December 31
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004Fixed maturities
    
    
    4,948.6
    
    
    
    4,963.4
    
    
    
    5,678.8
    
    
    
    5,685.2Equity securities
    
    
    362.6
    
    
    
    362.6
    
    
    
    399.4
    
    
    
    399.4Other investments
(excluding real estate)
    
    
    108.5
    
    
    
    108.5
    
    
    
    140.4
    
    
    
    140.4Short-term investments
    
    
    35.1
    
    
    
    35.1
    
    
    
    117.3
    
    
    
    117.3Funds Withheld Asset
    
    
    1,020.1
    
    
    
    1,020.1
    
    
    
    1,305.1
    
    
    
    1,305.1Cash and cash equivalents
    
    
    647.3
    
    
    
    647.3
    
    
    
    680.9
    
    
    
    680.9Debt
    
    
    -377.0
    
    
    
    -391.2
    
    
    
    -330.6
    
    
    
    -391.1
  Letter of credit facility




---



##### Table of Contents



Operating leases
   Table 22.1
Minimum future payments under operating leases
 Rental(US$ million)
    
    payments2006
    
    
    11.02007
    
    
    10.72008
    
    
    10.52009
    
    
    9.42010
    
    
    8.42011 and thereafter
    
    
    14.5Total
    
    
    64.5
   MDU Put Option
  Converium legal proceedings, claims and litigation
  Canada Life
 th
  th




---



##### Table of Contents



Review of certain of our reinsurance transactions
     Class action lawsuits
  Rubin v. Converium Holding AG, et
al., Rubin
 Rubin




---



##### Table of Contents



Investigation by the Swiss Federal Banking Commission
    United States
  
    
    Making any payments pursuant to commutation agreements that result in decreasing CRNAs
surplus;
 
    
    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; and
 
    
    Entering into any sales, purchases, exchanges, loans, extensions of credit or investments not
in the ordinary course of its run-off business.




---



##### Table of Contents



Switzerland
    Germany




---



##### Table of Contents



Country of
    
    
    % of equity
    
    
    
    
    
    
    Shareincorporation
    
    
    shares held
    
    
    Currency
    
    
    capitalConverium AG
    
    Switzerland/Zurich
    
    
    100
    
    
    CHF
    
    
    400,000,000Converium IP Management AG
    
    Switzerland/Zug
    
    
    100
    
    
    CHF
    
    
    100,000Converium
Rückversicherung
(Deutschland) AG
    
    Germany/Cologne
    
    
    100
    
    
    EUR
    
    
    4,601,627Converium Holding (UK) Ltd
    
    United Kingdom/London
    
    
    100
    
    
    GBP
    
    
    101Converium Insurance (UK)
Ltd
    
    United Kingdom/London
    
    
    100
    
    
    GBP
    
    
    60,000,000Converium London
Management Ltd
    
    United Kingdom/London
    
    
    100
    
    
    GBP
    
    
    1,000Converium Underwriting Ltd
    
    United Kingdom/London
    
    
    100
    
    
    GBP
    
    
    2Converium Holdings (North
America) Inc.
    
    United States/State of Delaware
    
    
    100
    
    
    US$
    
    
    1Converium Reinsurance
(North America) Inc.
    
    United States/State of Connecticut
    
    
    100
    
    
    US$
    
    
    3,500,000Converium Insurance
(North America) Inc.
    
    United States/State of New Jersey
    
    
    100
    
    
    US$
    
    
    5,000,000Converium Finance S.A.
    
    Luxembourg/Luxembourg
    
    
    100
    
    
    EUR
    
    
    31,000Converium Finance
(Bermuda) Ltd
    
    Bermuda/Hamilton
    
    
    100
    
    
    US$
    
    
    12,000
    (US$ million, except per share information)For the years ended December 31
    
    2005
    
    
    2004
    
    
    2003Net income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9Average basic shares outstanding (millions)
    
    
    146.4
    
    
    
    63.4
    
    
    
    39.8Average diluted shares outstanding (millions)
    
    
    148.4
    
    
    
    64.1
    
    
    
    40.3Basic earnings (loss) per share
    
    
    0.47
    
    
    
    -9.19
    
    
    
    2.24Diluted earnings (loss) per share
    
    
    0.46
    
    
    
    -9.19
    
    
    
    2.23




---



##### Table of Contents



Condensed consolidating statements of income
 Non-(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Guarantor
    
    
    ConsolidatingYear ended December 31, 2005
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedRevenuesNet premiums written
    
    
    
    
    
    
    1,195.7
    
    
    
    
    
    
    
    620.0
    
    
    
    
    
    
    
    1,815.7Net premiums earned
    
    
    
    
    
    
    1,700.3
    
    
    
    
    
    
    
    682.9
    
    
    
    
    
    
    
    2,383.2Net investment income
    
    
    13.3
    
    
    
    217.3
    
    
    
    13.4
    
    
    
    111.8
    
    
    
    -30.9
    
    
    
    324.9Net realized capital (losses) gains
    
    
    
    
    
    
    -42.6
    
    
    
    
    
    
    
    10.2
    
    
    
    57.9
    
    
    
    25.5Other income (loss)
    
    
    57.2
    
    
    
    8.7
    
    
    
    -24.7
    
    
    
    3.3
    
    
    
    -57.9
    
    
    
    -13.4Total revenues
    
    
    70.5
    
    
    
    1,883.7
    
    
    
    -11.3
    
    
    
    808.2
    
    
    
    -30.9
    
    
    
    2,720.2Benefits, losses and expensesLosses, loss expenses and life
benefits
    
    
    
    
    
    
    -1,323.4
    
    
    
    
    
    
    
    -452.5
    
    
    
    
    
    
    
    -1,775.9Acquisition costs
    
    
    
    
    
    
    -398.1
    
    
    
    
    
    
    
    -177.5
    
    
    
    
    
    
    
    -575.6Other operating and
administration expenses
    
    
    -19.2
    
    
    
    -112.0
    
    
    
    -0.1
    
    
    
    -79.5
    
    
    
    
    
    
    
    -210.8Interest expense
    
    
    -11.2
    
    
    
    -0.5
    
    
    
    -16.5
    
    
    
    -34.4
    
    
    
    31.0
    
    
    
    -31.6Amortization of other intangible
assets
    
    
    
    
    
    
    -21.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -21.5Restructuring costs
    
    
    
    
    
    
    -9.3
    
    
    
    
    
    
    
    -11.2
    
    
    
    
    
    
    
    -20.5Total benefits, losses and expenses
    
    
    -30.4
    
    
    
    -1,864.8
    
    
    
    -16.6
    
    
    
    -755.1
    
    
    
    31.0
    
    
    
    -2,635.9Income (loss) before taxes
    
    
    40.1
    
    
    
    18.9
    
    
    
    -27.9
    
    
    
    53.1
    
    
    
    0.1
    
    
    
    84.3Income tax benefit (expense)
    
    
    1.5
    
    
    
    -2.5
    
    
    
    -0.1
    
    
    
    -14.5
    
    
    
    
    
    
    
    -15.6Income (loss) before equity
in (loss) income of subsidiaries
    
    
    41.6
    
    
    
    16.4
    
    
    
    -28.0
    
    
    
    38.6
    
    
    
    0.1
    
    
    
    68.7Equity in (loss) income of
subsidiaries
    
    
    27.1
    
    
    
    10.6
    
    
    
    
    
    
    
    
    
    
    
    -37.7
    
    
    
    Net income (loss)
    
    
    68.7
    
    
    
    27.0
    
    
    
    -28.0
    
    
    
    38.6
    
    
    
    -37.6
    
    
    
    68.7




---



##### Table of Contents



Consolidating balance sheets
 Non-(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Guarantor
    
    
    ConsolidatingDecember 31, 2005
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedAssetsInvested assetsFixed maturities
    
    
    
    
    
    
    2,773.7
    
    
    
    14.4
    
    
    
    2,175.3
    
    
    
    
    
    
    
    4,963.4Equity securities
    
    
    
    
    
    
    178.8
    
    
    
    
    
    
    
    183.8
    
    
    
    
    
    
    
    362.6Investment in subsidiaries
    
    
    1,624.5
    
    
    
    542.0
    
    
    
    
    
    
    
    
    
    
    
    -2,166.5
    
    
    
    Notes receivable
    
    
    150.0
    
    
    
    
    
    
    
    175.0
    
    
    
    
    
    
    
    -325.0
    
    
    
    Short-term and other investments
    
    
    
    
    
    
    280.3
    
    
    
    
    
    
    
    110.6
    
    
    
    -102.7
    
    
    
    288.2Total investments
    
    
    1,774.5
    
    
    
    3,774.8
    
    
    
    189.4
    
    
    
    2,469.7
    
    
    
    -2,594.2
    
    
    
    5,614.2Funds Withheld Asset
    
    
    
    
    
    
    1,020.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,020.1Total invested assets
    
    
    1,774.5
    
    
    
    4,794.9
    
    
    
    189.4
    
    
    
    2,469.7
    
    
    
    -2,594.2
    
    
    
    6,634.3Other assetsCash and cash equivalents
    
    
    41.9
    
    
    
    479.3
    
    
    
    3.2
    
    
    
    198.1
    
    
    
    -75.2
    
    
    
    647.3Premiums receivable
    
    
    
    
    
    
    707.8
    
    
    
    
    
    
    
    576.3
    
    
    
    -224.8
    
    
    
    1,059.3Reserves for unearned premiums, retro
    
    
    
    
    
    
    12.7
    
    
    
    
    
    
    
    201.3
    
    
    
    -176.2
    
    
    
    37.8Reinsurance assets
    
    
    
    
    
    
    551.7
    
    
    
    
    
    
    
    1,695.7
    
    
    
    -1,404.7
    
    
    
    842.7Funds held by reinsureds
    
    
    
    
    
    
    1,400.5
    
    
    
    
    
    
    
    956.5
    
    
    
    -539.6
    
    
    
    1,817.4Deposit assets
    
    
    
    
    
    
    132.8
    
    
    
    
    
    
    
    50.6
    
    
    
    
    
    
    
    183.4Deferred policy acquisition costs
    
    
    
    
    
    
    251.3
    
    
    
    
    
    
    
    53.0
    
    
    
    
    
    
    
    304.3Deferred income taxes
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    -0.1
    
    
    
    
    
    
    
    1.0Other assets
    
    
    43.0
    
    
    
    107.0
    
    
    
    31.6
    
    
    
    204.5
    
    
    
    -87.7
    
    
    
    298.4Total assets
    
    
    1,859.4
    
    
    
    8,439.1
    
    
    
    224.2
    
    
    
    6,405.6
    
    
    
    -5,102.4
    
    
    
    11,825.9Liabilities and shareholders equityLiabilitiesReinsurance liabilities
    
    
    
    
    
    
    5,683.7
    
    
    
    
    
    
    
    3,921.9
    
    
    
    -1,404.8
    
    
    
    8,200.8Reserves for unearned premiums, gross
    
    
    
    
    
    
    487.5
    
    
    
    
    
    
    
    299.3
    
    
    
    -176.0
    
    
    
    610.8Other reinsurance liabilities
    
    
    
    
    
    
    96.6
    
    
    
    
    
    
    
    257.9
    
    
    
    -226.7
    
    
    
    127.8Funds held under reinsurance contracts
    
    
    
    
    
    
    162.0
    
    
    
    
    
    
    
    710.5
    
    
    
    -539.6
    
    
    
    332.9Deposit liabilities
    
    
    
    
    
    
    276.6
    
    
    
    
    
    
    
    24.0
    
    
    
    
    
    
    
    300.6Deferred income taxes
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    8.1Accrued expenses and other liabilities
    
    
    51.9
    
    
    
    178.0
    
    
    
    1.0
    
    
    
    229.1
    
    
    
    -259.7
    
    
    
    200.3Notes payable
    
    
    150.0
    
    
    
    
    
    
    
    
    
    
    
    175.0
    
    
    
    -325.0
    
    
    
    Debt
    
    
    
    
    
    
    
    
    
    
    193.8
    
    
    
    197.4
    
    
    
    
    
    
    
    391.2Total liabilities
    
    
    201.9
    
    
    
    6,884.6
    
    
    
    194.8
    
    
    
    5,823.0
    
    
    
    -2,931.8
    
    
    
    10,172.5Shareholders equityCommon stock and
additional paid-in capital
    
    
    1,913.2
    
    
    
    1,874.0
    
    
    
    
    
    
    
    1,372.7
    
    
    
    -3,250.8
    
    
    
    1,909.1Treasury stock
    
    
    -1.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1.5Unearned stock compensation
    
    
    -3.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -3.5Total accumulated other
comprehensive income (loss)
    
    
    134.7
    
    
    
    111.6
    
    
    
    2.1
    
    
    
    -22.8
    
    
    
    -90.9
    
    
    
    134.7Retained (deficit) earnings
    
    
    -385.4
    
    
    
    -431.1
    
    
    
    27.3
    
    
    
    -767.3
    
    
    
    1,171.1
    
    
    
    -385.4Total shareholders equity
    
    
    1,657.5
    
    
    
    1,554.5
    
    
    
    29.4
    
    
    
    582.6
    
    
    
    -2,170.6
    
    
    
    1,653.4Total liabilities and shareholders equity
    
    
    1,859.4
    
    
    
    8,439.1
    
    
    
    224.2
    
    
    
    6,405.6
    
    
    
    -5,102.4
    
    
    
    11,825.9




---



##### Table of Contents



Condensed consolidatingstatements of cash flows
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Guarantor
    
    
    ConsolidatingYear ended December 31, 2005
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedCash provided by (used in)
operating activities
    
    
    68.7
    
    
    
    415.0
    
    
    
    -1.3
    
    
    
    -761.1
    
    
    
    -121.2
    
    
    
    -399.9Cash flows from investing
activitiesPurchases of fixed maturities
held-to-maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -4.7
    
    
    
    
    
    
    
    -4.7Proceeds from sales and maturities
of fixed maturities
    
    
    
    
    
    
    929.3
    
    
    
    
    
    
    
    3,372.1
    
    
    
    
    
    
    
    4,301.4Purchases of fixed maturities
available-for-sale
    
    
    
    
    
    
    -999.3
    
    
    
    
    
    
    
    -3,064.3
    
    
    
    
    
    
    
    -4,063.6Proceeds from sales of equity
securities
    
    
    
    
    
    
    96.1
    
    
    
    
    
    
    
    90.6
    
    
    
    
    
    
    
    186.7Purchases of equity securities
    
    
    
    
    
    
    -8.2
    
    
    
    
    
    
    
    -117.6
    
    
    
    
    
    
    
    -125.8Net increase in short-term
investments
    
    
    41.5
    
    
    
    -292.5
    
    
    
    
    
    
    
    127.2
    
    
    
    197.2
    
    
    
    73.4Proceeds from sales of other assets
    
    
    
    
    
    
    48.2
    
    
    
    
    
    
    
    154.0
    
    
    
    -149.4
    
    
    
    52.8Purchase of other assets
    
    
    
    
    
    
    -13.1
    
    
    
    
    
    
    
    -30.3
    
    
    
    
    
    
    
    -43.4Net (increase) decrease in deposit
assets
    
    
    
    
    
    
    -10.6
    
    
    
    
    
    
    
    -2.4
    
    
    
    
    
    
    
    -13.0Investment in subsidiaries
    
    
    -70.0
    
    
    
    -14.2
    
    
    
    
    
    
    
    
    
    
    
    84.2
    
    
    
    Net cash provided by (used in)
investing activities
    
    
    -28.5
    
    
    
    -264.3
    
    
    
    
    
    
    
    524.6
    
    
    
    132.0
    
    
    
    363.8Cash flows from financing
activitiesCapital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77.1
    
    
    
    -77.1
    
    
    
    Issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net purchases of common shares
    
    
    -1.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1.5Net (increase) decrease in deposit
liabilities
    
    
    
    
    
    
    -37.7
    
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    -35.3Net cash provided by (used in)
financing activities
    
    
    -1.5
    
    
    
    -37.7
    
    
    
    
    
    
    
    79.5
    
    
    
    -77.1
    
    
    
    -36.8Effect of exchange rate changes
on cash and cash equivalents
    
    
    1.1
    
    
    
    21.2
    
    
    
    0.3
    
    
    
    25.6
    
    
    
    -8.9
    
    
    
    39.3Change in cash and cash equivalents
    
    
    39.8
    
    
    
    134.2
    
    
    
    -1.0
    
    
    
    -131.4
    
    
    
    -75.2
    
    
    
    -33.6Cash and cash equivalents as of
January 1
    
    
    2.1
    
    
    
    345.1
    
    
    
    4.2
    
    
    
    329.5
    
    
    
    
    
    
    
    680.9Cash and cash equivalents
as of December 31
    
    
    41.9
    
    
    
    479.3
    
    
    
    3.2
    
    
    
    198.1
    
    
    
    -75.2
    
    
    
    647.3




---



##### Table of Contents



Condensed consolidatingstatements of income(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Non-Guarantor
    
    
    ConsolidatingYear ended December 31, 2004
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedRevenuesNet premiums written
    
    
    
    
    
    
    2,683.4
    
    
    
    
    
    
    
    1,042.7
    
    
    
    
    
    
    
    3,726.1Net premiums earned
    
    
    
    
    
    
    2,599.8
    
    
    
    
    
    
    
    1,282.4
    
    
    
    
    
    
    
    3,882.2Net investment income
    
    
    13.4
    
    
    
    189.4
    
    
    
    13.4
    
    
    
    123.2
    
    
    
    -26.7
    
    
    
    312.7Net realized capital gains (losses)
    
    
    
    
    
    
    12.6
    
    
    
    
    
    
    
    33.9
    
    
    
    
    
    
    
    46.5Other income (loss)
    
    
    23.7
    
    
    
    -29.5
    
    
    
    19.0
    
    
    
    -21.4
    
    
    
    
    
    
    
    -8.2Total revenues
    
    
    37.1
    
    
    
    2,772.3
    
    
    
    32.4
    
    
    
    1,418.1
    
    
    
    -26.7
    
    
    
    4,233.2Benefits, losses and expensesLosses, loss expenses and life
benefits
    
    
    
    
    
    
    -1,988.2
    
    
    
    
    
    
    
    -1,354.3
    
    
    
    
    
    
    
    -3,342.5Acquisition costs
    
    
    
    
    
    
    -651.0
    
    
    
    
    
    
    
    -261.4
    
    
    
    
    
    
    
    -912.4Other operating and
administration expenses
    
    
    -11.7
    
    
    
    -105.0
    
    
    
    -0.1
    
    
    
    -103.0
    
    
    
    
    
    
    
    -219.8Interest expense
    
    
    -10.6
    
    
    
    -0.4
    
    
    
    -16.5
    
    
    
    -32.3
    
    
    
    26.7
    
    
    
    -33.1Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -94.0
    
    
    
    
    
    
    
    -94.0Amortization of other intangible
assets
    
    
    
    
    
    
    -9.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -9.9Restructuring costs
    
    
    
    
    
    
    -0.2
    
    
    
    
    
    
    
    -2.5
    
    
    
    
    
    
    
    -2.7Total benefits, losses and expenses
    
    
    -22.3
    
    
    
    -2,754.7
    
    
    
    -16.6
    
    
    
    -1,847.5
    
    
    
    26.7
    
    
    
    -4,614.4Income (loss) before taxes
    
    
    14.8
    
    
    
    17.6
    
    
    
    15.8
    
    
    
    -429.4
    
    
    
    
    
    
    
    -381.2Income tax benefit (expense)
    
    
    2.5
    
    
    
    6.6
    
    
    
    -0.1
    
    
    
    -210.3
    
    
    
    
    
    
    
    -201.3Income (loss) before equity
in (loss) income of subsidiaries
    
    
    17.3
    
    
    
    24.2
    
    
    
    15.7
    
    
    
    -639.7
    
    
    
    
    
    
    
    -582.5Equity in (loss) income of
subsidiaries
    
    
    -599.8
    
    
    
    -624.1
    
    
    
    
    
    
    
    
    
    
    
    1,223.9
    
    
    
    Net (loss) income
    
    
    -582.5
    
    
    
    -599.9
    
    
    
    15.7
    
    
    
    -639.7
    
    
    
    1,223.9
    
    
    
    -582.5




---



##### Table of Contents



Consolidating balance sheets(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Non-Guarantor
    
    
    ConsolidatingDecember 31, 2004
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedAssetsInvested assetsFixed maturities
    
    
    
    
    
    
    2,956.6
    
    
    
    14.8
    
    
    
    2,713.8
    
    
    
    
    
    
    
    5,685.2Equity securities
    
    
    
    
    
    
    255.8
    
    
    
    
    
    
    
    143.6
    
    
    
    
    
    
    
    399.4Investment in subsidiaries
    
    
    1,675.7
    
    
    
    600.6
    
    
    
    
    
    
    
    
    
    
    
    -2,276.3
    
    
    
    Notes receivable
    
    
    150.0
    
    
    
    
    
    
    
    175.0
    
    
    
    
    
    
    
    -325.0
    
    
    
    Short-term and other investments
    
    
    46.7
    
    
    
    337.4
    
    
    
    
    
    
    
    244.3
    
    
    
    -231.9
    
    
    
    396.5Total investments
    
    
    1,872.4
    
    
    
    4,150.4
    
    
    
    189.8
    
    
    
    3,101.7
    
    
    
    -2,833.2
    
    
    
    6,481.1Funds Withheld Asset
    
    
    
    
    
    
    1,305.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,305.1Total invested assets
    
    
    1,872.4
    
    
    
    5,455.5
    
    
    
    189.8
    
    
    
    3,101.7
    
    
    
    -2,833.2
    
    
    
    7,786.2Other assetsCash and cash equivalents
    
    
    2.1
    
    
    
    345.1
    
    
    
    4.2
    
    
    
    329.5
    
    
    
    
    
    
    
    680.9Premiums receivable
    
    
    
    
    
    
    1,582.0
    
    
    
    
    
    
    
    376.5
    
    
    
    -126.3
    
    
    
    1,832.4Reserves for unearned premiums, retro
    
    
    
    
    
    
    35.6
    
    
    
    
    
    
    
    300.3
    
    
    
    -280.7
    
    
    
    55.2Reinsurance assets
    
    
    
    
    
    
    521.5
    
    
    
    
    
    
    
    1,870.7
    
    
    
    -1,315.0
    
    
    
    1,077.2Funds held by reinsureds
    
    
    
    
    
    
    1,342.4
    
    
    
    
    
    
    
    812.4
    
    
    
    -417.1
    
    
    
    1,737.7Deposit assets
    
    
    
    
    
    
    122.2
    
    
    
    
    
    
    
    48.2
    
    
    
    
    
    
    
    170.4Deferred policy acquisition costs
    
    
    
    
    
    
    418.2
    
    
    
    
    
    
    
    64.5
    
    
    
    
    
    
    
    482.7Deferred income taxes
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    5.1
    
    
    
    
    
    
    
    6.2Other assets
    
    
    38.7
    
    
    
    240.0
    
    
    
    65.8
    
    
    
    117.7
    
    
    
    -103.6
    
    
    
    358.6Total assets
    
    
    1,913.2
    
    
    
    10,063.6
    
    
    
    259.8
    
    
    
    7,026.6
    
    
    
    -5,075.9
    
    
    
    14,187.3Liabilities and shareholders equity
LiabilitiesReinsurance liabilities
    
    
    
    
    
    
    6,532.1
    
    
    
    
    
    
    
    4,789.7
    
    
    
    -1,422.9
    
    
    
    9,898.9Reserves for unearned premiums, gross
    
    
    
    
    
    
    1,059.0
    
    
    
    
    
    
    
    469.0
    
    
    
    -280.3
    
    
    
    1,247.7Other reinsurance liabilities
    
    
    
    
    
    
    43.9
    
    
    
    
    
    
    
    52.2
    
    
    
    -25.3
    
    
    
    70.8Funds held under reinsurance contracts
    
    
    
    
    
    
    32.3
    
    
    
    
    
    
    
    579.7
    
    
    
    -417.2
    
    
    
    194.8Deferred liabilities
    
    
    
    
    
    
    334.9
    
    
    
    
    
    
    
    21.6
    
    
    
    
    
    
    
    356.5Deferred income taxes
    
    
    
    
    
    
    8.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.2Accrued expenses and other liabilities
    
    
    24.2
    
    
    
    377.5
    
    
    
    1.4
    
    
    
    206.1
    
    
    
    -324.7
    
    
    
    284.5Notes payable
    
    
    150.0
    
    
    
    
    
    
    
    
    
    
    
    175.0
    
    
    
    -325.0
    
    
    
    Debt
    
    
    
    
    
    
    
    
    
    
    193.6
    
    
    
    197.5
    
    
    
    
    
    
    
    391.1Total liabilities
    
    
    174.2
    
    
    
    8,387.9
    
    
    
    195.0
    
    
    
    6,490.8
    
    
    
    -2,795.4
    
    
    
    12,452.5EquityCommon stock and
additional paid-in capital
    
    
    1,919.6
    
    
    
    1,874.0
    
    
    
    
    
    
    
    1,288.1
    
    
    
    -3,166.3
    
    
    
    1,915.4Treasury stock
    
    
    -7.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -7.7Unearned stock compensation
    
    
    -7.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -7.5Total accumulated other
comprehensive income (loss)
    
    
    288.7
    
    
    
    259.8
    
    
    
    9.4
    
    
    
    53.6
    
    
    
    -322.8
    
    
    
    288.7Retained (deficit) earnings
    
    
    -454.1
    
    
    
    -458.1
    
    
    
    55.4
    
    
    
    -805.9
    
    
    
    1,208.6
    
    
    
    -454.1Total shareholders equity
    
    
    1,739.0
    
    
    
    1,675.7
    
    
    
    64.8
    
    
    
    535.8
    
    
    
    -2,280.5
    
    
    
    1,734.8Total liabilities and shareholders
equity
    
    
    1,913.2
    
    
    
    10,063.6
    
    
    
    259.8
    
    
    
    7,026.6
    
    
    
    -5,075.9
    
    
    
    14,187.3




---



##### Table of Contents



Condensed consolidatingstatements of cash flows(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Non-Guarantor
    
    
    ConsolidatingYear ended December 31, 2004
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedCash provided by (used in)
operating activities
    
    
    41.6
    
    
    
    698.9
    
    
    
    2.1
    
    
    
    -383.9
    
    
    
    
    
    
    
    358.7Cash flows from investing
activitiesPurchases of fixed maturities
held-to-maturity
    
    
    
    
    
    
    -214.9
    
    
    
    
    
    
    
    -13.3
    
    
    
    
    
    
    
    -228.2Proceeds from sales and maturities
of fixed maturities
    
    
    
    
    
    
    936.3
    
    
    
    
    
    
    
    3,179.7
    
    
    
    
    
    
    
    4,116.0Purchases of fixed maturities
available-for-sale
    
    
    
    
    
    
    -1,663.5
    
    
    
    
    
    
    
    -2,756.7
    
    
    
    
    
    
    
    -4,420.2Proceeds from sales of equity
securities
    
    
    
    
    
    
    279.6
    
    
    
    
    
    
    
    703.5
    
    
    
    
    
    
    
    983.1Purchases of equity securities
    
    
    
    
    
    
    -67.0
    
    
    
    
    
    
    
    -470.5
    
    
    
    
    
    
    
    -537.5Net increase in short-term
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -55.3
    
    
    
    
    
    
    
    -55.3Proceeds from sales of other assets
    
    
    
    
    
    
    54.2
    
    
    
    
    
    
    
    28.1
    
    
    
    
    
    
    
    82.3Purchase of other assets
    
    
    
    
    
    
    -152.0
    
    
    
    
    
    
    
    8.0
    
    
    
    
    
    
    
    -144.0Net (increase) decrease in deposit
assets
    
    
    
    
    
    
    -73.3
    
    
    
    
    
    
    
    -38.3
    
    
    
    
    
    
    
    -111.6Notes 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
    
    
    
    -1,058.5
    
    
    
    
    
    
    
    449.3
    
    
    
    695.6
    
    
    
    -315.4Cash flows from financing
activitiesCapital contribution
    
    
    
    
    
    
    402.9
    
    
    
    
    
    
    
    108.7
    
    
    
    -511.6
    
    
    
    Issuance of notes payable
    
    
    22.0
    
    
    
    182.6
    
    
    
    
    
    
    
    27.2
    
    
    
    -231.8
    
    
    
    Net purchases of common shares
    
    
    -6.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -6.0Dividends to shareholders
    
    
    -47.8
    
    
    
    -47.8
    
    
    
    
    
    
    
    
    
    
    
    47.8
    
    
    
    -47.8Proceeds from Rights Offering
    
    
    428.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    428.4Rights Offering issuance costs
    
    
    -25.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -25.1Net increase (decrease) in deposit
liabilities
    
    
    
    
    
    
    29.7
    
    
    
    
    
    
    
    -31.4
    
    
    
    
    
    
    
    -1.7Net cash provided by (used in)
financing activities
    
    
    371.5
    
    
    
    567.4
    
    
    
    
    
    
    
    104.5
    
    
    
    -695.6
    
    
    
    347.8Effect of exchange rate changes
on cash and cash equivalents
    
    
    -10.4
    
    
    
    15.4
    
    
    
    
    
    
    
    4.0
    
    
    
    
    
    
    
    9.0Change in cash and cash equivalents
    
    
    0.9
    
    
    
    223.2
    
    
    
    2.1
    
    
    
    173.9
    
    
    
    
    
    
    
    400.1Cash and cash equivalents
as of January 1
    
    
    1.2
    
    
    
    121.9
    
    
    
    2.1
    
    
    
    155.6
    
    
    
    
    
    
    
    280.8Cash and cash equivalents
as of December 31
    
    
    2.1
    
    
    
    345.1
    
    
    
    4.2
    
    
    
    329.5
    
    
    
    
    
    
    
    680.9




---



##### Table of Contents



Condensed consolidatingstatements of income
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Guarantor
    
    
    ConsolidatingYear ended December 31, 2003
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedRevenuesNet premiums written
    
    
    
    
    
    
    2,549.0
    
    
    
    
    
    
    
    1,373.7
    
    
    
    
    
    
    
    3,922.7Net premiums earned
    
    
    
    
    
    
    2,454.0
    
    
    
    
    
    
    
    1,313.8
    
    
    
    
    
    
    
    3,767.8Net investment income
    
    
    13.3
    
    
    
    129.5
    
    
    
    12.5
    
    
    
    105.0
    
    
    
    -25.9
    
    
    
    234.4Net realized capital (losses) gains
    
    
    
    
    
    
    -50.3
    
    
    
    39.5
    
    
    
    29.2
    
    
    
    
    
    
    
    18.4Other income (loss)
    
    
    33.1
    
    
    
    14.3
    
    
    
    
    
    
    
    -29.9
    
    
    
    
    
    
    
    17.5Total revenues
    
    
    46.4
    
    
    
    2,547.5
    
    
    
    52.0
    
    
    
    1,418.1
    
    
    
    -25.9
    
    
    
    4,038.1Benefits, losses and expensesLosses, loss expenses and life
benefits
    
    
    
    
    
    
    -1,667.5
    
    
    
    
    
    
    
    -1,092.6
    
    
    
    
    
    
    
    -2,760.1Acquisition costs
    
    
    
    
    
    
    -567.0
    
    
    
    
    
    
    
    -265.0
    
    
    
    
    
    
    
    -832.0Other operating and
administration expenses
    
    
    -8.9
    
    
    
    -105.1
    
    
    
    4.1
    
    
    
    -92.6
    
    
    
    
    
    
    
    -202.5Interest expense
    
    
    -10.5
    
    
    
    -0.1
    
    
    
    -16.5
    
    
    
    -29.8
    
    
    
    25.9
    
    
    
    -31.0Amortization of other intangible
assets
    
    
    
    
    
    
    -1.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -1.8Total benefits, losses and expenses
    
    
    -19.4
    
    
    
    -2,341.5
    
    
    
    -12.4
    
    
    
    -1,480.0
    
    
    
    25.9
    
    
    
    -3,827.4Income (loss) before taxes
    
    
    27.0
    
    
    
    206.0
    
    
    
    39.6
    
    
    
    -61.9
    
    
    
    
    
    
    
    210.7Income tax (expense) benefit
    
    
    -3.5
    
    
    
    -42.7
    
    
    
    
    
    
    
    13.4
    
    
    
    
    
    
    
    -32.8Income (loss) before equity
in income (loss) of subsidiaries
    
    
    23.5
    
    
    
    163.3
    
    
    
    39.6
    
    
    
    -48.5
    
    
    
    
    
    
    
    177.9Equity in income (loss) of
subsidiaries
    
    
    154.4
    
    
    
    -8.9
    
    
    
    
    
    
    
    
    
    
    
    -145.5
    
    
    
    Net income (loss)
    
    
    177.9
    
    
    
    154.4
    
    
    
    39.6
    
    
    
    -48.5
    
    
    
    -145.5
    
    
    
    177.9




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##### Table of Contents



Condensed consolidating statements of cash flows
 Non-(US$ million)
    
    Converium
    
    
    Converium
    
    
    Converium
    
    
    Guarantor
    
    
    ConsolidatingYear ended December 31, 2003
    
    Holding AG
    
    
    AG
    
    
    Finance S.A.
    
    
    Entities
    
    
    Adjustments
    
    
    ConsolidatedCash provided by (used in)
operating activities
    
    
    3.3
    
    
    
    878.8
    
    
    
    -1.1
    
    
    
    35.3
    
    
    
    0.9
    
    
    
    917.2Cash flows from investing activitiesPurchases of fixed maturities
held-to-maturity
    
    
    
    
    
    
    -192.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -192.4Proceeds from sales and maturities
of fixed maturities available-for-sale
    
    
    
    
    
    
    904.9
    
    
    
    
    
    
    
    2,908.5
    
    
    
    
    
    
    
    3,813.4Purchases of fixed maturities
available-for-sale
    
    
    
    
    
    
    -1,828.1
    
    
    
    -14.8
    
    
    
    -3,211.1
    
    
    
    
    
    
    
    -5,054.0Proceeds from sales of equity
securities
    
    
    
    
    
    
    47.8
    
    
    
    
    
    
    
    46.5
    
    
    
    
    
    
    
    94.3Purchases of equity securities
    
    
    
    
    
    
    -178.2
    
    
    
    
    
    
    
    -66.1
    
    
    
    
    
    
    
    -244.3Net decrease (increase)
in short-term investments
    
    
    3.6
    
    
    
    256.6
    
    
    
    42.7
    
    
    
    -25.7
    
    
    
    
    
    
    
    277.2Purchase of note receivable
    
    
    
    
    
    
    
    
    
    
    -25.0
    
    
    
    
    
    
    
    25.0
    
    
    
    Investment in subsidiaries
    
    
    29.9
    
    
    
    -106.8
    
    
    
    
    
    
    
    
    
    
    
    76.9
    
    
    
    Net (increase) decrease in deposit
assets
    
    
    
    
    
    
    -27.2
    
    
    
    
    
    
    
    14.1
    
    
    
    
    
    
    
    -13.1All other investing activity
    
    
    
    
    
    
    10.5
    
    
    
    
    
    
    
    -4.9
    
    
    
    -0.9
    
    
    
    4.7Net cash provided by (used in)
investing activities
    
    
    33.5
    
    
    
    -1,112.9
    
    
    
    2.9
    
    
    
    -338.7
    
    
    
    101.0
    
    
    
    -1,314.2Cash flows from financing activitiesCapital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106.8
    
    
    
    -106.8
    
    
    
    Issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.0
    
    
    
    -25.0
    
    
    
    Net purchases of common shares
    
    
    -17.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -17.3Dividends to shareholders
    
    
    -29.9
    
    
    
    -29.9
    
    
    
    
    
    
    
    
    
    
    
    29.9
    
    
    
    -29.9Net increase (decrease) in deposit
liabilities
    
    
    
    
    
    
    305.4
    
    
    
    
    
    
    
    -5.3
    
    
    
    
    
    
    
    300.1Net cash (used in) provided
by financing activities
    
    
    -47.2
    
    
    
    275.5
    
    
    
    
    
    
    
    126.5
    
    
    
    -101.9
    
    
    
    252.9Effect of exchange rate changes
on cash and cash equivalents
    
    
    10.8
    
    
    
    13.4
    
    
    
    
    
    
    
    -0.5
    
    
    
    
    
    
    
    23.7Change in cash and cash equivalents
    
    
    0.4
    
    
    
    54.8
    
    
    
    1.8
    
    
    
    -177.4
    
    
    
    
    
    
    
    -120.4Cash and cash equivalents
as of January 1
    
    
    0.8
    
    
    
    67.1
    
    
    
    0.3
    
    
    
    333.0
    
    
    
    
    
    
    
    401.2Cash and cash equivalents
as of December 31
    
    
    1.2
    
    
    
    121.9
    
    
    
    2.1
    
    
    
    155.6
    
    
    
    
    
    
    
    280.8
  Canada Life




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##### Table of Contents



Class action lawsuits




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##### Table of Contents



Converium Holding AG
Report of Independent Group Auditors
On the Financial Statement Schedules
      
 S-1




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##### Table of Contents



Schedule I
 Converium Holding AG and Subsidiaries
Summary of investments other than investments in related parties as of December 31, 2005
 Amount at whichCost or
    
    
    
    
    
    shown in theamortized cost
    
    Fair value
    
    balance sheet(US$ millions)Fixed maturities:Bonds held-to-maturity:US government
    
    
    558.2
    
    
    
    538.4
    
    
    
    558.2Other government
    
    
    235.4
    
    
    
    240.4
    
    
    
    235.4Total fixed maturities held-to-maturity
    
    
    793.6
    
    
    
    778.8
    
    
    
    793.6Bonds available-for-sale:US government
    
    
    1,166.3
    
    
    
    1,147.7
    
    
    
    1,147.7Other government
    
    
    1,566.6
    
    
    
    1,575.2
    
    
    
    1,575.2Public utilities
    
    
    77.7
    
    
    
    76.5
    
    
    
    76.5Other corporate debt securities
    
    
    648.3
    
    
    
    640.5
    
    
    
    640.5Unit trust
    
    
    162.6
    
    
    
    168.5
    
    
    
    168.5Mortgage and asset-backed securities
    
    
    568.1
    
    
    
    561.4
    
    
    
    561.4Total fixed maturities available for sale
    
    
    4,189.6
    
    
    
    4,169.8
    
    
    
    4,169.8Total fixed maturities
    
    
    4,983.2
    
    
    
    4,948.6
    
    
    
    4,963.4Equity securities:Common stocks:Public utilities
    
    
    3.3
    
    
    
    4.8
    
    
    
    4.8Banks, trusts, and insurance companies
    
    
    20.6
    
    
    
    29.5
    
    
    
    29.5Industrial, miscellaneous and all other
    
    
    167.8
    
    
    
    220.4
    
    
    
    220.4Unit trust
    
    
    89.7
    
    
    
    101.5
    
    
    
    101.5Non-redeemable preferred stocks
    
    
    6.3
    
    
    
    6.4
    
    
    
    6.4Total equity securities
    
    
    287.7
    
    
    
    362.6
    
    
    
    362.6Real estate
    
    
    144.6
    
    
    
    144.6
    
    
    
    144.6Policyholder, collateral and other loans
    
    
    1.1
    
    
    
    1.1
    
    
    
    1.1Other investments
    
    
    100.0
    
    
    
    107.4
    
    
    
    107.4Short-term investments
    
    
    35.1
    
    
    
    35.1
    
    
    
    35.1Total investments
    
    
    5,551.7
    
    
    
    5,599.4
    
    
    
    5,614.2Funds Withheld Asset
    
    
    1,020.1
    
    
    
    1,020.1
    
    
    
    1,020.1Total invested assets
    
    
    6,571.8
    
    
    
    6,619.5
    
    
    
    6,634.3
 S-2




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##### Table of Contents



Schedule II
 Converium Holding AG
Statements of income (loss)
 Year ended December 31,(US$ millions)
    
    2005
    
    2004
    
    2003IncomeNet investment income
    
    
    13.3
    
    
    
    13.4
    
    
    
    13.3Other income
    
    
    57.2
    
    
    
    23.7
    
    
    
    33.1Total revenues
    
    
    70.5
    
    
    
    37.1
    
    
    
    46.4ExpensesOther operating and administration expenses
    
    
    -19.2
    
    
    
    -11.7
    
    
    
    -8.9Interest expense
    
    
    -11.2
    
    
    
    -10.6
    
    
    
    -10.5Total expenses
    
    
    -30.4
    
    
    
    -22.3
    
    
    
    -19.4Income before taxes
    
    
    40.1
    
    
    
    14.8
    
    
    
    27.0Income tax benefit (expense)
    
    
    1.5
    
    
    
    2.5
    
    
    
    -3.5Income before equity in income (loss) of subsidiaries
    
    
    41.6
    
    
    
    17.3
    
    
    
    23.5Equity in (loss) income of subsidiaries
    
    
    27.1
    
    
    
    -599.8
    
    
    
    154.4Net
income (loss)
    
    
    68.7
    
    
    
    -582.5
    
    
    
    177.9
  S-3




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##### Table of Contents



Converium Holding AG
Balance sheets
 December 31,(US$ millions)
    
    2005
    
    2004AssetsInvested assetsInvestment in subsidiaries
    
    
    1,624.5
    
    
    
    1,675.7Notes receivable
    
    
    150.0
    
    
    
    150.0Short-term and other investments
    
    
    
    
    
    
    46.7Total invested assets
    
    
    1,774.5
    
    
    
    1,872.4Other assetsCash and cash equivalents
    
    
    41.9
    
    
    
    2.1Other assets
    
    
    43.0
    
    
    
    38.7Total assets
    
    
    1,859.4
    
    
    
    1,913.2Liabilities and shareholders equityLiabilitiesAccrued expenses and other liabilities
    
    
    51.9
    
    
    
    24.2Notes payable
    
    
    150.0
    
    
    
    150.0Total liabilities
    
    
    201.9
    
    
    
    174.2Shareholders equityCommon stock and additional paid-in capital
    
    
    1,913.2
    
    
    
    1,919.6Treasury stock
    
    
    -1.5
    
    
    
    -7.7Unearned stock compensation
    
    
    -3.5
    
    
    
    -7.5Total accumulated other comprehensive income
    
    
    134.7
    
    
    
    288.7Retained (deficit) earnings
    
    
    -385.4
    
    
    
    -454.1Total shareholders equity
    
    
    1,657.5
    
    
    
    1,739.0Total liabilities and shareholders equity
    
    
    1,859.4
    
    
    
    1,913.2
  S-4




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##### Table of Contents



Schedule II
 Converium Holding AG
Statements of cash flows
 Year ended December 31,(US$ millions)
    
    2005
    
    2004
    
    2003Cash flows from operating activitiesCash provided by operating activities
    
    
    68.7
    
    
    
    41.6
    
    
    
    3.3Cash flows from investing activitiesIssuance of note receivable
    
    
    
    
    
    
    -46.7
    
    
    
    Investment in Converium AG
    
    
    -70.0
    
    
    
    -355.1
    
    
    
    29.9Net increase in short-term investments
    
    
    41.5
    
    
    
    
    
    
    
    3.6Net cash (used in) provided by investing activities
    
    
    -28.5
    
    
    
    -401.8
    
    
    
    33.5Cash flows from financing activitiesIssuance of note payable
    
    
    
    
    
    
    22.0
    
    
    
    Net purchases of common shares
    
    
    -1.5
    
    
    
    -6.0
    
    
    
    -17.3Dividends to shareholders
    
    
    
    
    
    
    -47.8
    
    
    
    -29.9Proceeds from 2004 rights offering
    
    
    
    
    
    
    428.4
    
    
    
    2004 rights offering issuance costs
    
    
    
    
    
    
    -25.1
    
    
    
    Net cash (used in) provided by financing activities
    
    
    -1.5
    
    
    
    371.5
    
    
    
    -47.2Effect of exchange rate changes in cash and cash equivalents
    
    
    1.1
    
    
    
    -10.4
    
    
    
    10.8Change in cash and cash equivalents
    
    
    39.8
    
    
    
    0.9
    
    
    
    0.4Cash and cash equivalents, beginning of period
    
    
    2.1
    
    
    
    1.2
    
    
    
    0.8Cash and cash equivalents, end of period
    
    
    41.9
    
    
    
    2.1
    
    
    
    1.2
  S-5




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##### Table of Contents



Schedule IV
 Converium Holding AG and Subsidiaries
Reinsurance and insurance premiums and other considerations
 Gross
    
    Ceded to other
    
    Assumed from other
    
    
    
    
    
    % of amount(US$ millions)
    
    Amount
    
    Companies
    
    Companies
    
    Net Amount
    
    assumed to net2005
    
    
    529.1
    
    
    
    -178.6
    
    
    
    1,465.2
    
    
    
    1,815.7
    
    
    
    80.7
    %2004
    
    
    490.9
    
    
    
    -252.6
    
    
    
    3,487.8
    
    
    
    3,726.1
    
    
    
    93.6
    %2003
    
    
    561.4
    
    
    
    -377.7
    
    
    
    3,739.0
    
    
    
    3,922.7
    
    
    
    95.3
    %
 S-6




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##### Table of Contents



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 been incurred and 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




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##### Table of Contents



Loss 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




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##### Table of Contents



Retrocessional Reinsurance
    
    An arrangement under which a
reinsurer (the retroceding company)
cedes to another reinsurer (the
retrocessionaire) all or a portion
of the insurance risks reinsured by
the retroceding company.
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




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##### Table of Contents



SIGNATURES
  Converium Holding AGBy:
    
    /s/ Inga K. BealeName: Inga K. BealeTitle: Chief Executive Officer, Converium Holding AGBy:
    
    /s/ Andreas ZdrenykName: Andreas ZdrenykTitle: Chief Financial Officer, Converium Holding AG
  Sig-1




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit Number
    
    Description1.1
    
    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 April 11, 2006.1.4
    
    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 US$ 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, amending the Indenture
dated as of October 20, 1993.* (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 US$ 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 US$ 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 US$ 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 Holdings, Inc. and Converium
Holdings (North America) Inc., dated as of October 1, 2001.*4.3
    
    Agreement for the Sale and Transfer of Shares in Zürich Rückversicherung (Köln)
Aktiengesellschaft, dated September 28, 2001.*4.4
    
    Quota Share Retrocession Agreement between Zurich Insurance Company (including
its Singapore, Labuan and Bermuda branches) and Converium AG, dated October 1,
2001.*4.5
    
    Quota Share Retrocession Agreement between Zurich International (Bermuda) Ltd.
and Converium AG, dated October 1, (and effective as of July 1, 2001).*4.6
    
    Asset purchase and Assumption of Liability Agreement between Zurich Insurance
Company and Converium AG, dated September 28, 2001.*4.7
    
    Indemnity Agreement (Unicover) between Zurich Reinsurance (North America), Inc.
and Zurich Insurance Company, dated as of October 1, 2001.*4.8
    
    Indemnity Agreement (September 11th Cessions) between Zurich Reinsurance (North
America), Inc. and Zurich Insurance Company, dated as of October 1, 2001.*4.9
    
    Indemnity Agreement (September 11th Losses) between Zürich Rückversicherung
(Köln) 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.*




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##### Table of Contents



Exhibit Number
    
    Description4.16
    
    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. *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 US$ 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
US$ 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. \




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##### Table of Contents



Exhibit Number
    
    Description4.43
    
    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. \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. \4.46
    
    Amendment No. 1 to the Quota Share Retrocession Agreement between Zurich
Insurance Company (Including its Bermuda Branch) and Converium AG, dated as of
October 1, 2001 and effective as of July 1, 2001.7.1
    
    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.13.0
    
    906 Certification of Chief Executive Officer and Chief Financial Officer.
 
 *
    
    Incorporated by reference to the Companys Registration Statement filed on Form F-1, on December 10, 2001.+
    
    Incorporated by reference to the Companys Registration Statement filed on Form F-1, on December 18, 2002.^
    
    Incorporated by reference to the Companys Annual Report on Form 20-F for the year ended December 31, 2002,
filed on April 18, 2003.#
    
    Incorporated by reference to the Companys Annual Report on Form 20-F for the year ended December 31, 2003,
filed on April 5, 2004.\
    
    Incorporated by reference to the Companys Annual Report on Form 20-F for the year ended December 31,
2004, filed on June 30, 2005.