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ZUG, SwitzerlandConverium Holding Ltd. has reached a deal to sell its United States' operations, which are in runoff, to a unit of Berkshire Hathaway Inc. for $295 million.
Zug, Switzerland-based Converium said it would sell its North American operations to National Indemnity Co. for $95 million in cash and $200 million debt, and would not provide any indemnity or guarantee in respect of the reserves of the operations.
Converium said in a statement that the deal would reduce significantly its exposures, as National Indemnity will assume all of Converium's North American operations' reinsurance liabilitieswhich stood at $1.06 billion at June 30, 2006as well as $200 million of debt issued by Converium Holdings (North America) Inc.
Converium said it expected the transaction would reduce its shareholders' equity by $135 million to $1.66 billion.
"With this transaction we have successfully delivered on our promise to achieve finality regarding Converium's U.S. operations through a clean-cut sale. We can now fully concentrate on building Converium's future, with our business strategy focused on markets outside the U.S.," Inga Beale, Converium's chief executive officer, said in a statement.
Converium placed its North American reinsurance operations into runoff after being downgraded by rating agencies following large losses in 2004. That loss was largely caused by reserve increases for U.S. casualty business written between 1997 and 2001.