Converium

Since 30 June, troubled reinsurer Converium AG has commuted some $265mn in loss reserves related to prior years' business in North America, according to the company’s third quarter 2004 report. Converium is negotiating additional offers of commutation with several clients. The thinking is that commutations generally accelerate the realisation of profits inherent in long-tail reserves by turning outstanding claims reserves into payments which are then discounted; however, future investment income earned will decline as assets backing reserves are sold to make payments.