The reinsurer was downgraded to a "triple-B" from "A-minus" by Standard & Poor's on Sept. 10, just prior to the annual reinsurance Rendez-Vous de Septembre in Monte Carlo, the meeting at which insurers meet reinsurers to discuss coverage for the coming year.

S&P first lowered Converium's rating to "A-minus" in July when the company revealed that it would need to boost reserves on casualty business in the United States by nearly $400 million.

A.M. Best and Moody's also announced downgrades, with the Best rating falling to "B-double-plus" from "A-minus" on Sept. 1, and the Moody's rating dropping to Baa1 from A2 on Aug. 31. Fitch ratings in London downgraded the reinsurer to "double-B-plus" from "A-minus."

Converium, which has built businesses in key markets such as Europe, Asia-Pacific and Latin America, said that since its initial public offering it has generated net income in excess of $500 million?excluding business underwritten by the North American entity.

The company said that despite setbacks suffered in the United States, it continues to enjoy a strong and stable franchise among its customers in the remaining markets.

Converium noted that an independent survey from Flashpoehler, conducted in the first half of 2004 among European cedents, indicated that Converium's clients rank the Company third in terms of overall excellence among reinsurers surveyed.

Against this backdrop Converium said its board of directors believes the company can continue to extract value from this franchise for the benefit of shareholders. As a consequence, operating a going concern on a stand-alone basis based on a capital increase remains a viable option.

In considering all options to protect the company's franchise and shareholder value, flexibility is an essential component of this process, the company said. A capital increase is a core ingredient in a number of these options.

Converium said it is discussing a partnership or strategic investment with various parties. While some discussions are at a more advanced stage, additional time will be needed to evaluate and compare all options when it comes to structures and terms.

The progress of a number of discussions is dependent on assurances to potential partners that the capital increase will be available, the company said.

Converium's board stressed that the company will only execute a capital increase that makes sense from a shareholder value and rating perspective and on underwriting terms that are acceptable to the company.

The board proposed that shareholders approve a capital structure allowing a capital increase of up to $420 million.