ZURICH (Bloomberg) — Scor SA, France's largest reinsurer, won the backing of Converium Holding AG's board for its takeover approach after raising the offer by almost 8 percent to value the Swiss company at $2.8 billion.Scor plans to buy Zug, Switzerland-based Converium for 5.50 Swiss francs ($4.50) in cash and half of a new Scor share for each Converium share, the Paris-based company said yesterday.

Converium, which has an office in Bermuda, said shareholders should accept the offer, ending an almost three-month battle to remain independent.

Converium profit has trailed rivals since the company lost about $1 billion of contracts after its credit rating was cut in 2004 because it didn't set aside enough money for claims. Buying Converium would let Scor add customers in Switzerland, Austria, the UK and Germany, where it bought Revios Ruckversicherung AG last year to create the fourth-largest life reinsurer.

"It's a very attractive deal at this level," said Rene Locher, a Zurich-based analyst at Sal. Oppenheim. The offer is equivalent to 10 times forecast earnings for 2009, he said. "Everyone can save face with this deal."

Converium shares rose 25 centimes, or 1.1 percent, to 22.50 francs in Zurich. Shares of Scor declined 30 cents, or 1.4 percent, to [EURO]20.90 in Paris, giving the company a market value of almost [EURO]2.9 billion ($3.9 billion).

Negotiations to end Converium's opposition started over the weekend and continued until 3 a.m. yesterday, Scor chairman Denis Kessler said in Zurich, where he urged Converium shareholders to accept the increased bid. The original offer, announced on February 26, was for 4 francs in cash and half a new Scor share for each Converium share.

"We would have liked to remain independent," Converium Chairman Markus Dennler told shareholders yesterday in Zurich. In the end, "we had to confront the fact" that Scor already holds almost a third of the stock.

Converium said it will withdraw its litigation in the US against Scor and its shareholders yesterday scrapped a plan to return $300 million in capital to investors by July. The move was originally proposed by the company's board in February to convince shareholders to reject Scor's bid.

Scor said it plans to keep Zurich as one of three "key European hubs" in addition to Paris and Cologne, Germany. It agreed not to cut any jobs at Converium for at least a year.

"Everything will be done to protect the employees," Converium chief executive officer Inga Beale said.

Beale and finance chief Paolo de Martin will step down at the end of 2007 if the offer succeeds, Converium spokesman Beat Werder said. Benjamin Gentsch, chief of Converium's life and health unit, would head the combined company's Swiss division, Kessler said.

Kessler said he is "confident we'll keep most of the business" Converium underwrites, "if we want to keep it". He rejected a forecast made by Converium on April 13 that a hostile takeover would prompt employees to quit and cut premium income by up to 40 percent as "not realistic".

Reinsurers help insurers such as Allianz SE spread risks. Scor has said the combined company will be able to increase premiums from life reinsurance by 8 percent a year through 2010 and non-life reinsurance premiums by 6 percent annually during the period. By 2009, after incurring costs related to takeover, savings would be 65 million euros annually, Kessler has said.