A.M. Best Affirms Munich Re Group's Financial Strength and Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 5, 2001 Effective September 27, 2001, A.M. Best Co. has affirmed the A++ (Superior) financial strength rating of Muenchener Rueckversicherungs-Gesellschaft (Munich Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Co.) and its core reinsurance subsidiaries and affiliates. Further, A.M. Best has affirmed the "aaa" senior debt rating of Munich Re Munich Re AG, in German Münchener Rück AG (ISIN: DE0008430026), is the world's second largest reinsurance company with over 5,000 customers in 160 countries and has its headquarters in Munich, Germany. , the "aa" senior debt rating of American Re Corporation and the "aa-" rating of the trust preferred securities issued by American Re Capital I. A.M. Best's highest rating recognizes Munich Re's exceptional capitalization, its preeminent position as the world's leading reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. , outstanding geographic and business diversification, conservative financial and operational leverage, underwriting skills and the expertise of its management. The group's franchise and scope of operations allow Munich Re to sustain its international leadership position with reinsurance relationships in over 150 countries. The direct insurance operations, ERGO -- which include all major lines of life and non-life insurance but with a strong focus on personal lines business in Europe -- lend a greater stability to the group's earnings, counterbalancing the volatility associated with the reinsurance sector. The asset management division, MEAG MEAG Municipal Electric Authority of Georgia MEAG Munich Ergo Asset Management GmbH , has more than EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 150 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. and rounds out the product diversification. Conservative reserve levels and modest financial leverage support Munich Re's exceptional capital strength. Further reinforcing the group's capital resources is the recent passage of tax reforms in Germany, exempting corporations as of 2002 from capital gains tax on sale of equity holdings. Munich Re is expected to realize a significant tax-free gain on the disposal of investments and a substantial increase in its consolidated shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. in 2002. A.M. Best expects the group's low financial leverage and excellent fixed charge coverage to be maintained at exemplary levels in the near to intermediate term despite the incurred World Trade Center losses. Early earnings estimates indicate a pre tax loss of EUR 2.1 billion. It is anticipated that terms and conditions for reinsurance support will further harden, and the Munich Re Group will be among the principal beneficiaries of the accelerating flight to quality. Recent pension reform in Germany is expected to spawn a strong demand for investment linked life insurance policies. In this context, the recently announced restructuring of the group's shareholdings -- with an increase in its participation in Hypovereinbank as its centerpiece -- shall allow ERGO to substantially enhance its distribution channels as it will gain exclusive access to the bank's branch network to distribute pension products at a time when Germany is privatizing its pension system. These positive attributes are tempered by the group's considerable exposure to the German market, which, although decreasing, still generates 28.2 % of its reinsurance business and most of its primary insurance business. In addition, notwithstanding strengthening in reinsurance rates in the major property/casualty markets, the company as well as the market have not yet returned to technically sound pricing nor has profitability rebounded to levels expected of its rating. However, A.M. Best expects that these factors will be counterbalanced by the increase in both the reinsurance and primary insurance areas of the life/health areas which offer stronger long-term growth and profitability prospects. A.M. Best's rating Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. outlook for the Munich Re Group is stable. The A++ (Superior) financial strength rating for the following reinsurance subsidiaries has been affirmed: -- Muenchener Rueckversicherungs-Gesellschaft (Munich Reinsurance Company), Munich -- Muenchener Rueck Italia S.p.A., Milan, Italy -- New Reinsurance Company, Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. -- Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). Reinsurance (UK) PLC, London -- Munich Reinsurance Company of Canada, Toronto -- Munich Reinsurance Company of Australasia, Sydney, Australia -- Munich Reinsurance Company of Africa, Ltd. Johannesburg, South Africa -- American Re-Insurance Co., Princeton, New Jersey
Princeton, New Jersey is located in Mercer County, New Jersey, United States. Princeton University has been sited in the town since 1756. -- American Alternative Ins. Co., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Princeton Excess & Surplus Lines Insurance Co., Wilmington, Delaware -- Munich American Reassurance Company, Atlanta, Georgia The following debt ratings have been affirmed: Muenchener Rueckversicherungs-Gesellschaft (Munich Reinsurance Company) -- "aaa" rating on EUR 1.15 billion 1.0% Exchangeable bonds, due 2005 American Re Corporation -- "aa" rating on $500 million 7.45% Senior Notes, due 2026 American Re Capital --"aa-" rating on $237.5 million 8.5% Cumulative Quarterly Income Preferred Securities (QUIPS QUIPS See Quarterly Income Preferred Securities (QUIPS). ), due 2025 A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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