A.M. Best Affirms Rating of Munich Reinsurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 6, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength ratings of 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. Company (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. ) and its core subsidiaries (see list below). At the same time, A.M. Best has downgraded Munich Re's 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. 1,115 million exchange bond issue to "aa+" from "aaa". A negative outlook has been assigned to all ratings. These rating actions reflect Munich Re's superior capitalisation n. 1. same as capitalization. Noun 1. capitalisation - writing in capital letters capitalization writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper , superior business position in the global reinsurance market and excellent market profile in the German primary insurance segment. Offsetting these factors is Munich Re's unsatisfactory, but improving underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance. Superior Capitalisation and Excellent Financial Flexibility--A.M. Best regards Munich Re's consolidated risk-adjusted capitalisation as superior. However, significant unrealised losses from its equity portfolio and the necessary reserve strengthening of USD USD In currencies, this is the abbreviation for the U.S. Dollar. 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. 2.5 billion have severely impacted the group's capital base. A.M. Best believes that Munich Re's financial flexibility remains excellent despite difficult market conditions. The consolidated financial leverage is below 5%. Superior Business Position--Munich Re is the world largest 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. benefiting from its outstanding global network and underwriting capacity. A.M. Best believes that Munich Re is one of the main beneficiaries of an increasing focus on financial strength combined with reduced capacity in the reinsurance market. In the primary insurance segment, which accounted for 43.5% of total premiums in 2001, Munich Re has an excellent market profile in Germany, where it is the third largest composite group. ERGO Versicherungsgruppe, Munich Re's primary insurance arm, is one of the market leaders for private pensions (Riester-products) and is part of a consortium of insurers offering corporate pensions to more than three million employees of the metal industry. Unsatisfactory, but Improving Underwriting Performance--Munich Re's underlying underwriting results have improved in the first nine months of 2002, leading to a combined ratio of 102.4%. However, the overall underwriting performance was negatively impacted by necessary reserve strengthening for American Re and the World Trade Center as well as the floods in Central Europe--total impact EUR 2,058 million (USD 2,045 million after tax). Post-tax earnings in 2002 will be influenced by EUR 4.7 billion (USD 4.6 billion) profits from the restructuring of cross-shareholdings with Allianz and the necessary write-downs on investments. Outlook negative: The negative outlook reflects A.M. Best's concerns that Munich Re's risk adjusted capitalisation may further deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. as a consequence of continued weak equity markets. In addition, A.M. Best sees further potential for adverse developments in respect of asbestos and environmental related claims. Expectations: -- A.M. Best will closely monitor whether Munich Re will be able to achieve its profit targets over the next three years, which includes a 15% return on equity and a combined ratio of 100% for the next two years. -- A.M. Best expects Munich Re's risk-adjusted capitalisation to remain commensurate with an A++ (Superior) rating. The following A++ financial strength ratings have been affirmed and a negative outlook assigned: -- Munich Reinsurance Company -- Munich Reinsurance Company of Australasia Ltd -- 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 -- Munich Reinsurance Italy S.p.A. -- New Reinsurance Company -- Munich Reinsurance Company of Africa Ltd -- Munich Reinsurance Company of Canada -- Munich American Reassurance REASSURANCE. When an insurer is desirous of lessening his liability, he may procure some other insurer to insure him from loss, for the insurance he has made this is called reassurance. Company The following debt rating has been downgraded to "aa+" from "aaa" and a negative outlook assigned: -- "aa+" rating Munich Reinsurance Company, EUR 1,115 million Bonds Exchangeable into Allianz AG Shares 2000/2005 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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