A.M. Best Assigns Indicative Rating to Munich Reinsurance Company's Subordinated Debt.Business Editors/Insurance Writers OLDWICK, N.J.--(BUSINESS WIRE)--April 9, 2003 A.M. Best Co. has assigned an indicative "aa" rating to the forthcoming subordinated bonds Subordinated bonds Securities that fall after others in priority of claims on the entity in the case of financial distress. to be issued by 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. Finance B.V., based in the Netherlands, and guaranteed by 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). The proposed issues will be treated as hybrid capital and will not lead to Munich Re exceeding A.M. Best's financial leverage tolerance. Under the terms and conditions, the issuer will have the right to defer interest on a cumulative basis if no dividend has been declared by Munich Re on all classes of shares. The proceeds will be used to restore and strengthen Munich Re's consolidated risk-adjusted capitalisation while taking advantage of further growth opportunities in the reinsurance market. Maintenance of Munich Re's current ratings are predicated upon successful completion of this issue. Munich Re, the world's 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. , continues to benefit from its outstanding global presence, underwriting capacity and expertise. In the German primary insurance market, Munich Re has an excellent profile, ranking the second-largest composite group with approximately 41% of total premium. Munich Re's overall underwriting performance is unsatisfactory, but its underlying non-life reinsurance underwriting results improved in 2002, leading to a consolidated combined ratio of 106.5%. Total after tax profit improved to 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. 1.1 billion (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. 1.2 billion) in 2002 from EUR 250 million (USD 272 million) in 2001. A.M. Best expects further improvements over the next two years that could allow Munich Re to achieve a combined ratio of approximately 100%. All of Munich Re's ratings have a negative outlook, indicating a potential downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. if equity markets continue to fall and/or an adverse development in asbestos and environmental related claims were to materialise. 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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