A.M. Best Places Ratings of American Re Under Review With Negative Implications.OLDWICK, N.J. -- A.M. Best Co. has placed the financial strength ratings of A (Excellent) under review with negative implications for American Re Corporation Group's (American Re) member companies, which include American Re-Insurance Company (American Re-Insurance), American Alternative Insurance Corporation and The Princeton Excess & Surplus Lines Insurance Company (all domiciled dom·i·cile n. 1. A residence; a home. 2. One's legal residence. v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles v.tr. 1. in Wilmington, DE). A.M. Best has also placed the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a" for American Re-Insurance and the ICR and senior debt ratings of "bbb" of American Re Corporation (Princeton, NJ) under review with negative implications. These rating actions have been precipitated by a recent comment by its parent, 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. (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. ) (Germany) that they will be conducting an in-depth reserve review at American Re to determine if additional strengthening might be required for prior year reserves and a follow-up meeting with Munich Re. This review follows the $482.3 million, pre-tax of prior year adverse development in 2004. The quality of American Re's risk-adjusted capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and 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, as well as its earnings trend over the past five years, have been negatively affected by significant and repeated adverse development charges covering the 1997-2001 accident years, asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. charges and catastrophe-related exposure. Therefore, despite any anticipated future capital support from Munich Re, American Re's ratings remain under pressure reflecting A.M. Best's ongoing concerns over the ability of its current management team to improve its operating performance and sustain its capitalization without a continued material dependence on its parent. The resolution of this under review status is dependent upon the outcome of the reserve study, the level of support provided by Munich Re and A.M. Best's view of American Re's prospective operating performance. The financial strength ratings of A (Excellent) have been placed under review for the following subsidiaries of American Re Corporation Group: --American Re-Insurance Company --American Alternative Insurance Corporation --The Princeton Excess & Surplus Lines Insurance Company The issuer credit rating of "a" has been placed under review for American Re-Insurance Company. The issuer credit rating of "bbb" has been placed under review for American Re Corporation. The following debt rating has been placed under review: American Re Corporation-- --"bbb" on $500 million 7.45% senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes, due 2026 For Best's Debt Ratings, all other Best's Ratings 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. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 330 reinsurance companies, please visit http://www.ambest.com/reinsurance/. 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 http://www.ambest.com. |
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