American Re Corporation Reports 2005 Results.

PRINCETON, N.J. -- American Re Corporation reported a 2005 GAAP net loss of $1,558.8 million, primarily a result of the $1.4 billion addition to the Company's net loss and loss adjustment expense reserves recorded during the second quarter. The 2005 result compared to net income of $103.1 million in 2004. At December 31, 2005, the statutory surplus of the Company's reinsurance and insurance subsidiaries was $3.1 billion compared to $3.4 billion at December 31, 2004, as the Company's surplus was restored following the successful execution of a comprehensive recapitalization plan with Munich Reinsurance Company, its ultimate parent, during the third quarter.

For the full year 2005, gross premiums written were $3,760.2 million, a 10.6% decrease from $4,206.2 million for the full year 2004. The Company's GAAP combined ratio for 2005 was 211.9% compared to 122.0% in 2004. The accident year combined ratio for the Company's core business units was 108.3% for 2005, compared to 101.8% in 2004. Property catastrophe losses contributed 14.0 points to the accident year combined ratio for the Company's core business units, net of recoveries from the property catastrophe cover with Munich Re, compared to 6.0 points in 2004. The core results exclude non-core business operations and corporate retrocessions but include recoveries under the Company's property catastrophe cover with Munich Re. Catastrophe losses for the year were $780.6 million, compared to $202.1 million in 2004, prior to the application of any corporate retrocessional program.

For the fourth quarter of 2005, the GAAP net loss was $213.8 million, compared to a net loss of $90.6 million in 2004. Realized capital losses of $81.9 million and a $178.7 million tax charge impacted results in the fourth quarter of 2005, compared to capital gains of $116.4 million and a tax benefit of $96.4 million in 2004. The 2005 tax charge was mainly the result of establishing a contingency reserve for risks associated with the tax treatment of the Company's retrocessions with Munich Re. Gross premiums written in the fourth quarter were $875.5 million, a 10.1% decline from $974.2 million in the fourth quarter of 2004. The Company's GAAP combined ratio for the fourth quarter was 85.1%, compared to 147.8% in 2004. The accident year combined ratio for the Company's core business units was 113.3%, compared to 94.9% in 2004. Property catastrophe losses contributed 15.7 points to the accident year combined ratio for the Company's core business units, net of recoveries from the property catastrophe cover with Munich Re, compared to 3.8 points in 2004.

Commenting on American Re's results, Chairman John Phelan said, "This past year marks a significant turning point for American Re. Although the reserve strengthening had a significant impact on our results for the year, operating results were strong, excluding this item. As a result of Munich Re's commitment to American Re and the U.S. market, we are well-positioned to turn risk into value for our clients and stakeholders."

Safe Harbor Disclosure

The Company has disclosed certain forward-looking statements concerning its operations, economic performance and financial condition, including, in particular the likelihood of the Company's success in developing and expanding its business and the risks related thereto. These statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions that are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect the Company's results. Such statements may include, but are not limited to, projections of premium revenue, investment income, other revenue, losses, expenses, earnings, cash flows, plans for future operations, common stockholder's equity, investments, capital plans, dividends, plans relating to products or services of American Re, estimates concerning the effects of litigation or other disputes, adverse state or federal legislation or regulation, adverse publicity or news coverage or changes in general economic factors as well as the assumptions for any of the foregoing and are generally expressed with words, such as "believes," "estimates," "expects," "anticipates," "plans," "projects," "forecasts," "goals," "could have," "may have" and similar expressions.

American Re Corporation, a member of the Munich Re Group, is one of the leading providers of reinsurance in the United States. Through its subsidiaries, it writes treaty and facultative reinsurance, insurance, and provides related services to insurance companies, other large businesses, government agencies, pools and other self-insurers. The Munich Re Group, whose business also includes primary insurance and asset management, has a preeminent position in the global reinsurance industry. It is headed by Munich Reinsurance Company of Munich, Germany, and includes reinsurance subsidiaries, branches, service companies and liaison offices in more than 60 locations worldwide, serving corporate clients from around 160 countries.