American Re Corporation completes $500 million senior notes financing and defeases 10-7/8% senior subordinated debentures.PRINCETON, N.J.--(BUSINESS WIRE)--American Re Corporation today announced that it has completed a private placement of $500 million of the Company's 7.45 % Senior Notes due 2026 (the "Senior Notes"). The Company used all the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the placement (approximately $495 million), plus approximately $8 million of other funds provided by the Company, to purchase U.S. Government Obligations which were then deposited in escrow with State Street Bank and Trust Company The State Street Bank and Trust Company is a bank. It was a subsidiary of the State Street Corporation, until it sold off the retail banking portion of this unit in 1999 to Citizens Financial Group (a subsidiary of the Royal Bank of Scotland), of Providence, RI. , as trustee, for the purpose of defeasing the Company's outstanding issue of 10-7/8% Senior Subordinated Debentures due 2004 (the "Debentures"). The escrowed assets, including accrued investment income, will be used to redeem all of the then outstanding Debentures (currently $450 million in principal amount) on or about September 19, 1997, at 104.75% of par, plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. to the date of redemption, in accordance with the terms of the Indenture under which the Debentures were issued. The Senior Notes are rated Aa1 by Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. and AA by Standard & Poor's as a result of the upgrades in the ratings of the Company and its subsidiaries issued by those rating agencies in recent weeks. Paul H. Inderbitzin, Chairman & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of American Re, said, "The financial strength and claims paying ability ratings of our insurance operations have been upgraded to the highest ratings issued by Moody's, at Aaa, and Standard & Poor's, at AAA, respectively. And this offering puts in place a long-term, efficient capital structure, which will allow us to grow surplus even more rapidly than we have in the past." James R. Fisher, Chief Financial Officer of American Re, added, "This defeasance of our subordinated debt is the final chapter of our management led buyout. We are also delighted with our ratings upgrades, which are the result of our acquisition by 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. ." American Re, through its wholly-owned subsidiaries, is a direct writer of treaty and facultative 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. and related services. Based in 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. , it is, on a standalone basis, the third largest property-casualty reinsurance company in the United States. It is a member of the Munich Re Group, the world's largest reinsurer, which is led by Munich Reinsurance Company of Munich, Germany and includes more than 60 reinsurance subsidiaries, branches, service companies and liaison offices worldwide, serving insurers in more than 150 countries. CONTACT: James R. Fisher (609) 243-4602 or Thomas H. Walker, Jr. (609) 243-4679 |
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