American Re-Insurance Company Assigned Financial Strength Rating of A+ -Superior- by A.M. Best.

Business Editors

PRINCETON, N.J.--(BUSINESS WIRE)--Dec. 6, 2002

A.M. Best (Best) today assigned American Re-Insurance Company (American Re) a financial strength rating of A+ (Superior) and said the outlook for the rating was stable.

Also today, Best affirmed the A++ (Superior) financial strength rating of the American Re's parent company, Munich Re, which remains one of the few A++ rated reinsurers in the world.

Best cites American Re's weak operating performance over the past four years as the factor underpinning its rating action concerning American Re. This has caused Best to consider American Re to be a "strategic" subsidiary of Munich Re, rather than a "core" subsidiary as in the past. This distinction under Best's group rating methodology requires that American Re now be rated on a stand-alone basis, rather than assigned the same rating as Munich Re.

The rating action concerning American Re followed extensive discussions with Best after the Company's second quarter $2.0 billion loss reserve charge and its third quarter $1.4 billion recapitalization by its parent company, Munich Re. Although Best lowered American Re's rating, it did acknowledge the Company's strong capital adequacy, financial flexibility, and strategic importance to Munich Re. Best also acknowledged a marked improvement in American Re's current accident year's underwriting results, due to the Company's introduction of stricter underwriting criteria and the more favorable pricing environment. American Re remains confident that it will generate a 102% accident year combined ratio in 2002 (its statutory combined ratio stood at a 102.4% at nine months), and that it will improve to a combined ratio of 95% or lower and generate approximately $600 million in pretax GAAP net income in 2003.

American Re's CEO John Phelan commented, "Best's rating action is, of course, disappointing. We have worked hard to restructure and refocus American Re on its core businesses and to strengthen its balance sheet through our reserve increase and the capital infusion from Munich Re. I am confident that we have put American Re on a path that will generate excellent results in the future and eventually restore our status as a "core" member of the Munich Re Group, allowing us to again participate in the Group's A++ rating. In the meantime, we have an excellent market position and offer superior product, capacity, financial strength and stability at a time of great market upheaval."

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 insurers in more than 150 countries.