A.M. Best Places MARC under Review with Positive Implications

OLDWICK, N.J., Oct. 6, 2000—A.M. Best Co. has placed the A+ (Superior) financial strength rating of Munich American Reassurance Company (MARC) of Atlanta, Georgia, a subsidiary of the Munich Re Group of Munich, Germany, under review with positive implications.

This follows MARC’s announcement of their acquisition of the life reinsurance operations of CNA’s Continental Assurance via retrocession for undisclosed terms. This strategic action dramatically increases MARC’s volume of business. Based on consolidated numbers for new ordinary life reinsurance business written in 1999, the combined organization would have had a 10% U.S. market share and would be ranked number five in the U.S. ordinary life market based on new business written.

In addition, the transaction provides MARC with a B2B e-commerce platform called AgoraRe.com, which will help to organize and simplify the administration regarding cessions received from cedants on each applicant, and enhance its facultative underwriting capability. The transaction will also provide MARC improved economies of scale, resulting in a more competitive cost structure.

The Munich Re Group will reorganize their U.S. life and non-life operations under a new holding company, Munich American Holding Corporation based in Delaware, which will own MARC and the American Re Corporation Group based in Princeton, N.J. This restructuring is significant as it reflects the Munich Re Group’s strategic support of these companies and its sustained commitment to the U.S. market.

MARC’s rating will remain under review pending further clarification regarding the terms and conditions of the transaction and its financing. A.M. Best anticipates receiving this information from the management teams in Atlanta and Munich.

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.

A.M. Best Co.