Munich Re strengthens its position in US life reinsurance by acquiring the business of CNA Financial Corporation

Holding company set up for US operations

MUNICH, October 6, 2000—As announced by the two companies today, Munich American Reassurance Company (MARC), Atlanta, will acquire the life reinsurance operations of CNA Financial Corporation, Chicago. In terms of new business for the year 1999, this makes MARC’s market share nearly 10%, putting it at number five in the US life reinsurance market.

MARC, which specializes in US life reinsurance, has been given capital injections of over US $125m by Munich Re since mid-1998 to enhance its market position; in 1999 it increased its premium income from US $182m to US $302m. The agreed acquisition of CNA’s life reinsurance portfolio fits in very well with this growth strategy, given that there are hardly any overlaps with MARC’s existing business. As at the end of 1999 CNA reported reinsurance premium income of US $198m. Both MARC and CNA expect to record above-average growth again in 2000.

As part of the deal with CNA, MARC will also acquire AgoraRe.com, an Internet marketplace designed to facilitate and expedite the exchange of information on a business-to-business level between life insurance companies and their reinsurers.

As is well known, American Re—like MARC a wholly-owned Munich Re subsidiary—numbers among the market leaders in the US non-life reinsurance market. Munich Re will transfer ownership of both companies to a newly formed holding company. Munich-American Holding Corporation, Delaware, will provide better opportunities for further developing these two important Munich Re subsidiaries in the world’s largest insurance market.

Dr. Hans-Jürgen Schinzler, Chairman of Munich Re’s Board of Management, commented: “The acquisition of CNA’s life reinsurance portfolio doubles our presence in this US market. In new business, we have moved up into the leading group. From this position, we can better attain our growth and earnings objectives. The holding company structure allows us to bundle our operations in US reinsurance and creates an optimum base for the further development of our business.”

Munich Reinsurance Company