Position of US reinsurance subsidiaries to be strengthened by capital injections

Munich Re repeats its demand for a reassessment of major risks; Psychological effect of the plane crash in Queens will accelerate market turnaround

Dr. jur. Hans-Jürgen
Schinzler

MUNICH, November 14, 2001—“The plane crash in New York on November 12 is further proof of the pressing need to fundamentally rethink and reassess the risk situation as a whole, and not only in aviation insurance,” said Dr. Hans-Jürgen Schinzler, Chairman of Munich Re’s Board of Management. Also because of its psychological effect, this further catastrophe event, which will cost the Munich Re Group under US $50m, would additionally accelerate the “return to reason” in the global insurance market, he added. Munich Re expects the refocusing of market players on proven principles of risk assessment and risk assumption to result in markedly improved terms of trade in the current renewals of many reinsurance treaties.

After the catastrophe of September 11 and in the midst of a market turnaround: Additional capital for the US reinsurers in the Munich Re Group in order to exploit business opportunities

American Re Corp., Princeton, a Munich Re subsidiary and holding corporation for a range of companies with annual premium income totalling over US $3.2bn (2000), reports a loss of US $506.5m (US GAAP basis) in the figures published today in its report for the third quarter 2001. This was expected and inevitable in view of the events of September 11, 2001. On an after-tax basis, more than half the loss is attributable to claims costs from the terrorist attacks; a substantial amount has also been used to strengthen underwriting reserves in several sectors.

In order to take advantage of the major turn of the market in the US and to exploit the related business opportunities for American Re-Insurance on the basis of its top ratings, the holding company, American Re Corp., is to get a capital injection of over US $1bn from Munich Re. At the same time the significantly smaller Munich American Reassurance Co., Atlanta, which operates in the more stable sector of life reinsurance, will be given a capital increase of US $80m.

Munich Reinsurance Company