American Re Under Review

August 8, 2005

A.M. Best Co. placed the financial strength ratings of “A” (excellent) for American Re Corporation Group’s member companies under review with negative implications. Member companies include American Re-Insurance. Co., American Alternative Insurance Corp. and The Princeton Excess & Surplus Lines Insurance. Co., all domiciled in Wilmington, Del. Best also placed the issuer credit rating of “a” for American Re-Insurance and the ICR and senior debt ratings of “bbb” of American Re Corp. of Princeton, N.J., under review with negative implications.

American Re’s parent, Munich Reinsurance, recently noted it plans an in-depth reserve review at American Re to determine if additional strengthening might be required for prior year reserves. The quality of American Re’s risk-adjusted capitalization and underwriting performance, as well as its earnings trend over the past five years, have been negatively affected by significant and repeated adverse development charges covering the 1997-2001 accident years, asbestos charges and catastrophe-related exposure.

Therefore, despite any anticipated future capital support from Munich Re, American Re’s ratings remain under pressure due to ongoing concerns over the ability of its current management team to improve operating performance and sustain capitalization without a continued material dependence on its parent.

The financial strength ratings of “A” (excellent) have been placed under review for the following subsidiaries of American Re Group: American Re-Insurance Company, American Alternative Insurance Corp. and the Princeton Excess & Surplus Lines Insurance Company. The issuer credit rating of “a” has been placed under review for American Re-Insurance. Co.

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