Munich Re Selects John P. Phelan To Replace Ed Noonan as American Re CEO

January 11, 2002

American Re Corp., the U.S. subsidiary of Munich Re, the world’s largest reinsurer, has accepted the resignation of CEO Edward J. Noonan, and has named John P. Phelan, currently President of Munich Reinsurance Company of Canada, to replace him effective March 31, 2002.

Under Noonan’s direction, which began shortly after Munich Re acquired American Re in 1997, the subsidiary failed to achieve the results its parent had hoped for. He ends 18 years with American Re, and expressed his confidence in Phelan’s leadership.

Despite efforts to improve profitability, American Re’s combined ratio continues to be in the 120 range, and it was heavily impacted by the Sept. 11 attacks with projected net losses of around $315 million.

Analysts’ interpretations of the move vary. Some view it as a signal that Munich Re intends to adopt a more “hands on” approach to the North American reinsurance market. Others speculate that it had overpaid to acquire American Re, and had set unreasonably high profitability goals in an effort to compensate.

In any event Munich Re remains committed to its U.S. subsidiary. Last November it announced that it would inject an additional $1 billion in capital into the company, and it is hoping to profit from the increased demand and rising premiums in the North American market.

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