A.M. Best Co. issued a bulletin stating that “the financial strength ratings of A+ (Superior) of American Re-Insurance Company (American Re) (Princeton, NJ) and its direct insurance subsidiaries could potentially be impacted by the recent downgrade of its parent’s–Muenchener Rueckversicherungs (Munich Re).”
Best said that while American Re was “no longer viewed as a core operating subsidiary of the Munich Re group as defined by A.M. Best’s rating methodology,” it “remains strategically important to Munich Re. Accordingly, the rating of American Re is based on its stand-alone financial strength and the benefit it receives from the explicit and implicit financial support from Munich Re. A.M. Best is in the process of evaluating American Re’s progress in the restoration of its stand-alone financial strength, including risk-adjusted capitalization, adequacy of its loss reserve and prospective profitability.
“As a significant player in the professional reinsurance market, American Re is benefiting from improved market conditions. Thus far in 2003, the group has not experienced any significant earnings drag from adverse loss reserve development; as a result, American Re is reporting improved earnings and internal capital generation.” Best said it expected to “conclude its assessment within the next 30 days.”
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