American Re Announces 3Q, Year-to-Date Results

November 14, 2000

American Re Corp., a member of the Munich Re Group and one of the leading writers of reinsurance in the U.S., reported net income to its common stockholder of $14.0 million for the quarter ended September 30, 2000, compared to net income of $4.4 million in the third quarter of 1999.

The third quarter of 2000 includes $5.1 million of after-tax losses from natural catastrophes and $9.6 million of after-tax capital gains, compared to $56.2 million of catastrophe losses and $10.6 million of capital gains in the third quarter of 1999.

The result for the third quarter of 2000 does not yet fully reflect the impact of pricing improvements American Re has been obtaining on renewal business and does include adverse development on several contracts.

Gross premiums written by the company’s reinsurance and insurance subsidiaries increased 9.5% during the third quarter of 2000 to $988.0 million, compared to the $902.1 million written in the same period of 1999. Net premiums written during the quarter increased 7.7% over the comparable period of 1999.

The GAAP combined ratio for American Re’s reinsurance and insurance subsidiaries was 109.1% for the third quarter of 2000, compared to 111.9% for the same period of 1999. The decreased combined ratio compared to 1999 reflects lower catastrophe losses, offset in part by the company’s higher provisions for current accident year losses than in the comparable period of last year and by an increase in the commission ratio.

The company’s net investment income was $117.7 million pre-tax for the third quarter of 2000, a 12.4% increase compared to $104.7 million for 1999. For the nine-month period ended September 30, 2000, American Re reported a net loss to its common stockholder of $22.7 million, compared to net income of $107.1 million in the same period of 1999. The reduction in net income reflects the company’s higher provisions for losses from the current and recent accident years than in the comparable period of last year, and a reduction in after-tax capital gains from $48.4 million in 1999 to $29.9 million in 2000, offset in part by decreased catastrophe losses, which were $38.7 million after-tax in the first nine months of 2000 compared to $74.1 million in the same period of 1999.

Gross premiums written by the company’s reinsurance and insurance subsidiaries during the first three quarters of 2000 were $2.713 billion, a 1.4% increase compared to the $2.675 billion written in 1999. This increase was primarily the result of increased healthcare, credit enhancement and traditional facultative business, offset in part by reduced finite risk writings. Net premiums written during the first nine months of 2000 increased 6.9% over the comparable period of 1999, due primarily to changes in the company’s retrocessional programs which resulted in increased retentions compared to the comparable period of 1999.

The GAAP combined ratio of American Re’s reinsurance and insurance subsidiaries was 114.7% for the first three quarters of 2000, compared to 108.3% for 1999. The increased combined ratio reflects the company’s higher provisions for losses from the current and recent accident years than in the comparable period of last year, offset in part by decreased catastrophe losses, which added 2.6 points in the first nine months of 2000 compared to 5.6 points added by catastrophe losses in the same period of 1999. American Re’s net investment income was $336.4 million pre-tax for the first nine months of 2000, a 7.3% increase compared to $313.4 million for 1999.

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