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American Re Corporation Reports Second Quarter Results
Princeton, New Jersey (August 4, 2005)
-- The results for the quarter were impacted by the addition of $1,426.5 million to the Company’s net loss and loss adjustment expense reserves, compared to an addition of $78.7 million in the second quarter of 2004. Consequently, American Re Corporation reported a second quarter 2005 GAAP net loss of $1,444.4 million, compared to net income of $106.0 million in the second quarter of 2004. At June 30, 2005, the statutory surplus of American Re-Insurance Company, the Company’s principal reinsurance subsidiary, was $3.0 billion. The Company’s combined statutory surplus including its insurance subsidiaries, American Alternative Insurance Corporation and The Princeton Excess and Surplus Lines Insurance Company, was $3.1 billion, compared to $3.4 billion at December 31, 2004.
Gross premiums written for the second quarter of 2005 were $852.2 million, a 21.9% decrease from $1,090.7 in 2004. The Company’s GAAP combined ratio for the second quarter was 427.8%, compared to 101.2% in 2004. The accident year combined ratio for the Company’s core business units was 93.2% for the second quarter, compared to 93.5% in 2004. The core results exclude non-core business operations and corporate retrocessions.
For the six months ended June 30, 2005, the GAAP net loss was $1,355.9 million, compared to net income of $186.9 million in 2004.
For the first six months, gross premiums written were $1,806.3 million, a 12.6% decrease from $2,066.0 million for the same period in 2004 due to American Re’s continuous strict adherence to pricing and underwriting discipline. The Company’s GAAP combined ratio for the first six months was 263.7%, compared to 101.5% in 2004. The accident year combined ratio for the Company’s core business units was 94.3% through six months, compared to 97.9% in 2004.
Commenting on American Re’s results, Chairman John Phelan said, “The reserve strengthening was certainly a major impact on our financials. As a consequence, Munich Re will reinforce the capital base of American Re by contributing $1.1 billion of capital and by converting $1.6 billion of loans at two holding companies into equity capital. Furthermore, American Re will be integrated even more closely into the Munich Re Group through extended retrocessional covers. This capitalization plan reinforces Munich Re's unwavering commitment to American Re and the U.S. market. Our enhanced capital base will put us in a very strong position to achieve our goals in the U.S. marketplace."
American Re Corporation, a member of the Munich Re Group, is one of the leading providers of reinsurance in the United States. Through its subsidiaries, it writes treaty and facultative reinsurance, insurance, and provides related services to insurance companies, other large businesses, government agencies, pools and other self-insurers. The Munich Re Group, whose business also includes primary insurance and asset management, has a preeminent position in the global reinsurance industry. It is headed by Munich Reinsurance Company of Munich, Germany, and includes reinsurance subsidiaries, branches, service companies and liaison offices in more than 60 locations worldwide, serving insurers in more than 160 countries.
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