A.M. Best Reports on Financial Strength, Debt Ratings for American Re

March 8, 2004

A.M. Best Co. has commented that the financial strength rating of A+ (Superior) of American Re-Insurance Company and its direct subsidiaries, collectively American Re Corporation Group (American Re) (Princeton, N.J.), are unaffected by the recent pre-tax charge of $368 million covering additional reserve strengthening for the 1997-2001 accident years. The rating of the group had already contemplated a sizeable reserve deficiency; therefore, the company’s stand-alone capitalization remains supportive of the group’s superior financial strength rating.

Despite the charge, American Re Group reported robust earnings in 2003, which together with a capital contribution of $300 million from its ultimate parent and unrealized capital gains, augmented statutory surplus by $1.1 billion to $3.34 billion at the end of 2003. Further, during the period, American Re executed a significant novation which, together with other actions, resulted in a net decline in the company’s carried reserves.

As a significant player in the U.S. professional reinsurance market, American Re has benefited from improved market conditions as reflected by improved earnings; current accident year trends are very favorable thus far and are in line with the U.S. reinsurance sector.

A.M. Best believes that as a strategically important subsidiary, American Re will continue to benefit from the ongoing commitment of Munich Re, which will enable the group to further strengthen and maintain its capital position at a level commensurate with its current rating.

The financial strength rating of A+ (Superior) of the following subsidiaries of American Re Corporation Group are unaffected:

— American Re-Insurance Company

— American Alternative Insurance Corporation

— Princeton Excess & Surplus Lines Insurance Company

The senior debt rating of “a-” for the following security is unaffected:

American Re Corporation–

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