Best: Munich Re' Non-Life Biz Improved
NU Online News Service, June 5, 3:18 p.m. EDT?A.M. Best Co., commenting after Munich Re reported first-quarter losses, said despite further write-offs in investment portfolios, the capitalization for the world's largest reinsurer remains "superior" and that its non-life reinsurance underwriting has improved over the past year.
The Oldwick, N.J.-based rating firm currently has "A-Double-Plus" (superior) financial strength rating for the Munich, Germany-headquartered reinsurer and its main subsidiaries.
Earlier this week, Munich Re posted first-quarter results, which revealed the company was impacted by weak capital markets. The company reported a net loss of 238 million euros ($278.9 million) for the quarter, compared with a net income of 4.5 billion euros ($5.3 billion) for the corresponding period last year.
The volatility in capital markets prompted write-downs on securities and losses on the disposal of investments totaling some 2.3 billion euros ($2.7 billion) in the 2003 first quarter, Munich Re noted.
But despite these write-offs, Munich Re's risk-adjusted capitalization remains "superior," A.M. Best said. The ratings agency also said it recognizes the "significant improvement" in Munich Re's non-life reinsurance underwriting performance.
The company took note of Munich Re's combined ratio of 96.8 percent for the 2003 first quarter, better than the 101.7 percent the company recorded a year ago. Overall earnings, however, have remained depressed, A.M. Best pointed out.
The ratings agency will "continue to monitor Munich Re's ability to achieve its operating performance targets--combined ratio of below 100 percent and growth in embedded value operating earnings of more than 10 percent in 2003," A.M. Best said.
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