<PAGE>

________________________________________________________________________________

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              -------------------

                                   FORM 10-K

(MARK ONE)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

           FOR THE TRANSITION PERIOD FROM             TO
                         COMMISSION FILE NUMBER 1-10545
                              -------------------

                          TRANSATLANTIC HOLDINGS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                              -------------------

<TABLE>
<S>                                            <C>
                   DELAWARE                                      13-3355897
       (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER IDENTIFICATION NO.)
        INCORPORATION OR ORGANIZATION)

      80 PINE STREET, NEW YORK, NEW YORK                           10005
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)
</TABLE>

                                 (212) 770-2000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
                              -------------------

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
                                                          NAME OF EACH EXCHANGE ON
             TITLE OF EACH CLASS                              WHICH REGISTERED
             -------------------                              ----------------
<S>                                            <C>
   Common Stock, Par Value $1.00 per Share             New York Stock Exchange, Inc.
</TABLE>

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
                              -------------------

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x]    No [ ]
    Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [x]
    The aggregate market value of the shares of all classes of voting stock of
the registrant held by non-affiliates of the registrant on January 31, 2001 was
approximately $1,227,488,696 computed upon the basis of the closing sales price
of the Common Stock on that date. For purposes of this computation, shares held
by directors (and shares held by any entities in which they serve as officers)
and officers of the registrant have been excluded. Such exclusion is not
intended, nor shall it be deemed, to be an admission that such persons are
affiliates of the registrant.
    As of January 31, 2001, there were outstanding 34,779,320 shares of Common
Stock, $1.00 par value, of the registrant.
                              -------------------

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the registrant's definitive proxy statement filed or to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A involving
the election of directors at the annual meeting of the shareholders of the
registrant scheduled to be held on May 17, 2001 are incorporated by reference in
Part III of this Form 10-K.

________________________________________________________________________________






<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I

Item 1.   Business....................................................    1
Item 2.   Properties..................................................   17
Item 3.   Legal Proceedings...........................................   17
Item 4.   Submission of Matters to a Vote of Security Holders.........   17

                                  PART II

Item 5.   Market for the Registrant's Common Stock and Related
            Stockholder Matters.......................................   19
Item 6.   Selected Financial Data.....................................   20
Item 7.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................   21
Item 8.   Financial Statements and Supplementary Data.................   29
Item 9.   Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure..................................   52

                                  PART III

Item 10.  Directors and Executive Officers of the Registrant..........   52
Item 11.  Executive Compensation......................................   52
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management................................................   52
Item 13.  Certain Relationships and Related Transactions..............   52

                                  PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
            8-K.......................................................   53
</TABLE>

    The Private Securities Litigation Reform Act of 1995 provides a 'safe
harbor' for forward-looking statements. This Form 10-K, the Company's Annual
Report to Stockholders, any proxy statement, any Form 10-Q or any Form 8-K of
the Company or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. These
forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors (which are described in more
detail elsewhere in this Form 10-K) include, but are not limited to,
uncertainties relating to general economic conditions and cyclical industry
conditions, uncertainties relating to government and regulatory policies,
volatile and unpredictable developments (including catastrophes), the legal
environment, the uncertainties of the reserving process, the competitive
environment in which the Company operates, the uncertainties inherent in
international operations, and interest rate fluctuations. The words 'believe,'
'expect,' 'anticipate,' 'project' and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company is not under any obligation to (and expressly disclaims any such
obligations to) publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.





<PAGE>

                                     PART I

ITEM 1. BUSINESS

INTRODUCTION

    Transatlantic Holdings, Inc. (the 'Company') is a holding company
incorporated in the state of Delaware. Originally formed in 1986 under the name
PREINCO Holdings, Inc. as a holding company for Putnam Reinsurance Company
(Putnam), the Company's name was changed to Transatlantic Holdings, Inc. on
April 18, 1990 following the acquisition on April 17, 1990 of all of the common
stock of Transatlantic Reinsurance Company (TRC) in exchange for shares of
common stock of the Company (the 'Share Exchange'). Prior to the Share Exchange,
American International Group, Inc. (AIG) held a direct and indirect interest of
approximately 25% in the Company and an indirect interest of 49.99% in TRC. As a
result of the Share Exchange, AIG became the beneficial owner of approximately
41% of the Company's outstanding common stock and TRC became a wholly-owned
subsidiary of the Company. In June 1990, certain stockholders of the Company
(other than AIG) sold shares of the Company's common stock in a registered
public offering. In August 1998, AIG increased its beneficial ownership of the
Company's outstanding common stock from 49% to over 50%. As of December 31,
2000, AIG beneficially owned approximately 60% of the Company's outstanding
shares.

    The Company, through its wholly-owned subsidiaries, TRC, Trans Re Zurich
(TRZ), acquired by TRC in 1996, and Putnam (contributed by the Company to TRC in
1995), offers reinsurance capacity for a full range of property and casualty
products on a treaty and facultative basis, directly and through brokers, to
insurance and reinsurance companies, in both the domestic and international
markets. One or both of TRC and Putnam is licensed, accredited, authorized or
can serve as a reinsurer in 50 states and the District of Columbia in the United
States and in Puerto Rico and Guam. TRC is licensed by the federal government of
and seven provinces in Canada. TRC is also licensed in Japan, the United Kingdom
and the Dominican Republic and is registered or authorized as a foreign
reinsurer in Peru, Colombia, Argentina (where it also maintains a representative
office in Buenos Aires, Transatlantic Re (Argentina) S.A.), Brazil (where it
maintains a representative office in Rio de Janeiro, Transatlantic Re (Brasil)
Ltda.), Chile, Mexico, Ecuador, Guatemala, Venezuela and France. In addition,
TRC is licensed in the Hong Kong Special Administrative Region, People's
Republic of China, and maintains a branch in Hong Kong. Also, TRC is authorized
to maintain a representative office in Shanghai, People's Republic of China. TRZ
is licensed as a reinsurer in Switzerland. In addition, in early 2000,
Transatlantic Polska Sp. z o.o., a subsidiary of TRC, began operations as a
registered representative office in Warsaw, Poland. TRH's (Transatlantic
Holdings, Inc. and its subsidiaries) principal lines of reinsurance include auto
liability (including nonstandard risks), other liability (including directors'
and officers' liability and other professional liability), accident and health,
medical malpractice, marine and aviation and surety and credit in the casualty
lines, and fire and allied lines in the property lines. Reinsurance is provided
for most major lines of insurance on both excess-of-loss and pro rata bases.

    Each of TRC and Putnam is currently rated 'A++ (Superior),' the highest
rating classification, by A.M. Best Company (Best's) and 'AA,' the second
highest major rating classification, by Standard & Poor's (S&P). TRC is also
rated Aa1 ('Excellent'), the second highest rating classification, by Moody's
Investors Service (Moody's) and TRZ is rated 'AA' by S&P. Best's, S&P and
Moody's are independent industry rating organizations. Best's indicates that the
'A++ (Superior)' rating is assigned to those companies that, in Best's opinion,
have, on balance, superior financial strength, operating performance and market
profile when compared to standards established by Best's and that have a very
strong ability to meet their ongoing obligations to policyholders. S&P advises
that companies that receive an insurer financial strength rating of 'AA' have
very strong financial security characteristics differing only slightly from
those rated higher. Moody's advises that an insurance financial strength rating
of Aa1 is assigned to those ranked at the higher end of insurance companies
offering excellent financial security, but whose long-term risks appear somewhat
larger than companies in the highest rating category. These ratings are based
upon factors that may be of concern to policy or contract holders, but may not
reflect the considerations applicable to an equity investment in an insurance or
reinsurance company.

                                       1




<PAGE>

    The statutory surplus of TRC of $1,531.9 million, as of December 31, 2000,
ranked TRC as the 5th largest domestic reinsurer according to statistics
distributed by the Reinsurance Association of America. Although TRC and its
wholly-owned subsidiary, Putnam, are separate entities, together they would have
ranked as the 5th largest domestic reinsurer based upon combined statutory net
premiums written of $1,533.3 million and 3rd based upon combined statutory net
income of $177.0 million for the year ended December 31, 2000, according to such
statistics.

THE REINSURANCE BUSINESS

    Reinsurance is an arrangement whereby one or more insurance companies, the
'reinsurer,' agrees to indemnify another insurance company, the 'ceding
company,' for all or part of the insurance risks underwritten by the ceding
company. Reinsurance can provide certain basic benefits to the ceding company.
It reduces net liability on individual risks, thereby enabling the ceding
company to underwrite more business than its own resources can support; it
provides catastrophe protection to lessen the impact of large or multiple
losses; it stabilizes results by leveling fluctuations in the ceding company's
loss ratio; and it helps the ceding company maintain acceptable surplus and
reserve ratios.

    There are two major classes of reinsurance: treaty reinsurance and
facultative reinsurance. Treaty reinsurance is a contractual arrangement that
provides for the automatic reinsuring of a type or category of risk underwritten
by the ceding company. Facultative reinsurance is the reinsurance of individual
risks. Rather than agreeing to reinsure all or a portion of a class of risk, the
reinsurer separately rates and underwrites each risk. Facultative reinsurance is
normally purchased to cover risks not covered by treaty reinsurance or for
individual risks covered by reinsurance treaties that are in need of capacity
beyond that provided by such treaties.

    A ceding company's reinsurance program may involve pro rata and
excess-of-loss reinsurance on both a treaty and facultative basis. Under pro
rata reinsurance (also referred to as proportional), the ceding company and the
reinsurer share the premiums as well as the losses and expenses in an agreed
proportion. Under excess-of-loss reinsurance, the reinsurer agrees to reimburse
the ceding company for all losses in excess of a predetermined amount up to a
predetermined limit. Premiums paid by the ceding company to the reinsurer for
excess-of-loss coverage are generally not proportional to the premiums that the
ceding company receives because the reinsurer does not assume a proportionate
risk.

    In pro rata reinsurance, the reinsurer generally pays the ceding company a
ceding commission. Generally, the ceding commission is based on the ceding
company's cost of obtaining the business being reinsured (i.e., brokers' and
agents' commissions, local taxes and administrative expenses). There is usually
no ceding commission on excess-of-loss reinsurance and therefore the pricing
mechanism used by reinsurers is a rate applicable to premiums of the individual
policy or policies subject to the reinsurance agreement.

    In general, casualty insurance protects the insured against financial loss
arising out of its obligation to others for loss or damage to their person or
property. Property insurance protects the insured against financial loss arising
out of the loss of property or its use caused by an insured peril. Property and
casualty reinsurance protects the ceding company against loss to the extent of
the reinsurance coverage provided. A greater degree of unpredictability is
generally associated with casualty risks and catastrophe-exposed property risks,
and there tends to be a greater lag in the reporting and settlement of casualty
reinsurance claims, due to the nature of casualty risks and their greater
potential for litigation.

GENERAL

    TRH reinsures risks from a broad spectrum of industries throughout the
United States and foreign countries. A portion of the reinsurance written by TRH
is assumed from AIG and its subsidiaries (the 'AIG Group') and therefore
reflects their underwriting philosophy and diversified insurance products.
Approximately $209 million (11%), $184 million (11%) and $167 million (11%) of
gross premiums written by TRH in the years 2000, 1999 and 1998, respectively,
were attributable to reinsurance purchased by the AIG Group. (For a discussion
of TRH's business with the AIG Group, see 'Relationship with the AIG Group.')

                                       2




<PAGE>

    In 2000, TRH's activities in the United States were conducted through its
worldwide headquarters in New York and its regional office in Chicago. All
domestic treaty business is underwritten by, or under the close supervision of,
senior officers of TRH located in New York. TRH's headquarters in New York, the
Miami office (underwriting business from Latin America and the Caribbean) and
international offices in Toronto, London, Paris, Zurich, Hong Kong and Tokyo can
offer treaty as well as facultative reinsurance. In addition, TRH operates
representative offices in Buenos Aires, Rio de Janeiro, Warsaw (opened in early
2000) and Shanghai. In addition, in late 1998, TRH entered into an exclusive
arrangement with a representative agency in Johannesburg, South Africa. Business
underwritten by all offices located outside the United States and by the Miami
office (which underwrites business in Latin America and the Caribbean) accounted
for approximately 49%, 50% and 49% of worldwide net premiums written in 2000,
1999 and 1998, respectively. (See Management's Discussion and Analysis of
Financial Condition and Results of Operations (Management's Discussion) for a
discussion of premium fluctuations between years and Note 14 of Notes to
Consolidated Financial Statements for financial data by business segment.) One
of the international offices, the London branch, had net premiums written
totaling $364.9 million, $323.4 million and $304.4 million in 2000, 1999 and
1998, respectively, representing 22% of worldwide net premiums written in each
of those years. (For a discussion of certain conditions associated with
international business see 'Regulation' and Note 14 of Notes to Consolidated
Financial Statements.)

    Casualty reinsurance constitutes the larger portion of TRH's business,
accounting for 77% of net premiums written in 2000, 75% in 1999 and 71% in 1998.
As a general matter, due to the longer period of time necessary to settle
casualty claims, casualty reinsurance underwriting tends to involve variables
(such as those discussed in the paragraph immediately following) that are not as
predictable as those in property reinsurance underwriting. The greater degree of
uncertainty associated with casualty business as a result of these variables may
produce a more volatile result over a period of time, although property
reinsurance, including property catastrophe business, is also subject to
significant year to year volatility due to major natural disasters. Year 2000
catastrophe losses did not have a material impact on the year's results. In 1999
and 1998, pre-tax catastrophe losses totaled $85 million and $20 million,
respectively. (See Management's Discussion.) TRH also seeks to focus on more
complex risks within the casualty and property lines, and to adjust its mix of
business to take advantage of market opportunities.

    In general, the overall operating results (including investment performance)
and other changes to stockholders' equity of property and casualty insurance and
reinsurance companies, and TRH, in particular, are subject to significant
fluctuations due to competition, catastrophic events, economic and social
conditions, foreign currency rate fluctuations, interest rates, operating
performance and prospects of investee companies and other factors, such as
changes in tax laws, tort laws and the regulatory environment.

                                       3




<PAGE>

    The following table presents certain underwriting information concerning
TRH's casualty and property business for the periods indicated:(5)
<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                                  ---------------------------------------------------------------

                                       NET PREMIUMS WRITTEN             NET PREMIUMS EARNED
                                  ------------------------------   ------------------------------
                                    2000       1999       1998       2000       1999       1998
                                    ----       ----       ----       ----       ----       ----
                                                       (dollars in millions)
<S>                               <C>        <C>        <C>        <C>        <C>        <C>
Casualty
   Auto liability(3)............  $  341.5   $  320.5   $  270.9   $  312.7   $  308.2   $  273.0
   Other
    liability(1)(2)(3)(4).......     270.2      254.4      274.7      274.6      256.4      248.2
   Ocean marine and
    aviation(2)(3)(4)...........     191.6      149.1      190.3      193.5      146.6      192.8
   Accident and health(3).......     185.9      137.7       63.3      190.9      130.9       69.8
   Medical malpractice(2)(4)....     149.2      135.5       90.3      141.4      141.9       91.7
   Surety, credit and financial
    guaranty(2)(3)..............      74.6       71.4       63.0       74.0       70.7       65.4
   Other........................      59.9       52.1       37.3       62.6       45.0       40.9
                                  --------   --------   --------   --------   --------   --------
      Total casualty............   1,272.9    1,120.7      989.8    1,249.7    1,099.7      981.8
                                  --------   --------   --------   --------   --------   --------
Property
   Fire(2)......................     193.5      182.9      168.9      193.4      177.8      176.8
   Homeowners multiple
    peril(2)....................      61.3       58.7       57.9       57.8       62.9       64.2
   Auto physical damage(2)......      52.1       42.6       64.2       51.7       47.5       44.3
   Allied lines(2)(3)(4)........      44.0       44.1       69.4       42.3       44.6       68.5
   Other........................      34.8       49.5       43.5       36.6       52.1       45.0
                                  --------   --------   --------   --------   --------   --------
      Total property............     385.7      377.8      403.9      381.8      384.9      398.8
                                  --------   --------   --------   --------   --------   --------
         Total..................  $1,658.6   $1,498.5   $1,393.7   $1,631.5   $1,484.6   $1,380.6
                                  --------   --------   --------   --------   --------   --------
                                  --------   --------   --------   --------   --------   --------

<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                  ------------------------------------------------------
                                               NET                     LOSS AND LOSS
                                         LOSSES AND LOSS            ADJUSTMENT EXPENSE
                                       ADJUSTMENT EXPENSES                 RATIO
                                  ------------------------------   ---------------------
                                    2000       1999       1998     2000    1999    1998
                                    ----       ----       ----     ----    ----    ----
                                                  (dollars in millions)
<S>                               <C>        <C>        <C>        <C>     <C>     <C>
Casualty
   Auto liability(3)............  $  228.4   $  275.9   $  212.6    73.0    89.5    77.9
   Other
    liability(1)(2)(3)(4).......      85.9       93.1      149.2    31.3    36.3    60.1
   Ocean marine and
    aviation(2)(3)(4)...........     174.9       97.8      194.5    90.4    66.7   100.9
   Accident and health(3).......     136.1      117.8       56.3    71.3    90.0    80.6
   Medical malpractice(2)(4)....      88.2      118.9       39.3    62.4    83.8    42.9
   Surety, credit and financial
    guaranty(2)(3)..............      54.5       57.4       57.0    73.6    81.3    87.2
   Other........................      42.1       39.2       18.8    67.3    87.1    46.1
                                  --------   --------   --------
      Total casualty............     810.1      800.1      727.7    64.8    72.8    74.1
                                  --------   --------   --------
Property
   Fire(2)......................     224.4      188.5      138.6   116.1   106.1    78.4
   Homeowners multiple
    peril(2)....................      21.8       36.2       47.0    37.7    57.5    73.2
   Auto physical damage(2)......      47.1       31.9       39.7    91.2    67.1    89.6
   Allied lines(2)(3)(4)........      88.0       66.2       38.1   208.0   148.4    55.6
   Other........................       5.5       25.9       29.8    14.9    49.7    66.2
                                  --------   --------   --------
      Total property............     386.8      348.7      293.2   101.3    90.6    73.5
                                  --------   --------   --------
         Total..................  $1,196.9   $1,148.8   $1,020.9    73.4    77.4    73.9
                                  --------   --------   --------
                                  --------   --------   --------
</TABLE>

---------

(1) A significant portion of this line includes more complex risks such as
    professional liability (other than medical malpractice), directors' and
    officers' liability, errors and omissions and environmental impairment
    liability.

(2) In 2000, development on reserves held at December 31, 1999 related to losses
    that occurred in 1999 and prior years significantly decreased the loss ratio
    in other liability, medical malpractice and homeowners multiple peril and
    significantly increased the loss ratios in ocean marine and aviation,
    surety, credit and financial guaranty, fire, auto physical damage and allied
    lines.

(3) In 1999, development on reserves held at December 31, 1998 related to losses
    that occurred in 1998 and prior years significantly decreased the loss
    ratios in other liability and in ocean marine and aviation and significantly
    increased the loss ratios in auto liability, accident and health, surety,
    credit and financial guaranty, and allied lines.

(4) In 1998, development on reserves held at December 31, 1997 related to losses
    that occurred in 1997 and prior years significantly decreased the loss
    ratios in other liability, medical malpractice and allied lines and
    significantly increased the loss ratios in ocean marine and aviation.

(5) See Management's Discussion and Analysis of Financial Condition and Results
    of Operations for a discussion of TRH's underwriting components.

    Treaty reinsurance constitutes the great majority of TRH's business,
accounting for 96%, 97% and 95% of net premiums written in 2000, 1999 and 1998,
respectively.

                                       4




<PAGE>

    The following table presents certain information concerning TRH's treaty and
facultative business for the periods indicated:

<TABLE>
<CAPTION>
                                                                     TREATY
                                                         ------------------------------
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                         2000(1)    1999(2)      1998
                                                         -------    -------      ----
                                                                 (in millions)
<S>                                                      <C>        <C>        <C>
Gross premiums written.................................  $1,756.5   $1,570.4   $1,438.5
Net premiums written...................................   1,597.7    1,448.1    1,320.2
Net premiums earned....................................   1,570.8    1,427.5    1,311.1

<CAPTION>
                                                                  FACULTATIVE
                                                         ------------------------------
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2000       1999       1998
                                                           ----       ----       ----
                                                                 (in millions)
<S>                                                      <C>        <C>        <C>
Gross premiums written.................................    $123.9     $120.3     $128.4
Net premiums written...................................      60.9       50.4       73.5
Net premiums earned....................................      60.7       57.1       69.5
</TABLE>

---------

(1) In 2000 compared to 1999, international treaty premiums increased
    significantly in auto liability, accident and health and property
    catastrophe excess-of-loss lines. Domestic treaty premiums increased
    significantly in certain specialty casualty classes (particularly accident
    and health and medical malpractice lines) and in aviation and property
    catastrophe excess-of-loss lines.

(2) In 1999 compared to 1998, international treaty premiums increased
    significantly in auto liability, accident and health and property lines, and
    decreased significantly in the ocean marine line. Domestic treaty premiums
    increased significantly in certain specialty casualty classes (particularly
    accident and health and medical malpractice lines) and decreased
    significantly in property (due, in large part, to an increase in reinsurance
    ceded) and aviation lines.

TREATY REINSURANCE

    Treaty reinsurance accounted for approximately $1,756.5 million of gross
premiums written and $1,597.7 million of net premiums written in 2000,
approximately 77% of which resulted from casualty lines treaties, with the
remainder from property lines treaties. Approximately 64% of treaty gross
premiums written in 2000 represented treaty reinsurance written on a pro rata
basis and the balance represented treaty reinsurance written on an
excess-of-loss basis. Approximately 8% of treaty gross premiums written in 2000
were attributable to the AIG Group. Such premiums were primarily written on a
pro rata basis. The majority of TRH's non-AIG Group treaty premiums were also
written on a pro rata basis. As pro rata business is a proportional sharing of
premiums and losses among ceding company and reinsurer, generally, the
underwriting results of such business more closely reflect the underwriting
results of the business ceded than do the results of excess-of-loss business.

    TRH's treaty business consists primarily of lines of business within other
liability (including directors' and officers' liability and other professional
liability), auto liability (including nonstandard risks), ocean marine and
aviation, medical malpractice, accident and health, surety and credit, fire and
allied lines. A significant portion of TRH's business within these lines
(primarily other liability, medical malpractice and accident and health) is
derived from certain more complex risks. TRH also underwrites non-traditional
reinsurance, which blends funding characteristics with more traditional risk
transfer.

    TRH's treaty underwriting process emphasizes a team approach between TRH's
underwriters, actuaries and claims staff, as appropriate. Treaties are reviewed
for compliance with TRH's underwriting guidelines and objectives and certain
larger treaties are evaluated in part based upon actuarial analyses conducted by
TRH. The generic actuarial models used in such analyses are tailored in each
case to the exposures and experience underlying the specific treaty and the loss
experience for the risks covered thereunder. TRH also at times conducts
underwriting audits at the offices of a prospective ceding company before
entering into major treaties, because reinsurers, including TRH, do not
separately evaluate each of the individual risks assumed under their treaties
and, consequently, are largely dependent on the original underwriting decisions
made by the ceding company. Such dependence subjects TRH, and reinsurers in
general, to the possibility that the ceding companies have not adequately
evaluated the risks to be reinsured and, therefore, that the premiums ceded in
connection therewith may not adequately compensate the reinsurer for the risk
assumed.

                                       5




<PAGE>

    TRH offers brokers full service with large capacity for both casualty and
property risks. For non-AIG business, TRH generally seeks to lead treaty
arrangements. The lead reinsurer on a treaty generally accepts one of the
largest percentage shares of the treaty and represents the other participating
reinsurers in negotiating price, terms and conditions. TRH believes that this
strategy has enabled it to influence more effectively the terms and conditions
of the treaties in which it has participated. TRH has generally not set terms
and conditions as lead underwriter with respect to AIG Group treaty reinsurance,
although it may do so in the future. When TRH does not lead the treaty, it may
still suggest changes to any aspect of the treaty. In either case, TRH may
reject any treaty business offered to it by the AIG Group or others based upon
its assessment of all relevant factors. Such factors include type and level of
risk assumed, actuarial and underwriting judgment with respect to rate adequacy,
various treaty terms, prior and anticipated loss experience on the treaty, prior
business experience with the ceding company, overall financial position,
operating results and Best's, S&P and Moody's ratings of the ceding company and
social, legal, regulatory, environmental and general economic conditions
affecting the risks assumed or the ceding company.

    TRH currently has approximately 4,153 treaties in effect for the current
underwriting year. In 2000, no single treaty exceeded 3% of treaty gross
premiums written. No ceding company accounted for more than 3% of total treaty
gross premiums written in 2000 other than AIG Group companies (see 'Relationship
with the AIG Group') and members of Lloyd's of London, which accounted for 10%
of treaty gross premiums written.

    Non-U.S. treaty business accounted for approximately 48% of TRH's total net
premiums written for the year ended December 31, 2000.

FACULTATIVE REINSURANCE

    During 2000, TRH wrote approximately $123.9 million of gross premiums
written and $60.9 million of net premiums written of facultative reinsurance,
approximately 67% of which represented casualty risks with the balance
comprising property risks. The majority of facultative net premiums written in
2000 represented facultative reinsurance written on an excess-of-loss basis.
Facultative coverages are generally offered for most lines of business. However,
the great majority of premiums are within the other liability (including
directors' and officers' liability and other professional liability), auto
liability and fire lines. Underwriting expenses associated with facultative
business are generally higher in proportion to related premiums than those
associated with treaty business, reflecting, among other things, the more
labor-intensive nature of underwriting and servicing facultative business.
Approximately 54% of facultative gross premiums written in 2000 were
attributable to AIG Group companies. Except for AIG Group companies, no single
ceding company accounted for more than 4% of total facultative gross premiums
written in 2000. Non-U.S. facultative business accounted for approximately 1% of
TRH's total net premiums written for the year ended December 31, 2000.

RETENTION LEVELS AND RETROCESSION ARRANGEMENTS

    TRH enters into retrocession arrangements for many of the same reasons
primary insurers seek reinsurance, including reducing the effect of individual
or aggregate losses and increasing gross premium writings and risk capacity
without requiring additional capital.

                                       6




<PAGE>

    Under TRH's underwriting guidelines and retrocession arrangements in effect
at the end of 2000, the maximum net amounts generally retained per risk and the
maximum gross capacities are set forth in the table below.

<TABLE>
<CAPTION>
                                                                            MAXIMUM
                                                            MAXIMUM NET      GROSS
                                                             RETENTION     CAPACITY
                                                             ---------     --------
                                                                  (in millions)
<S>                                                         <C>           <C>
Property
    Treaty
        Catastrophe excess-of-loss........................      $17           $30
        Other.............................................       30            30
    Facultative...........................................        3            40
Casualty
    Treaty
        Marine and aviation...............................        5            35
        Other.............................................        8            10
    Facultative...........................................        8            10
</TABLE>

    For 2001, TRH is protected by catastrophe reinsurance agreements that would
generally result in a maximum net retention by TRH of $35 million per
occurrence, with a property catastrophe limit of up to $250 million.

    Average gross lines and net retentions on risks assumed historically have
been smaller than the maximums permissible under the underwriting guidelines.
Underwriting guidelines, including gross lines and net retention levels, may be
changed and limited exceptions are made by TRH from time to time.

    Retrocession arrangements do not relieve TRH from its obligations to the
insurers and reinsurers from whom it assumes business. The failure of
retrocessionnaires to honor their obligations could result in losses to TRH. TRH
holds substantial amounts of funds and letters of credit to collateralize
reinsurance recoverables. Such funds and letters of credit can be drawn on for
amounts remaining unpaid beyond contract terms. In addition, an allowance has
been established for estimated unrecoverable amounts.

    As of December 31, 2000, TRH had in place approximately 140 active
retrocessional arrangements for current and prior underwriting years with 374
retrocessionnaires, and reinsurance recoverable on paid and unpaid losses
totaled $543.8 million, including $261.1 million recoverable from AIG
affiliates. (See Note 13 of Notes to Consolidated Financial Statements.)

MARKETING

    TRH provides property and casualty reinsurance capacity through brokers and
directly to insurance and reinsurance companies in both the domestic and
international markets. TRH believes its worldwide network of offices and its
relationship with the AIG Group help position TRH to take advantage of market
opportunities.

    AIG Group business is obtained directly from the ceding company. No ceding
company, other than the AIG Group companies, has accounted for more than 10% of
TRH's revenues in any of the last five years.

    Non-AIG Group treaty business is produced primarily through brokers, while
non-AIG Group facultative business is produced both directly and through
brokers. In 2000, approximately 81% of TRH's non-AIG Group business was written
through brokers and the balance was written directly. Companies controlled by
Marsh & McLennan Companies, Inc. and Aon Corporation, TRH's largest brokerage
sources of non-AIG Group business, accounted for 15% and 14%, respectively, of
TRH's consolidated revenues and gross premiums written in 2000. In addition,
TRH's largest 10 brokers accounted for non-AIG Group business aggregating
approximately 55% of gross premiums written. Brokerage fees generally are paid
by reinsurers. TRH believes that its emphasis on seeking the lead position in
non-AIG Group reinsurance treaties in which it participates is beneficial in
obtaining business.

                                       7




<PAGE>

    Brokers do not have the authority to bind TRH with respect to reinsurance
agreements, nor does TRH commit in advance to accept any portion of the business
that brokers submit to it. Reinsurance business from any ceding company, whether
new or renewal, is subject to acceptance by TRH.

    Effective January 1, 1995, TRC and Putnam entered into a quota share
reinsurance agreement whereby TRC ceded 5% of its total reinsurance liabilities,
net of retrocessions, to Putnam. Thereafter, TRC cedes 5% of its assumed
reinsurance, net of other retrocessions, to Putnam pursuant to this quota share
reinsurance agreement. Presently all of Putnam's business is assumed from TRC
pursuant to this quota share reinsurance agreement. This agreement was entered
into for operational reasons and had no impact on TRH's financial position or
results of operations.

CLAIMS

    Claims are managed by TRH's professional claims staff whose responsibilities
include the review of initial loss reports, creation of claim files,
determination of whether further investigation is required, establishment and
adjustment of case reserves and payment of claims. In addition to claims
assessment, processing and payment, the claims staff conducts comprehensive
claims audits of both specific claims and overall claims procedures at the
offices of selected ceding companies, which TRH believes benefit all parties to
the reinsurance arrangement. Claims audits are conducted in the ordinary course
of business. In certain instances, a claims audit may be performed prior to
assuming reinsurance business.

RESERVES FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

    Significant periods of time may elapse between the occurrence of an insured
loss, the reporting of the loss to the ceding company and the reinsurer, and the
ceding company's payment of that loss and subsequent payments to the ceding
company by the reinsurer. To recognize liabilities for unpaid losses and loss
adjustment expenses (LAE), insurers and reinsurers establish reserves, which are
balance sheet liabilities representing estimates of future amounts needed to pay
claims and related expenses with respect to insured events which have occurred
on or before the balance sheet date, including events which have not been
reported to the ceding company.

    Upon receipt of a notice of claim from the ceding company, TRH establishes
its own case reserve for the estimated amount of the ultimate settlement, if
any. Case reserves usually are based upon the amount of reserves recommended by
the ceding company and may be supplemented by additional amounts as deemed
necessary. In certain instances, TRH establishes case reserves even when the
ceding company does not report any liability to the reinsurer.

    TRH also establishes reserves to provide for the estimated expenses of
settling claims, including legal and other fees, and the general expenses of
administering the claims adjustment process (i.e., LAE), and the losses and loss
adjustment expenses incurred but not reported (IBNR). TRH calculates LAE and
IBNR reserves by using generally accepted actuarial reserving techniques to
project the ultimate liability for losses and loss adjustment expenses. Such
reserves are periodically revised by TRH to adjust for changes in the expected
loss development pattern over time. TRH has an in-house actuarial staff which
periodically reviews its loss reserves, and therefore does not retain any
outside actuarial firm to review its loss reserves.

    Losses and loss adjustment expenses, net of related reinsurance recoverable,
are charged to income as incurred. Unpaid losses and loss adjustment expenses
represent the accumulation of case reserves and IBNR. Provisions for inflation
and 'social inflation' (e.g., awards by judges and juries which progressively
increase in size at a rate exceeding that of general inflation) are implicitly
considered in the overall reserve setting process as an element of the numerous
judgments which are made as to expected trends in average claim severity.
Legislative changes may also affect TRH's liabilities, and evaluation of the
impact of such changes is made in the reserve setting process.

    The methods of determining estimates for reported and unreported losses and
establishing resulting reserves and related reinsurance recoverable are
continually reviewed and updated, and adjustments resulting therefrom are
reflected in income currently. The process relies upon the basic assumption that
past experience, adjusted for the effect of current developments and likely
trends, is an appropriate basis for predicting future events. However,
estimation of loss reserves is a difficult process, especially in view of
changes in the legal and tort environment which impact the development of loss
reserves and

                                       8




<PAGE>

therefore quantitative techniques frequently have to be supplemented by
subjective considerations and managerial judgment. In addition, trends that have
affected development of liabilities in the past may not necessarily occur or
affect liability development to the same degree in the future.

    While the reserving process is difficult and subjective for the ceding
companies, the inherent uncertainties of estimating such reserves are even
greater for the reinsurer, due primarily to the longer-term nature of most
reinsurance business, the diversity of development patterns among different
types of reinsurance treaties or facultative contracts, the necessary reliance
on the ceding companies for information regarding reported claims and differing
reserving practices among ceding companies. Thus, actual losses and loss
adjustment expenses may deviate, perhaps substantially, from estimates of
reserves reflected in the Company's consolidated financial statements.

    During the loss settlement period, which can be many years in duration,
additional facts regarding individual claims and trends usually become known. As
these become apparent, it usually becomes necessary to refine and adjust the
reserves upward or downward and even then the ultimate net liability may be less
than or greater than the revised estimates. TRH does not otherwise adjust
downward those claims reported to it by ceding companies.

    Included in TRH's reserves are amounts related to environmental impairment
and asbestos-related illnesses, which, net of related reinsurance recoverable,
totaled $71 million and $75 million as of December 31, 2000 and 1999,
respectively. The majority of TRH's environmental and asbestos-related
liabilities arise from contracts entered into after 1984 and underwritten
specifically as environmental or asbestos-related coverages rather than as
standard general liability coverages where the environmental or asbestos-related
liabilities were neither clearly defined nor specifically excluded. Significant
uncertainty exists as to the ultimate settlement of these liabilities since,
among other things, there are inconsistent court resolutions and judicial
interpretations with respect to underlying policy intent and coverage and
uncertainties as to the allocation of responsibility for resultant damages. (See
Management's Discussion and Note 2(f) of Notes to Consolidated Financial
Statements for further discussion.)

    The 'Analysis of Consolidated Net Loss and Loss Adjustment Expense Reserve
Development' which follows presents the development of balance sheet loss and
loss adjustment expense reserves for calendar years 1990 through 2000. The upper
half of the table shows the cumulative amounts paid during successive years
related to the opening reserve. For example, with respect to the net loss and
loss adjustment expense reserve of $1,241.2 million as of December 31, 1991, by
the end of 2000 (nine years later) $945.8 million had actually been paid in
settlement of those reserves. In addition, as reflected in the lower section of
the table, the original reserve of $1,241.2 million was reestimated to be
$1,190.6 million at December 31, 2000. This change from the original estimate
would normally result from a combination of a number of factors, including
losses being settled for different amounts than originally estimated. The
original estimates will also be increased or decreased as more information
becomes known about the individual claims and overall claim frequency and
severity patterns. The net deficiency or redundancy depicted in the table, for
any particular calendar year, shows the aggregate change in estimates over the
period of years subsequent to the calendar year reflected at the top of the
respective columns. For example, the net redundancy of $189.2 million at
December 31, 2000 related to December 31, 1994 net loss and loss adjustment
expense reserves of $1,727.4 million, represents the cumulative amount by which
net reserves for 1994 have developed favorably from 1995 through 2000.

    Each amount other than the original reserves in the following table includes
the effects of all changes in amounts for prior periods. For example, if a loss
settled in 1993 for $150,000 was first reserved in 1990 at $100,000 and remained
unchanged until settlement, the $50,000 deficiency (actual loss minus original
estimate) would be included in the cumulative net deficiency in each of the
years in the period 1990 through 1992 shown in the following table. Conditions
and trends that have affected development of liability in the past may not
necessarily occur in the future. Accordingly, it may not be appropriate to
extrapolate future development based on this table.

                                       9






<PAGE>

     ANALYSIS OF CONSOLIDATED NET LOSS AND LOSS ADJUSTMENT EXPENSE RESERVE
                              DEVELOPMENT(1)(2)(3)
<TABLE>
<CAPTION>
                            1990         1991         1992         1993         1994         1995         1996         1997
                            ----         ----         ----         ----         ----         ----         ----         ----
                                                                    (in thousands)
<S>                      <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Net unpaid losses and
 loss adjustment
 expenses,
 December 31:(4).......  $1,064,214   $1,241,160   $1,386,092   $1,503,389   $1,727,380   $1,985,786   $2,383,528   $2,522,728
Paid (cumulative) as
 of:
   One year later......     190,484      198,463      281,641      312,923      338,947      396,647      549,635      543,539
   Two years later.....     336,547      396,739      497,557      506,681      594,508      685,485      765,380      963,055
   Three years later...     443,578      526,776      633,737      681,388      797,841      855,809    1,055,551    1,264,134
   Four years later....     534,824      614,555      760,091      824,468      899,232    1,058,296    1,253,537
   Five years later....     586,303      699,667      851,734      885,415    1,033,595    1,194,900
   Six years later.....     645,657      770,270      922,778      986,263    1,128,240
   Seven years later...     703,101      825,981    1,003,942    1,062,295
   Eight years later...     750,275      891,845    1,071,266
   Nine years later....     807,819      945,846
   Ten years later.....     855,551
Net liability
 reestimated as of:(4)
   End of year.........   1,064,214    1,241,160    1,386,092    1,503,389    1,727,380    1,985,786    2,383,528    2,522,728
   One year later......   1,062,280    1,238,929    1,409,008    1,518,361    1,723,926    1,978,062    2,368,965    2,463,239
   Two years later.....   1,072,552    1,250,809    1,425,146    1,516,299    1,729,924    1,961,041    2,289,951    2,369,885
   Three years later...   1,084,635    1,260,763    1,426,424    1,522,635    1,718,844    1,885,897    2,171,127    2,265,351
   Four years later....   1,095,054    1,268,476    1,437,271    1,511,825    1,657,393    1,784,560    2,081,811
   Five years later....   1,102,404    1,269,583    1,426,466    1,468,903    1,580,256    1,725,009
   Six years later.....   1,110,499    1,252,455    1,394,401    1,418,959    1,538,160
   Seven years later...   1,096,961    1,226,855    1,362,585    1,406,154
   Eight years later...   1,085,248    1,197,790    1,358,694
   Nine years later....   1,072,967    1,190,639
   Ten years later.....   1,067,743
   Net (deficiency)
    redundancy.........  $   (3,529)  $   50,521   $   27,398   $   97,235   $  189,220   $  260,777   $  301,717   $  257,377

<CAPTION>
                            1998         1999         2000
                            ----         ----         ----
                                    (in thousands)

<S>                      <C>          <C>          <C>
Net unpaid losses and
 loss adjustment
 expenses,
 December 31:(4).......  $2,656,103   $2,762,162   $2,614,917
Paid (cumulative) as
 of:
   One year later......     702,603      953,708
   Two years later.....   1,224,593
   Three years later...
   Four years later....
   Five years later....
   Six years later.....
   Seven years later...
   Eight years later...
   Nine years later....
   Ten years later.....
Net liability
 reestimated as of:(4)
   End of year.........   2,656,103    2,762,162    2,614,917
   One year later......   2,588,626    2,776,519
   Two years later.....   2,496,422
   Three years later...
   Four years later....
   Five years later....
   Six years later.....
   Seven years later...
   Eight years later...
   Nine years later....
   Ten years later.....
   Net (deficiency)
    redundancy.........  $  159,681   $  (14,357)
</TABLE>

---------

 (1) This table excludes data related to TRZ, a non-U.S. subsidiary acquired in
     the third quarter of 1996, for 1995 and prior years as such data is not
     available.

 (2) This table is on a calendar year basis and does not present accident or
     underwriting year data.

 (3) Data have been affected by transactions between TRH and the AIG Group. (See
     'Relationship with the AIG Group' and Notes 11 and 13 of Notes to
     Consolidated Financial Statements.)

 (4) Represents gross liability for unpaid losses and loss adjustment expenses
     net of related reinsurance recoverable.

                                       10




<PAGE>

           ANALYSIS OF NET UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES
                        AND NET REESTIMATED LIABILITY(1)
<TABLE>
<CAPTION>
                                     1992         1993         1994         1995         1996         1997         1998
                                     ----         ----         ----         ----         ----         ----         ----
                                                                       (in thousands)
<S>                               <C>          <C>          <C>          <C>          <C>          <C>          <C>
End of year:
   Gross liability..............  $1,769,486   $1,890,178   $2,167,316   $2,388,155   $2,733,055   $2,918,782   $3,116,038
   Related reinsurance
     recoverable................     383,394      386,789      439,936      402,369      349,527      396,054      459,935
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
       Net liability............  $1,386,092   $1,503,389   $1,727,380   $1,985,786   $2,383,528   $2,522,728   $2,656,103
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
One year later:
   Gross reestimated
     liability..................  $1,807,550   $1,930,343   $2,138,947   $2,326,770   $2,755,288   $2,864,610   $3,083,643
   Reestimated related
     reinsurance recoverable....     398,542      411,982      415,021      348,708      386,323      401,371      495,017
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
       Net reestimated
         liability..............  $1,409,008   $1,518,361   $1,723,926   $1,978,062   $2,368,965   $2,463,239   $2,588,626
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
Two years later:
   Gross reestimated
     liability..................  $1,857,100   $1,945,407   $2,091,724   $2,340,639   $2,664,858   $2,776,598   $3,033,092
   Reestimated related
     reinsurance recoverable....     431,954      429,108      361,800      379,598      374,907      406,713      536,670
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
       Net reestimated
         liability..............  $1,425,146   $1,516,299   $1,729,924   $1,961,041   $2,289,951   $2,369,885   $2,496,422
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
Three years later:
   Gross reestimated
     liability..................  $1,875,877   $1,894,754   $2,110,823   $2,246,095   $2,568,103   $2,701,351
   Reestimated related
     reinsurance recoverable....     449,453      372,119      391,979      360,198      396,976      436,000
                                  ----------   ----------   ----------   ----------   ----------   ----------
       Net reestimated
         liability..............  $1,426,424   $1,522,635   $1,718,844   $1,885,897   $2,171,127   $2,265,351
                                  ----------   ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------   ----------
Four years later:
   Gross reestimated
     liability..................  $1,818,521   $1,909,734   $2,034,135   $2,166,178   $2,497,563
   Reestimated related
     reinsurance recoverable....     381,250      397,909      376,742      381,618      415,752
                                  ----------   ----------   ----------   ----------   ----------
       Net reestimated
         liability..............  $1,437,271   $1,511,825   $1,657,393   $1,784,560   $2,081,811
                                  ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------
Five years later:
   Gross reestimated
     liability..................  $1,849,050   $1,881,933   $1,978,270   $2,120,568
   Reestimated related
     reinsurance recoverable....     422,584      413,030      398,014      395,559
                                  ----------   ----------   ----------   ----------
       Net reestimated
         liability..............  $1,426,466   $1,468,903   $1,580,256   $1,725,009
                                  ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------
Six years later:
   Gross reestimated
     liability..................  $1,828,676   $1,854,711   $1,946,734
   Reestimated related
     reinsurance recoverable....     434,275      435,752      408,574
                                  ----------   ----------   ----------
       Net reestimated
         liability..............  $1,394,401   $1,418,959   $1,538,160
                                  ----------   ----------   ----------
                                  ----------   ----------   ----------
Seven years later:
   Gross reestimated
     liability..................  $1,820,674   $1,852,253
   Reestimated related
     reinsurance recoverable....     458,089      446,099
                                  ----------   ----------
       Net reestimated
         liability..............  $1,362,585   $1,406,154
                                  ----------   ----------
                                  ----------   ----------
Eight years later:
   Gross reestimated
     liability..................  $1,826,344
   Reestimated related
     reinsurance recoverable....     467,650
                                  ----------
       Net reestimated
         liability..............  $1,358,694
                                  ----------
                                  ----------
Gross (deficiency) redundancy as
 of December 31, 2000...........  $  (56,858)  $   37,925   $  220,582   $  267,587   $  235,492   $  217,431   $   82,946
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  ----------   ----------   ----------   ----------   ----------   ----------   ----------





<CAPTION>
                                     1999         2000
                                     ----         ----
                                      (in thousands)
<S>                               <C>          <C>
End of year:
   Gross liability..............  $3,304,931   $3,077,162
   Related reinsurance
     recoverable................     542,769      462,245
                                  ----------   ----------
       Net liability............  $2,762,162   $2,614,917
                                  ----------   ----------
                                  ----------   ----------
One year later:
   Gross reestimated
     liability..................  $3,369,520
   Reestimated related
     reinsurance recoverable....     593,001
                                  ----------
       Net reestimated
         liability..............  $2,776,519
                                  ----------
                                  ----------
Two years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Three years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Four years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Five years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Six years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Seven years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Eight years later:
   Gross reestimated
     liability..................
   Reestimated related
     reinsurance recoverable....

       Net reestimated
         liability..............

Gross (deficiency) redundancy as
 of December 31, 2000...........  $  (64,589)
                                  ----------
                                  ----------
</TABLE>

---------

(1) This table excludes data related to TRZ for 1995 and prior years.

                                       11




<PAGE>

    The trend depicted in the latest development year in the reestimated net
liability portion of the 'Analysis of Consolidated Net Loss and Loss Adjustment
Expense Reserve Development' table and in the 'Analysis of Net Unpaid Losses and
Loss Adjustment Expenses and Net Reestimated Liability' table reflects net
adverse development. Net adverse development of $14.4 million was recorded in
2000 on losses occurring in prior years. (See Management's Discussion.)

    In general, the majority of the redundancies shown in the table in more
recent years result from favorable development of reserves in the other
liability line for losses occurring since 1986, partially offset by continued
adverse development of reserves in the other liability line for losses occurring
prior to 1984. Adverse development of losses occurring in the early 1980s was
common throughout the industry and was caused by a number of industry and
external factors which combined to drive loss frequency and severity to
unexpectedly high levels.

    The length of time needed for reserves to be ultimately paid has generally
been decreasing over the past ten years due, in large part, to a shift in the
business mix towards lines with shorter loss payment patterns, the higher
incidence (compared to earlier years) of catastrophe losses paid in 1999 and
2000 related to events occuring prior to the year in which such payments were
made and, from 1992 through 1995, the return of loss and loss adjustment expense
reserves associated with the reduced participation in one of TRH's then largest
assumed treaties.

    The following table presents a reconciliation of beginning and ending net
reserve balances for the years indicated. For domestic subsidiaries, there is no
difference in reserves for losses and loss adjustment expenses net of
reinsurance recoverable on unpaid losses and loss adjustment expenses whether
determined in accordance with accounting principles generally accepted in the
United States of America or statutory accounting principles.

                           RECONCILIATION OF RESERVE
                  FOR NET LOSSES AND LOSS ADJUSTMENT EXPENSES

<TABLE>
<CAPTION>
                                                              2000         1999         1998
                                                              ----         ----         ----
                                                                      (in thousands)
<S>                                                        <C>          <C>          <C>
Reserve for net unpaid losses and loss adjustment
  expenses at beginning of year(1).......................
                                                           $2,762,162   $2,656,103   $2,522,728
                                                           ----------   ----------   ----------
Net losses and loss adjustment expenses incurred in
  respect of losses occurring in:
    Current year.........................................   1,182,539    1,216,294    1,080,377
    Prior years..........................................      14,357      (67,477)     (59,489)
                                                           ----------   ----------   ----------
        Total............................................   1,196,896    1,148,817    1,020,888
                                                           ----------   ----------   ----------
Net losses and loss adjustment expenses paid in respect
  of losses occurring in:
    Current year.........................................     390,433      340,155      343,974
    Prior years..........................................     953,708      702,603      543,539
                                                           ----------   ----------   ----------
        Total............................................   1,344,141    1,042,758      887,513
                                                           ----------   ----------   ----------
Reserve for net unpaid losses and loss adjustment
  expenses at end of year(1).............................  $2,614,917   $2,762,162   $2,656,103
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

---------

 (1) In TRH's balance sheet and in accordance with Statement of Financial
     Accounting Standards (SFAS) No. 113, unpaid losses and loss adjustment
     expenses are presented before deduction of related reinsurance recoverable.
     (See Notes 2 and 5 of Notes to Consolidated Financial Statements.)

    In general, the increase in paid loss activity is attributable, in large
part, to increases in premium volume and a shift in the business mix to lines
with shorter payment patterns in recent years. In 2000, the increase in prior
year paid losses is largely due to payments related to previously reserved
claims, including 1999 catastrophe losses. (See Management's Discussion for
further analysis of incurred and paid loss activity.)

                                       12




<PAGE>

INVESTMENT OPERATIONS

    TRH's investments must comply with the insurance laws of the state of New
York, the state of domicile of TRC and Putnam, and of the other states and
jurisdictions in which the Company and its subsidiaries are regulated. These
laws prescribe the kind, quality and concentration of investments which may be
made by insurance companies. In general, these laws permit investments, within
specified limits and subject to certain qualifications, in federal, state and
municipal obligations, corporate bonds, preferred and common stocks, real estate
mortgages and real estate. The Finance Committee of the Company's Board of
Directors and senior management oversee investments, establish TRH's investment
strategy and implement investment decisions with the assistance of certain AIG
Group companies, which act as financial advisors and managers of TRH's
investment portfolio and, in connection therewith, make the selection of
particular investments. Other than as set forth above, there are no guidelines
or policies with respect to the specific composition of TRH's overall investment
portfolio or the composition of its bond portfolio by rating or maturity. A
significant portion of TRH's domestic investments are in tax-exempt bonds.

    TRH's current investment strategy seeks to maximize after-tax income through
a high quality diversified taxable bond and tax-exempt municipal bond portfolio,
while maintaining an adequate level of liquidity. TRH adjusts its mix of taxable
and tax-exempt investments, as appropriate, generally as a result of strategic
investment and tax planning considerations. During recent years, the yields on
bonds purchased have generally been lower than yields on bonds sold or otherwise
disposed of. Tax-exempt bonds carry lower pre-tax yields than taxable bonds that
are comparable in risk and term to maturity due to their tax-advantaged status.
(See Management's Discussion.) The equity portfolio is structured to achieve
capital appreciation primarily through investment in quality growth companies.
The great majority of other invested assets represent investments in
partnerships and a short duration bond fund managed by an AIG subsidiary.

    The following table reflects investment results for TRH for each of the five
years in the period ended December 31, 2000.

                               INVESTMENT RESULTS

<TABLE>
<CAPTION>
                                                              PRE-TAX NET    PRE-TAX
                                                AVERAGE       INVESTMENT    EFFECTIVE   PRE-TAX REALIZED
YEARS ENDED DECEMBER 31,                     INVESTMENTS(1)    INCOME(2)    YIELD(3)    NET CAPITAL GAINS
------------------------                     --------------    ---------    --------    -----------------
                                                                (dollars in thousands)
<S>                                          <C>              <C>           <C>         <C>
2000.......................................    $4,355,516      $234,485        5.4%         $ 33,098
1999.......................................     4,322,020       230,739        5.3            82,793
1998.......................................     4,149,932       222,000        5.3           120,899
1997.......................................     3,781,217       207,646        5.5            32,939
1996.......................................     3,286,514       192,636        5.9            18,668
</TABLE>

---------

 (1) Average of the beginning and ending carrying values of investments and cash
     for the year, excluding non-interest bearing cash. Bonds available for
     sale, common stocks, nonredeemable preferred stocks and other invested
     assets are carried at fair market value. Other bonds and redeemable
     preferred stocks are carried at amortized cost.

 (2) After investment expenses, excluding realized net capital gains.

 (3) Pre-tax net investment income for the year divided by average investments
     for the same year.

                                       13




<PAGE>

    The following table summarizes the investments of TRH (on the basis of
carrying value) as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                   BREAKDOWN OF
                                                                   INVESTMENTS
                                                              ----------------------
                                                                DECEMBER 31, 2000
                                                              ----------------------
                                                                AMOUNT      PERCENT
                                                                ------      -------
                                                              (dollars in thousands)
<S>                                                           <C>           <C>
Bonds held to maturity (at amortized cost):
    Domestic and foreign municipal bonds....................  $  932,260      21.9%
                                                              ----------     -----
Bonds available for sale (at market value):
    Corporate bonds.........................................     579,367      13.6
    U.S. Government and government agency bonds.............     277,114       6.5
    Foreign government bonds................................     231,994       5.4
    Domestic and foreign municipal bonds....................   1,407,105      33.0
                                                              ----------     -----
                                                               2,495,580      58.5
                                                              ----------     -----
Preferred stocks............................................      26,695       0.6
                                                              ----------     -----
Common stocks...............................................     545,725      12.8
                                                              ----------     -----
Other invested assets.......................................     233,629       5.5
                                                              ----------     -----
Short-term investments......................................      28,091       0.7
                                                              ----------     -----
        Total investments...................................  $4,261,980     100.0%
                                                              ----------     -----
                                                              ----------     -----
</TABLE>

    The carrying value of bonds and equities available for sale are subject to
significant volatility from changes in their market values. (See Management's
Discussion.)

    As of December 31, 2000, the market value of the total investment portfolio
was $4,311.8 million.

    The following table indicates the composition of the bond portfolio of TRH
by rating as of December 31, 2000:

<TABLE>
<CAPTION>
                                                              HELD TO     AVAILABLE
           BREAKDOWN OF BOND PORTFOLIO BY RATING              MATURITY     FOR SALE     TOTAL
           -------------------------------------              --------     --------     -----
<S>                                                           <C>        <C>            <C>
Aaa.........................................................    14.2%        47.1%       61.3%
Aa..........................................................    12.0         20.3        32.3
A...........................................................     1.0          2.7         3.7
Baa.........................................................     --           0.3         0.3
Ba..........................................................     --           0.3         0.3
B...........................................................     --           1.9         1.9
Not rated...................................................     --           0.2         0.2
                                                                ----         ----       -----
    Total...................................................    27.2%        72.8%      100.0%
                                                                ----         ----       -----
                                                                ----         ----       -----
</TABLE>

    At December 31, 2000, TRH had no real estate or derivative instruments. (See
Note 3 of Notes to Consolidated Financial Statements.)

    In addition, TRH's operations are exposed to market risk which could result
in the loss of fair market value resulting from adverse fluctuations in interest
rates, foreign currency exchange rates and equity prices. TRH has performed a
Value at Risk (VaR) analysis to determine the maximum loss of fair value that
could occur over a period of one month at a confidence level of 95%. (See
Management's Discussion).

COMPETITION

    The reinsurance business is highly competitive in virtually all lines. After
many years of deteriorating contract terms and pricing, a noticeable firming of
rates was evident as the year 2000 progressed, reinforcing the positive signs
observed in certain classes of business in 1999.

    TRH faces competition from new market entrants and from market participants
that devote greater amounts of capital to the types of business written by TRH.
Over the past several years, generally increased market capacity, significant
domestic and international merger and acquisition activity, and

                                       14




<PAGE>

since 1996, the reemergence of Lloyd's of London, have added to competitive
pressures. The ultimate impact on the market of these events is uncertain.

    Competition in the types of reinsurance in which TRH is engaged is based on
many factors, including the perceived overall financial strength of the
reinsurer, Best's, S&P and Moody's ratings, the states or other jurisdictions
where the reinsurer is licensed, accredited, authorized or can serve as a
reinsurer, premiums charged, other terms and conditions of the reinsurance
offered, services offered, speed of claims payment and reputation and experience
in the lines of business underwritten.

    TRH competes in the United States and international reinsurance markets with
numerous major international reinsurance companies and numerous domestic
reinsurance companies, some of which have greater financial and other resources
than TRH. While TRC and Putnam, on a combined basis, would rank 5th, on the
basis of statutory net premiums written, they are a less significant reinsurer
in international reinsurance markets. TRH's competitors include independent
reinsurance companies, subsidiaries or affiliates of established worldwide
insurance companies, reinsurance departments of certain primary insurance
companies and domestic and European underwriting syndicates. Many of these
competitors have been operating for substantially longer than TRH and have
established long-term and continuing business relationships throughout the
industry, which can be a significant competitive advantage. Although most
reinsurance companies operate in the broker market, most of TRH's largest
competitors also work directly with ceding companies, competing with brokers.
According to the Reinsurance Association of America, there were 31 domestic
reinsurers for which results were reported in their quarterly survey as of
December 31, 2000.

EMPLOYEES

    At December 31, 2000, TRH had approximately 390 employees. Approximately 185
employees were located in the New York headquarters; 35 employees were located
in Chicago and Miami (serving Latin America and the Caribbean) and 170 employees
were located in other international offices.

REGULATION

    The rates and contract terms of reinsurance agreements are generally not
subject to regulation by any governmental authority. This contrasts with primary
insurance agreements, the rates and policy terms of which are generally closely
regulated by state insurance departments. As a practical matter, however, the
rates charged by primary insurers and the policy terms of primary insurance
agreements may affect the rates charged and the policy terms associated with
reinsurance agreements.

    The Company, TRC, TRZ and Putnam are subject to the insurance statutes,
including insurance holding company statutes, of various states and
jurisdictions. The insurance holding company laws and regulations vary from
jurisdiction to jurisdiction, but generally require domestic insurance holding
companies and insurers and reinsurers that are subsidiaries of insurance holding
companies to register with the applicable state regulatory authority and to file
with that authority certain reports which provide information concerning their
capital structure, ownership, financial condition and general business
operations.

    Such holding company laws generally also require prior regulatory agency
approval of changes in direct or indirect control of an insurer or reinsurer and
of certain material intercorporate transfers of assets within the holding
company structure. The New York Insurance Law provides that no corporation or
other person, except an authorized insurer, may acquire direct control of TRC or
Putnam, or acquire control of the Company and thus indirect control of TRC and
Putnam, unless such corporation or person has obtained the prior approval of the
New York Insurance Department for such acquisition. For the purposes of the New
York Insurance Law, any investor acquiring ten percent or more of the Common
Stock of the Company would be presumed to be acquiring 'control' of the Company
and its subsidiaries, unless the New York Insurance Department determines upon
application that such investor would not control the Company. An investor who
would be deemed to be acquiring control of the Company would be required to
obtain the approval of the New York Insurance Department prior to such
acquisition. In addition, such investor would become subject to various ongoing
reporting requirements in New York and in certain other states.

    TRC, TRZ and Putnam, in common with other reinsurers, are subject to
regulation and supervision by the states and by other jurisdictions in which
they do business. Within the United States, the method

                                       15




<PAGE>

of such regulation varies but generally has its source in statutes that delegate
regulatory and supervisory powers to an insurance official. The regulation and
supervision relate primarily to the standards of solvency that must be met and
maintained, including risk-based capital measurements, the licensing of
reinsurance, the nature of and limitations on investments, restrictions on the
size of risks which may be insured under a single contract, deposits of
securities for the benefit of ceding companies, methods of accounting, periodic
audits of the affairs and financial reports of insurance companies, the form and
content of reports of financial condition required to be filed, and reserves for
unearned premiums, losses and other purposes. As required by the state of New
York, TRC and Putnam adopted the Codification of Statutory Accounting Principles
(Codification) as of January 1, 2001 as primary guidance on statutory
accounting. The cumulative effect on statutory surplus of adopting the
Codification (which differs from existing statutory guidance) on January 1, 2001
was not material. TRH expects that the impact of adopting the Codification on
future statutory net income, financial position or cash flows will not be
material. (See Management's Discussion.) In general, such regulation is for the
protection of the ceding companies and, ultimately, their policyholders rather
than securityholders.

    Risk Based Capital (RBC) is designed to measure the adequacy of an insurer's
statutory surplus in relation to the risks inherent in its business. Thus,
inadequately capitalized insurance companies may be identified. The RBC formula
develops a risk adjusted target level of statutory surplus by applying certain
factors to various asset, premium and reserve items. Higher factors are applied
to items deemed to have more risk by the National Association of Insurance
Commissioners and lower factors are applied to items that are deemed to have
less risk. Thus, the target level of statutory surplus varies not only as a
result of the insurer's size, but also on the risk profile of the insurer's
operations. The RBC Model Law provides for four incremental levels of regulatory
attention for insurers whose surplus is below the calculated RBC target. These
levels of attention range in severity from requiring the insurer to submit a
plan for corrective action to placing the insurer under regulatory control. The
statutory surplus of each of the Company's domestic subsidiaries significantly
exceeded the risk-based capital requirements as of December 31, 2000.

    Through the 'credit for reinsurance' mechanism, TRC and Putnam are
indirectly subject to the effects of regulatory requirements imposed by
jurisdictions in which TRC's and Putnam's ceding companies are licensed. In
general, an insurer which obtains reinsurance from a reinsurer that is licensed,
accredited or authorized by the state in which the insurer files statutory
financial statements is permitted to take a credit on its statutory financial
statements in an aggregate amount equal to the reinsurance recoverable on paid
losses and the liabilities for unearned premiums and loss and loss adjustment
expense reserves ceded to the reinsurer, subject to certain limitations where
amounts of reinsurance recoverable on paid losses are more than 90 days overdue.
Certain states impose additional requirements that make it difficult to become
so authorized, and certain states do not allow credit for reinsurance ceded to
reinsurers that are not licensed or accredited in that state without additional
provision for security.

    In addition to licensing requirements, TRH's international operations are
also regulated in various jurisdictions with respect to currency, amount and
type of security deposits, amount and type of reserves and amount and type of
local investment, and are subject to local economic, political and social
conditions. In addition, TRH's results of operations and net unrealized currency
translation gain or loss (a component of accumulated other comprehensive income)
are subject to volatility as the value of the foreign currencies fluctuate
relative to the U.S. dollar. (See Note 8 of Notes to Consolidated Financial
Statements.) Regulations governing constitution of technical reserves and
remittance balances in some countries may hinder remittance of profits and
repatriation of assets.

RELATIONSHIP WITH THE AIG GROUP

AIG

    AIG is a holding company which, through its subsidiaries, is primarily
engaged in a broad range of insurance and insurance-related activities and
financial services in the United States and abroad. U.S.-based property and
casualty insurance subsidiaries of AIG currently attain the highest rating
classification assigned by Best's and S&P. The AIG Group is one of the largest
purchasers of reinsurance in the insurance industry based on premiums ceded.

                                       16




<PAGE>

CONTROL OF THE COMPANY

    In August 1998, AIG increased its beneficial ownership of the Company's
outstanding common stock from 49% to over 50%. As of December 31, 2000, AIG
beneficially owned approximately 60% of the Company's outstanding shares. Four
of the Company's 9 current directors, including the Chairman, are officers of
AIG and hold the following positions with AIG: Mr. Greenberg is a Director and
the Chairman and Chief Executive Officer; Mr. Matthews is a Director and Vice
Chairman; Mr. Smith is a Director and the Executive Vice President and Chief
Financial Officer and Mr. Tizzio is a Director and Senior Vice Chairman.

AIG GROUP REINSURANCE

    From 1977 through June 1990, TRH and AIG had an agreement granting TRH a
right of first acceptance to participate in substantially all property and
casualty reinsurance purchased by the AIG Group. AIG continues to grant TRH a
right of first acceptance under terms similar to those in effect under the above
mentioned agreement. TRH either accepts or rejects the AIG Group reinsurance
offered based upon TRH's assessment of risk selection, pricing, terms and
conditions. Historically, and with few exceptions, TRH has generally not set
terms and conditions as lead underwriter with respect to the AIG Group treaty
reinsurance; however, TRH may in the future set terms and conditions with
respect to such business as lead underwriter and intends that the terms and
conditions of any such reinsurance will be negotiated on an arms' length basis.
The operating management of TRH is not employed by the AIG Group, and the
Underwriting Committee of the Board of Directors of the Company, which includes
directors of the Company who are not employees of the AIG Group, monitor TRH's
underwriting policies.

    Approximately $209 million (11%), $184 million (11%) and $167 million (11%)
of gross premiums written by TRH in the years 2000, 1999 and 1998, respectively,
were attributable to reinsurance purchased by the AIG Group, for the production
of which TRH paid ceding commissions to the AIG Group of approximately $38
million, $34 million and $31 million, respectively, in such years. TRH has no
goal with respect to the proportion of AIG Group versus non-AIG Group business
it accepts. TRH's objective in determining its business mix is to evaluate each
underwriting opportunity individually with a view to maximizing overall
underwriting results.

    TRH retroceded gross premiums written to the AIG Group in the years 2000,
1999 and 1998 of approximately $95.1 million, $100.4 million and $93.4 million,
respectively, and received ceding commissions of approximately $11.2 million,
$16.2 million and $12.4 million, respectively, for the production of such
business in such years.

ITEM 2. PROPERTIES

    As of December 31, 2000, one-half of the office space of TRH's New York
headquarters and its Toronto office are rented from AIG, which either owns the
property or leases it from others. The remaining office space of TRH's
headquarters and the Chicago, Miami, Buenos Aires, Rio de Janeiro, London,
Paris, Warsaw, Zurich, Hong Kong, Shanghai and Tokyo offices, are rented from
third parties. The leases for the office space occupied by TRH's New York
headquarters expire in 2005.

ITEM 3. LEGAL PROCEEDINGS

    TRH, in common with the reinsurance industry in general, is subject to
litigation in the normal course of its business. TRH does not believe that any
pending litigation will have a material adverse effect on its consolidated
results of operations, financial position or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There were no matters submitted to a vote of security holders during the
fourth quarter of 2000.

                                       17




<PAGE>

               DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The table below sets forth the names, positions and ages of the persons who
are the directors and executive officers of the Company as of March 22, 2001.

<TABLE>
<CAPTION>
                                                                                       SERVED AS
                                                                                      DIRECTOR OR
                NAME                                  POSITION                 AGE   OFFICER SINCE
                ----                                  --------                 ---   -------------
<S>                                    <C>                                     <C>   <C>
Robert F. Orlich.....................  President, Chief Executive Officer      53        1990(1)
                                         and Director
Paul A. Bonny........................  Executive Vice President, President     44        1994
                                         International Operations
Steven S. Skalicky...................  Executive Vice President, Chief         52        1995
                                         Financial Officer
Javier E. Vijil......................  Executive Vice President, President     48        1996(2)
                                         Latin American Division
Robert V. Mucci......................  Senior Vice President and Actuary       43        1990(1)
Gary A. Schwartz.....................  Vice President and General Counsel      40        1999(3)
Elizabeth M. Tuck....................  Secretary                               45        1991
M. R. Greenberg......................  Chairman of the Board                   75        1986
James Balog..........................  Director                                72        1988
C. Fred Bergsten.....................  Director                                59        1998
Ikuo Egashira........................  Director                                70        1995
John J. Mackowski....................  Director                                75        1990
Edward E. Matthews...................  Director                                69        1986
Howard I. Smith......................  Director                                56        1994
Thomas R. Tizzio.....................  Director                                63        1990(1)
</TABLE>

---------

(1) Prior to April 1990, such person was a director or an officer of TRC and
    Putnam, but not of the Company.

(2) Mr. Vijil was elected Executive Vice President, President Latin American
    Division of the Company in October 1998. From May 1996 to October 1998,
    Mr. Vijil was a Senior Vice President of the Company. From November 1994 to
    May 1996, Mr. Vijil was a Senior Vice President of TRC and Putnam, but not
    of the Company.

(3) Mr. Schwartz was named Vice President and General Counsel of the Company by
    action of the Executive Committee in July 1999, and by election of the Board
    of Directors in October 1999. From March 1996 to July 1999, Mr. Schwartz was
    a Vice President and Director of Taxation of TRC and Putnam, but not of the
    Company. From September 1992 to March 1996, Mr. Schwartz was an Assistant
    Vice President and Director of Taxation of TRC and Putnam, but not of the
    Company.

    Except as noted, each of the executive officers has, for more than five
years, occupied an executive position with the Company or companies that are now
its subsidiaries. Since January 1991, Ms. Tuck has also served as the Secretary
of a number of AIG Group companies.

                                       18






<PAGE>

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

    (a) The following table sets forth the high and low closing sales prices per
share of the Company's Common Stock, as reported on the New York Stock Exchange
Composite Tape for each of the four quarters of 2000 and 1999:

<TABLE>
<CAPTION>
                                                        2000                              1999
                                          --------------------------------   --------------------------
                                            HIGH              LOW              HIGH             LOW
                                            ----              ---              ----             ---
<S>                                       <C>               <C>              <C>              <C>
First Quarter...........................   85 1/2           68 15/16         77 1/4           74 1/8
Second Quarter..........................   90 9/16          81 9/16          80 1/8           72 13/16
Third Quarter...........................   93               80 15/16         75 7/8           70 1/4
Fourth Quarter..........................  105 7/8           89 15/16         78 5/16          69 3/16
</TABLE>

    (b) As of January 31, 2001, the approximate number of holders of Common
Stock, including those whose Common Stock is held in nominee name, was 5,000.

    (c) In 2000, the Company declared a quarterly dividend of $0.125 per common
share in March and $0.135 per common share in each of May, September and
November. In 1999, the Company declared a quarterly dividend of $0.11 per common
share in March and $0.125 per common share in each of May, October and December.
The Company paid each dividend in the quarter following the date of declaration
except for the October 1999 dividend, which was paid in the same quarter as the
date of declaration.

    The declaration and payment of future dividends, if any, by the Company will
be at the discretion of the Board of Directors and will depend upon many
factors, including the Company's consolidated earnings, financial condition and
business needs, capital and surplus requirements of the Company's operating
subsidiaries, regulatory considerations and other factors.

    The Company is a holding company whose principal source of income is
dividends from its subsidiary, TRC. The payment of dividends by TRC and its
wholly-owned subsidiaries, TRZ and Putnam, is restricted by insurance
regulations. (See Note 12 of Notes to Consolidated Financial Statements.)

                                       19




<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES

    The following Selected Consolidated Financial Data is prepared in accordance
with accounting principles generally accepted in the United States of America.
Such data include the results of TRZ subsequent to the date of its acquisition
by TRH (through its wholly owned subsidiary TRC) in mid-1996 accounted for as a
purchase. In addition, this data should be read in conjunction with the
Consolidated Financial Statements and accompanying notes included elsewhere
herein.

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                     --------------------------------------------------------------
                                        2000         1999         1998         1997         1996
                                        ----         ----         ----         ----         ----
                                                 (in thousands, except per share data)
<S>                                  <C>          <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
    Net premiums written...........  $1,658,579   $1,498,524   $1,393,700   $1,294,136   $1,142,515
    Net premiums earned............   1,631,536    1,484,634    1,380,570    1,259,251    1,130,633
    Net investment income..........     234,485      230,739      222,000      207,646      192,636
    Realized net capital gains.....      33,098       82,793      120,899       32,939       18,668
    Total revenues.................   1,899,119    1,798,166    1,723,469    1,499,836    1,341,937
    Operating income...............     268,064      236,235      323,580      236,096      197,518
    Income before income taxes.....     267,982      236,097      323,351      234,726      196,320
    Net income.....................     211,638      187,362      247,523      185,500      154,860
PER COMMON SHARE:(1)
    Net income:(2)
        Basic......................  $     6.09   $     5.40   $     7.15   $     5.37   $     4.49
        Diluted....................        6.05         5.37         7.10         5.34         4.48
    Cash dividends declared........        0.53         0.49         0.43         0.39         0.33
SHARE DATA:(1)(2)
    Weighted average common shares
      outstanding:
        Basic......................      34,751       34,704       34,636       34,546       34,474
        Diluted....................      34,984       34,882       34,865       34,751       34,594
BALANCE SHEET DATA (AT YEAR END):
    Investments and cash...........  $4,391,226   $4,333,462   $4,328,833   $3,992,519   $3,589,889
    Total assets...................   5,522,672    5,480,198    5,253,249    4,834,980    4,379,141
    Unpaid losses and loss
      adjustment expenses..........   3,077,162    3,304,931    3,116,038    2,918,782    2,733,055
    Unearned premiums..............     418,621      397,783      386,652      366,640      343,936
    Stockholders' equity...........   1,856,365    1,642,517    1,610,139    1,356,659    1,137,306
</TABLE>

---------

(1) Share and per share data have been retroactively adjusted to reflect a
    3-for-2 common stock split effected in the form of a 50% stock dividend,
    paid July 18, 1997.

(2) All periods reflect the adoption of the accounting standard related to
    earnings per share (SFAS No. 128).

                                       20




<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FINANCIAL STATEMENTS

    The following discussion refers to the consolidated financial statements of
Transatlantic Holdings, Inc. and its subsidiaries (collectively, TRH) as of
December 31, 2000 and 1999 and for each of the three years in the period ended
December 31, 2000, which are presented elsewhere herein. TRH's principal
operating subsidiaries are Transatlantic Reinsurance Company (TRC), Trans Re
Zurich (TRZ) and Putnam Reinsurance Company (Putnam).

    In August 1998, American International Group, Inc. (AIG, and collectively,
with its subsidiaries, the AIG Group) increased its beneficial ownership of
Transatlantic Holdings, Inc. (the 'Company') outstanding common stock from 49%
to over 50%. As of December 31, 2000, AIG beneficially owned approximately 60%
of the Company's outstanding shares. Financial data discussed below have been
affected by certain transactions between TRH and the AIG Group. (See Notes 11
and 13 of Notes to Consolidated Financial Statements.)

OPERATIONAL REVIEW

    TRH derives its revenue from two principal sources: premiums from
reinsurance assumed net of reinsurance ceded (i.e., net premiums earned) and
income from investments. Premiums are earned primarily on a pro rata basis over
the term of the related coverages. Unearned premiums and prepaid reinsurance
premiums represent the portion of gross premiums assumed and reinsurance ceded,
respectively, relating to the unexpired terms of such coverages. The
relationship between net premiums written and net premiums earned will,
therefore, vary depending generally on the volume and inception dates of the
business assumed and ceded and the mix of such business between pro rata and
excess-of-loss reinsurance.

    The following table shows net premiums written, net premiums earned and net
investment income of TRH for the periods indicated:

<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                   ---------------------------------------------------------------------
                                           2000                    1999                    1998
                                   ---------------------   ---------------------   ---------------------
                                                CHANGE                  Change                  Change
                                                 FROM                    From                    From
                                    AMOUNT    PRIOR YEAR    Amount    Prior Year    Amount    Prior Year
                                    ------    ----------    ------    ----------    ------    ----------
                                                           (dollars in millions)
<S>                                <C>        <C>          <C>        <C>          <C>        <C>
Net premiums written.............  $1,658.6      10.7%     $1,498.5       7.5%     $1,393.7       7.7%
Net premiums earned..............   1,631.5       9.9       1,484.6       7.5       1,380.6       9.6
Net investment income............     234.5       1.6         230.7       3.9         222.0       6.9
</TABLE>

    For the period under discussion, the reinsurance market has been
characterized by significant competition worldwide in most classes, although
rate increases were achieved in many classes as 2000 progressed. The increases
in net premiums written resulted generally from increased coverage provided and
were primarily from treaty business. On a worldwide basis, casualty lines
business represented 76.7% of net premiums written in 2000 versus 74.8% and
71.0% in 1999 and 1998, respectively. The balance represented property lines.
Treaty business represented 96.3% of net premiums written in 2000 versus 96.6%
in 1999 and 94.7% in 1998. The balance represented facultative accounts.

    Net premiums written by international offices increased in 2000 by $65.2
million, or 8.7%, over the prior year, to $813.1 million. The majority of
international offices recorded increases in net premiums written, led by London
and TRZ. International net premiums written increased significantly in auto
liability, accident and health and property catastrophe excess-of-loss lines.
International business represented 49.0% of 2000 net premiums written compared
to 49.9% in 1999.

    In 2000, domestic net premiums written increased by $94.9 million, or 12.6%,
over 1999, to $845.5 million, with significant increases recorded in certain
specialty casualty classes (particularly accident and health and medical
malpractice lines) and in aviation and property catastrophe excess-of-loss
lines.

    Net premiums written by international offices increased in 1999 by $65.9
million, or 9.7%, over the prior year, to $747.9 million. Most international
offices recorded increases in net premiums written, led by Paris and London. In
addition, net premiums written by the Asia Pacific offices (Hong Kong and

                                       21




<PAGE>

Tokyo) increased 44% to $83.0 million. TRZ recorded a significant decrease
compared to 1998 as a result of the shift of their business to certain other TRH
offices, closer to source, and the selective retention of business in core
areas. International net premiums written increased significantly in auto
liability, accident and health and property lines, and decreased significantly
in the ocean marine line. International business represented 49.9% of 1999 net
premiums written compared to 48.9% in 1998.

    In 1999, domestic net premiums written increased by $38.9 million, or 5.5%,
over 1998, to $750.6 million, with significant increases recorded in certain
specialty casualty classes (particularly accident and health and medical
malpractice lines), and significant decreases recorded in property and aviation
lines. The majority of the reduction in property net premiums written was due to
an increase in premiums for reinsurance ceded.

    The increase in net premiums earned in each of 2000 and 1999 compared to the
respective prior year amounts resulted primarily from the growth in net premiums
written in both years. Net investment income grew in 2000 compared to 1999 due
to an increase in investment income from other invested assets offset largely by
a decrease from fixed maturities, and a reduction in investment expenses. Net
investment income grew in 1999 versus 1998 due to significant cash flow
available for investment which was generated by operating activities. The
percentage increase in net investment income is less in 2000 versus 1999, than
in 1999 and 1998 compared to the respective prior years, due to the impact of
negative operating cash flow in the first two quarters of 2000, due largely to a
high level of paid losses (see discussion of operating cash flow under Financial
Condition and Liquidity) and to the negative impact of foreign exchange on
investment income earned by certain of our international locations in 2000. (See
Note 3 of Notes to Consolidated Financial Statements.)

    The property and casualty insurance and reinsurance industries use the
combined ratio as a measure of underwriting profitability. The combined ratio
reflects only underwriting results, and does not include income from
investments. Generally, a combined ratio under 100 indicates an underwriting
profit and a combined ratio exceeding 100 indicates an underwriting loss.
Underwriting profitability is subject to significant fluctuations due to
competition, catastrophic events, economic and social conditions, foreign
currency rate fluctuations, interest rates and other factors.

    The following table sets forth TRH's combined ratios and the components
thereof for the years indicated:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED
                                                                  DECEMBER 31,
                                                              --------------------
                                                              2000   1999    1998
                                                              ----   ----    ----
<S>                                                           <C>    <C>     <C>
Loss and loss adjustment expense ratio......................  73.4    77.4    73.9
Underwriting expense ratio..................................  26.5    27.8    27.4
Combined ratio..............................................  99.9   105.2   101.3
</TABLE>

    2000 catastrophe losses had an immaterial impact on current year results. In
addition, as a result of net increases in estimates of losses occurring in prior
years, net losses and loss adjustment expenses were increased by $14.4 million
in 2000. In particular, significant adverse development was recorded in 2000 on
losses occurring in 1998 and 1999 in fire and allied lines. These increases to
incurred losses were partially offset by favorable development in 2000 on losses
occurring primarily in 1994 through 1999 in the other liability line.

    TRH's 1999 results included catastrophe losses incurred of $85 million,
which added 5.7 to each of the loss and loss adjustment expense ratio and
combined ratio. More than one-half of those losses were from European storms
occurring late in the year. Two of those storms, Lothar and Martin, occurred
within a day of each other in late December and caused extensive property damage
in Western Europe, most severely in France. These two storms collectively are
considered among the worst natural catastrophes ever to strike France.

    In addition, as a result of net decreases in estimates of losses occurring
in prior years, net losses and loss adjustment expenses were reduced by $67.5
million in 1999. Significant favorable development was recorded in 1999 on
losses occurring in 1987 through 1996 in the other liability line and in 1994
through 1998 in the aviation line. These reductions to incurred losses were
partially offset by adverse

                                       22




<PAGE>

development in 1999 on losses occurring in 1997 and 1998, principally in fire,
allied lines, auto liability and ocean marine lines, and prior to 1984 in the
other liability line.

    TRH's 1998 results included catastrophe losses incurred of $20 million
related to Hurricane Georges, which added 1.4 to each of the loss and loss
adjustment expense ratio and combined ratio. In addition, as a result of net
decreases in estimates of losses occurring in prior years, net losses and loss
adjustment expenses were reduced by $59.5 million in 1998. Significant favorable
development was recorded in 1998 on losses occurring in years subsequent to 1986
in the other liability line, in 1996 and 1997 in the medical malpractice line
and in 1993 through 1996 in the fire and allied lines. These reductions to
incurred losses were partially offset by adverse development in 1998 on losses
occurring in 1996 and 1997 in the ocean marine line, prior to 1984 in the other
liability line and in 1997 in the fire line.

    At December 31, 2000, reserves for unpaid losses and loss adjustment
expenses totaled $3.08 billion, a decrease of $227.8 million, or 6.9%, as
compared to the prior year. The decrease in reserves was largely due to the
payment of previously reserved claims, including those related to catastrophe
losses occurring in prior years, and to favorable development in 2000 on losses
occurring in prior years in the other liability line. Also at December 31, 2000,
reinsurance recoverable on unpaid losses and loss adjustment expenses totaled
$449.2 million, a decrease of $80.5 million, or 15.2%, from the prior year. This
decrease was due, in part, to amounts recovered by TRH on ceded reinsurance
related to catastrophe losses in prior years. (See Note 13 of Notes to
Consolidated Financial Statements.) TRH's reserves and related recoverables
represent estimates of all future liability and reinsurance recoverable thereon
for losses occurring on or prior to the balance sheet date. Net losses and loss
adjustment expenses are charged to income as incurred. Unpaid losses and loss
adjustment expenses are principally based on reports and individual case
estimates received from ceding companies. A provision is included for losses and
loss adjustment expenses incurred but not reported on the basis of past
experience and other factors. The methods of making such estimates and for
establishing the resulting reserves and related recoverables are continually
reviewed and updated, and any adjustments resulting therefrom are reflected in
income currently. Provisions for inflation and 'social inflation' (e.g., awards
by judges and juries which progressively increase in size at a rate exceeding
that of general inflation) are implicitly considered in the overall reserve
setting process as an element of numerous judgments which are made as to
expected trends in average claim severity. Because the reserving process is
inherently difficult and subjective, actual net losses and loss adjustment
expenses may deviate, perhaps substantially, from estimates of reserves and
reinsurance recoverable on such amounts reflected in TRH's consolidated
financial statements.

    Loss and loss adjustment expense reserves, net of related reinsurance
recoverables, for risks related to environmental impairment and asbestos-related
illnesses amounted to $71 million and $75 million at December 31, 2000 and 1999,
respectively. The majority of TRH's environmental and asbestos-related
liabilities arise from contracts entered into after 1984. These obligations
generally arose from contracts underwritten specifically as environmental or
asbestos-related coverages rather than from standard general liability coverages
where the environmental or asbestos-related liabilities were neither clearly
defined nor specifically excluded. The reserves carried for such claims,
including incurred but not reported claims (IBNR), are based upon known facts
and current law. However, significant uncertainty exists as, among other things,
there are inconsistent court resolutions and judicial interpretations with
respect to underlying policy intent and coverage and uncertainties as to the
allocation of responsibility for resultant damages. Further, while there is
always the possibility of changes in statutes, laws, regulations and other
factors that could have a material effect on these liabilities and, accordingly,
future earnings, TRH believes that these claims reserves, as well as all other
claims reserves carried at December 31, 2000, are adequate.

    The underwriting expense ratio, which represents the sum of net commissions
and other operating expenses expressed as a percentage of net premiums written,
decreased in 2000 compared to 1999 due principally to a decrease in the
commission ratio caused, in large part, by a slight shift in the mix of business
between years. The underwriting expense ratio increased modestly in 1999 over
1998.

    Other deductions generally include currency transaction gains and losses and
other miscellaneous income and expense items.

                                       23




<PAGE>

    Realized net capital gains on the disposition of investments totaled $33.1
million in 2000, $82.8 million in 1999 and $120.9 million in 1998. The high
levels of realized net capital gains in 1999 and 1998 as compared to 2000 were
caused, in 1999, by the redeployment of a portion of the equity portfolio early
in the year generally into fixed income investments, and in 1998, by the
strategic realignment of the equity portfolio.

    Income before income taxes was $268.0 million in 2000, $236.1 million in
1999 and $323.4 million in 1998. The increase in income before income taxes in
2000 over 1999 was primarily due to the absence of significant catastrophe
losses occurring in 2000, partially offset by a decrease in realized net capital
gains as compared to 1999. The decrease in income before income taxes in 1999
resulted principally from a high level of catastrophe losses and a decline in
realized net capital gains in 1999 compared to 1998.

    The provisions for federal and foreign income taxes were $56.3 million in
2000, $48.7 million in 1999 and $75.8 million in 1998. The Company and its
domestic subsidiaries, TRC and Putnam, filed consolidated federal income tax
returns for the years under discussion, except those for 2000 which are not yet
due. The tax burden among the companies is allocated in accordance with a tax
sharing agreement. TRC will include as part of its taxable income those items of
income of the non-U.S. subsidiary, TRZ, which are subject to U.S. income tax
currently, pursuant to Subpart F income rules of the Internal Revenue Code, and
included, as appropriate, in the consolidated federal income tax return.

    The effective tax rates were 21.0% in 2000, 20.6% in 1999 and 23.5% in 1998.
The effective tax rate in 2000 increased slightly compared to 1999. The decrease
in the effective tax rate in 1999 versus 1998 is due principally to the fact
that tax-exempt interest represented a greater percentage of income before
income taxes in 1999 than in the previous year. While tax-exempt interest
remained relatively level compared to 1998, income before income taxes declined
significantly for the reasons discussed earlier.

    Net income and net income per common share on a diluted basis, respectively,
were as follows: 2000 -- $211.6 million, $6.05; 1999 -- $187.4 million, $5.37;
1998 -- $247.5 million, $7.10. Reasons for the changes between years are as
discussed earlier. (See Note 7 of Notes to Consolidated Financial Statements.)

FINANCIAL CONDITION AND LIQUIDITY

    As a holding company, the Company's assets consist primarily of the stock of
TRC and the Company's future cash flows depend on the availability of dividends
or other statutorily permissible payments from TRC and its wholly-owned
operating subsidiaries, TRZ and Putnam. (See Note 12 of Notes to Consolidated
Financial Statements for a discussion of restrictions on dividend payment.) In
2000 and 1999, the Company received cash dividends from TRC of $18.1 million and
$16.3 million, respectively. Sources of funds for the operating subsidiaries
consist primarily of premiums, reinsurance recoverables, investment income and
proceeds from sales, redemptions and the maturing of investments. Funds are
applied primarily to payments of claims, ceded reinsurance premiums, insurance
operating expenses, income taxes and investments in fixed income and equity
securities. Premiums are generally received substantially in advance of related
claims payments. Cash and cash equivalents are maintained for the payment of
claims and expenses as they become due. TRH does not anticipate any material
capital expenditures in the foreseeable future.

    At December 31, 2000, total investments and cash were $4,391.2 million
compared to $4,333.5 million at December 31, 1999. The increase was caused by
pre-tax unrealized holding gains on investments, partially offset by modest
negative operating cash flow and outward cash flow from financing activities.
(See Note 3 of Notes to Consolidated Financial Statements.)

    For 2000, TRH's operating cash flow was modestly negative, a substantial
reduction from the positive amount reported in 1999. The reduction in cash flow
was caused largely by a significant increase in paid losses offset partially by
increased premium collections, net of commissions. Paid loss levels in 2000 were
significantly elevated due to payments related to previously reserved claims,
including 1999 catastrophe losses, an increase in premium volume and the
continued shift in the business mix towards lines with shorter payment patterns.

    TRH's operating cash flow in 1999 declined compared to 1998. This decrease
was due to significant increases in paid losses and net commissions, offset, in
part, by increased net premiums and a significant

                                       24




<PAGE>

reduction in taxes paid. In 1999, the increase in paid losses was principally
due to increases in premium volume and a shift in the business mix in more
recent years towards lines with shorter loss payment patterns.

    A portion of consolidated operating cash flow, namely, -$5.0 million,
$104.6 million and $91.4 million, was derived from international operations in
2000, 1999 and 1998, respectively.

    TRH believes that its balance of cash and cash equivalents of $129.2 million
as of December 31, 2000 and its future cash flows will be sufficient to meet
TRH's cash requirements through the end of 2001 and thereafter for a period the
length of which is difficult to predict, but which TRH believes will be at least
one year.

    TRH's fixed maturity investments, approximately 80.4% of total investments
as of December 31, 2000, are predominantly investment grade, liquid securities,
approximately 50% of which will mature in less than 10 years. Also as of that
date, approximately 13.4% of total investments were in common and nonredeemable
preferred stocks, approximately 5.5% of total investments were in other invested
assets, including investments in partnerships, and the remaining 0.7% consisted
of short-term investments. Based on the foregoing, TRH considers its liquidity
to be adequate through the end of 2001 and thereafter for a period the length of
which is difficult to predict, but which TRH believes will be at least one year.

    Fixed maturity investments are carried at amortized cost when it is TRH's
positive intent to hold these securities to maturity and TRH has the ability to
do so. As of December 31, 2000, a significant portion of the bond portfolio was
classified as available-for-sale and carried at market value. Most activity
within the bonds available for sale portfolio for the years under discussion
represented strategic portfolio realignments to maximize after-tax income. TRH
adjusts its mix of taxable and tax-exempt investments, as appropriate, generally
as a result of strategic investment and tax planning considerations. As of
December 31, 2000, bonds held to maturity had gross unrealized gains of $50.0
million and $0.1 million of gross unrealized losses. Gross unrealized gains and
losses on bonds available for sale as of December 31, 2000 amounted to $63.3
million and $15.6 million, respectively.

    As of December 31, 2000, 93.6% of the bond portfolio was rated Aaa or Aa, an
additional 4.0% was also rated investment grade or better, 2.2% was rated below
investment grade and 0.2% was not rated. Also, as of December 31, 2000, TRH had
no derivative instruments. (See Note 3 of Notes to Consolidated Financial
Statements.)

    TRH's operations are exposed to market risk. Market risk is the risk of loss
of fair market value resulting from adverse fluctuations in interest rates,
equity prices and foreign currency exchange rates.

    Measuring potential losses in fair values is the focus of risk management
efforts by many companies. Such measurements are performed through the
application of various statistical techniques. One such technique is Value at
Risk (VaR). VaR is a summary statistical measure that uses changes in historical
interest and foreign currency exchange rates and equity prices to calculate the
maximum loss that could occur over a defined period of time given a certain
probability.

    TRH believes that statistical models alone do not provide a reliable method
of monitoring and controlling market risk. While VaR models are relatively
sophisticated, the quantitative market risk information generated is limited by
the assumptions and parameters established in creating the related models.
Therefore, such models are tools and do not substitute for the experience or
judgment of senior management.

    TRH has performed VaR analyses to estimate the maximum potential loss of
fair value for financial instruments for each type of market risk. TRH has
refined its methodology for calculating VaR and the results of the calculations
for 2000 were performed using historical simulation. Using historical simulation
over the delta-normal approach (which was used for the 1999 information
presented herein) does not significantly change the result of the VaR analysis.
The historical simulation methodology entails re-pricing all assets and
liabilities under explicit changes in market rates within a specific historical
time period. In this case, the most recent three years of historical market
information for interest rates, foreign exchange rates and equity index prices
are used to construct the historical scenarios. For each scenario, each
transaction is re-priced. Consolidated totals are calculated by netting the
values of all the underlying assets and liabilities. The final VaR number
represents the maximum

                                       25




<PAGE>

potential loss incurred with 95% confidence (i.e., only 5% of historical
scenarios show losses greater than the VaR figure). A one-month holding period
is assumed in computing the VaR figure. At December 31, 2000 and 1999, the VaR
was approximately $80 million and $76 million, respectively.

    The following table presents the VaR of each component of market risk. VaR
with respect to the aggregate of the three components of market risk cannot be
derived by aggregating the individual risk amounts presented herein.

<TABLE>
<CAPTION>
     MARKET RISK                                               2000    1999
     -----------                                               ----    ----
                                                               (in millions)
     <S>                                                       <C>     <C>
     Interest rate...........................................   $66     $38
     Equity..................................................    51      65
     Currency................................................     4       8
     </TABLE>

    TRH's stockholders' equity increased to $1.86 billion at December 31, 2000,
an increase of $213.8 million over year-end 1999. The net increase was comprised
principally of net income of $211.6 million and an increase in accumulated other
comprehensive income of $18.6 million, less cash dividends declared of $18.4
million. The increase in net unrealized appreciation of investments, net of
income tax, a component of accumulated other comprehensive income, principally
consisted of an increase in unrealized appreciation of bonds available for sale,
net of income tax, of $83.5 million due principally to a reduction in market
interest rates compared to a year ago, partially offset by a decrease in
unrealized appreciation of common stocks available for sale, net of income tax,
of $45.0 million, reflecting a general weakening of the U.S. economy. Net
unrealized appreciation of investments, net of income taxes, is subject to
significant volatility resulting from changes in the market value of bonds and
equities available for sale. Market values may fluctuate due to changes in
general economic conditions, market interest rates, prospects of investee
companies and other factors.

    Risk-based capital (RBC) standards, promulgated by the National Association
of Insurance Commissioners (NAIC), relate an individual company's statutory
policyholders' surplus to the risk inherent in its overall operations and sets
thresholds at which certain company and regulatory corrective actions are
mandated. At December 31, 2000, the statutory surpluses of TRC and Putnam each
significantly exceeded RBC requirements.

ACCOUNTING STANDARDS

    In June 1997, the Financial Accounting Standards Board (FASB) adopted
Statement of Financial Accounting Standards (SFAS) No. 130, 'Reporting
Comprehensive Income.' This statement established standards for reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general-purpose financial statements. Comprehensive
income is defined as the change in stockholders' equity during a period from
transactions and other events and circumstances from non-owner sources and
includes net income and all changes in stockholders' equity except those
resulting from investments by owners and distribution to owners.

    This standard requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. In accordance with the standard, TRH adopted SFAS No. 130 in
1998.

    Also in June 1997, the FASB adopted SFAS No. 131, 'Disclosure about Segments
of an Enterprise and Related Information.' This statement established standards
for the way that public business enterprises report information about operating
segments in annual and interim financial statements and required presentation of
a measure of profit or loss, certain specific revenue and expense items and
segment assets. Generally, financial information is required to be reported on
the basis that is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The standard also establishes
guidance for related disclosures about products and services, geographic areas
and major customers, superseding most of SFAS No. 14, 'Financial Reporting for
Segments of a Business Enterprise.' In accordance with SFAS No. 131, TRH
implemented the standard for the 1998 annual financial statements.

                                       26




<PAGE>

    SFAS No. 133, 'Accounting for Derivative Instruments and Hedging
Activities,' issued by the FASB in June 1998, as amended by SFAS No. 137 and
SFAS No. 138 in June 1999 and June 2000, respectively, established accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. All
derivatives must be recognized as either assets or liabilities in the balance
sheet and measured at fair value. The accounting recognition for the change in
the fair value of a derivative depends on a number of factors, including the
intended use of the derivative. These standards are effective for TRH on
January 1, 2001 and may not be applied retroactively. As of December 31, 2000,
TRH had no derivative instruments.

    In October 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-7, 'Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk.'
This statement provides guidance on how to account for insurance and reinsurance
contracts that do not transfer both required elements of insurance risk (i.e.,
underwriting risk and timing risk). SOP 98-7 was effective for TRH on
January 1, 2000. Restatement of previously issued annual financial statements is
not permitted. The impact of applying this statement was not material to TRH's
results of operations, financial position or cash flows.

    In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, 'Revenue Recognition in Financial Statements.'
SAB 101 provides guidance on the recognition, presentation and disclosure of
revenue in financial statements. In accordance with the bulletin and subsequent
guidance that deferred the implementation date, TRH adopted SAB 101 in the
fourth quarter of 2000. With respect to results of operations, financial
position and cash flows, SAB 101 did not have a material impact in 2000 and is
not expected to have a material impact thereafter.

    In September 2000, the FASB issued SFAS No. 140, 'Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities -- a
replacement of SFAS No. 125.' SFAS No. 140 specifies the accounting and
reporting requirements for securitizations and other transfers of financial
assets and collateral, the recognition and measurement of servicing assets and
liabilities and the extinguishment of liabilities. This statement is effective
for the recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. SFAS No. 140 is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring after
March 31, 2001 and is to be applied prospectively with certain exceptions.
Adoption of the new requirements on their effective dates has not had and is not
expected to have a material impact on TRH's results of operations, financial
position or cash flows.

OTHER MATTERS

    In 1998, the NAIC adopted the Codification of Statutory Accounting
Principles (Codification) as primary guidance on statutory accounting effective
January 1, 2001. The Codification provides guidance for areas where previously
statutory accounting had been silent and changes current statutory accounting in
some areas. The New York Insurance Department (in the state of domicile of TRC
and Putnam) recently adopted most of the Codification guidance for
implementation on January 1, 2001, but did not adopt several key provisions
including those on deferred income taxes. The cumulative effect of the
implementation of Codification guidance (as adopted by the New York Insurance
Department) on the statutory surplus of TRC and Putnam as of January 1, 2001 was
not material. In addition, the Codification guidance is not expected to have a
material effect on future statutory net income, financial position or cash
flows.

    As one or both of TRC and Putnam is also licensed, accredited or otherwise
permitted to serve as a reinsurer in all states and the District of Columbia in
the United States, they will be required to disclose the differences between
implementing Codification guidance on a New York State basis and Codification
guidance adopted by the NAIC in a footnote to their statutory filings. The
difference in statutory surplus between those bases as of January 1, 2001 was
not material. Future differences in statutory net income, financial position or
cash flows are also not expected to be material.

    On January 1, 1999, certain of the member nations of the European Economic
and Monetary Union (EMU) adopted a common currency, the Euro. Once the national
currencies are phased out, the

                                       27




<PAGE>

Euro will be the sole legal tender of each of these nations. During the
transition period, commerce of these nations will be transacted in the Euro or
in the currently existing national currency.

    TRH has taken the necessary steps to transact business in the Euro, has
identified the significant issues and will be prepared with respect to the
continued phase in of and ultimate redenomination to the Euro. Any costs
associated with the adoption of the Euro are expensed as incurred and are not
material to TRH's results of operations, financial position or cash flows.

    Any statements contained in this discussion that are not historical facts,
or that might be considered an opinion or projection, whether expressed or
implied, are meant as, and should be considered, forward-looking statements as
that term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on assumptions and opinions concerning a
variety of known and unknown risks. If any assumptions or opinions prove
incorrect, any forward-looking statements made on that basis may also prove
materially incorrect.

                                       28






<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>
                                                                  PAGE
                                                                  ----
<S>                                                               <C>
Report of Independent Accountants...............................   30
Consolidated Balance Sheets as of December 31, 2000 and
  1999..........................................................   31
Consolidated Statements of Operations for the years ended
  December 31, 2000, 1999 and 1998..............................   32
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 2000, 1999 and 1998..................   33
Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 1999 and 1998..............................   34
Consolidated Statements of Comprehensive Income for the
  years ended December 31, 2000, 1999 and 1998..................   35
Notes to Consolidated Financial Statements......................   36

Schedules:
  I -- Summary of Investments -- Other than Investments in
       Related Parties as of December 31, 2000...................  S-1
 II -- Condensed Financial Information of Registrant as of
       December 31, 2000 and 1999 and for the years ended
       December 31, 2000, 1999 and 1998..........................  S-2
III -- Supplementary Insurance Information as of December 31,
       2000, 1999 and 1998 and for the years then ended..........  S-5
 IV -- Reinsurance for the years ended December 31, 2000, 1999
       and 1998..................................................  S-6
 VI -- Supplementary Information Concerning Property/Casualty
       Insurance Operations as of December 31, 2000, 1999 and
       1998 and for the years then ended.........................  S-7
</TABLE>

                                       29




<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
TRANSATLANTIC HOLDINGS, INC.:

    In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Transatlantic Holdings, Inc. and Subsidiaries at December 31, 2000
and 1999, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedules listed in the
accompanying index present fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedules are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.


                                      /s/ PricewaterhouseCoopers LLP

                                          PRICEWATERHOUSECOOPERS LLP

New York, New York
February 7, 2001

                                       30






<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                  2000           1999
                                                                  ----           ----
                                                              (in thousands, except share
                                                                         data)
<S>                                                           <C>            <C>
                           ASSETS
Investments and cash:
    Fixed maturities:
        Bonds held to maturity, at amortized cost (market
          value: 2000 -- $982,115; 1999 -- $1,083,740)......   $  932,260     $1,062,968
        Bonds available for sale, at market value (amortized
          cost: 2000 -- $2,447,871; 1999 -- $2,479,930).....    2,495,580      2,399,158
    Equities:
        Common stocks available for sale, at market value
          (cost: 2000 -- $486,257; 1999 -- $408,465)........      545,725        537,149
        Nonredeemable preferred stocks available for sale,
          at market value (cost: 2000 -- $28,569;
          1999 -- $52,324)..................................       26,695         51,192
    Other invested assets...................................      233,629        173,043
    Short-term investments, at cost which approximates
      market value..........................................       28,091          5,935
    Cash and cash equivalents...............................      129,246        104,017
                                                               ----------     ----------
            Total investments and cash......................    4,391,226      4,333,462
Accrued investment income...................................       69,051         73,578
Premium balances receivable, net............................      234,668        208,525
Reinsurance recoverable on paid and unpaid losses and loss
  adjustment expenses:
    Affiliates..............................................      261,097        294,147
    Other...................................................      282,736        274,414
Deferred acquisition costs..................................       76,623         71,022
Prepaid reinsurance premiums................................       30,160         32,188
Deferred income taxes.......................................      144,121        153,548
Other assets................................................       32,990         39,314
                                                               ----------     ----------
            Total assets....................................   $5,522,672     $5,480,198
                                                               ----------     ----------
                                                               ----------     ----------

            LIABILITIES AND STOCKHOLDERS' EQUITY
Unpaid losses and loss adjustment expenses..................   $3,077,162     $3,304,931
Unearned premiums...........................................      418,621        397,783
Reinsurance balances payable................................       70,582         82,942
Other liabilities...........................................       99,942         52,025
                                                               ----------     ----------
            Total liabilities...............................    3,666,307      3,837,681
                                                               ----------     ----------
            Commitments and contingent liabilities
Preferred Stock, $1.00 par value; shares authorized:
  5,000,000.................................................           --             --
Common Stock, $1.00 par value; shares authorized:
  100,000,000; shares issued: 2000 -- 35,573,608;
  1999 -- 35,527,822........................................       35,574         35,528
Additional paid-in capital..................................      202,593        200,567
Accumulated other comprehensive income......................       36,773         18,212
Retained earnings...........................................    1,591,425      1,398,210
Treasury Stock, at cost; 800,000 shares.....................      (10,000)       (10,000)
                                                               ----------     ----------
            Total stockholders' equity......................    1,856,365      1,642,517
                                                               ----------     ----------
            Total liabilities and stockholders' equity......   $5,522,672     $5,480,198
                                                               ----------     ----------
                                                               ----------     ----------
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       31





<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                              2000          1999          1998
                                                              ----          ----          ----
                                                            (in thousands, except per share data)
<S>                                                        <C>           <C>           <C>
Income:
    Net premiums written.................................  $1,658,579    $1,498,524    $1,393,700
    Increase in net unearned premiums....................     (27,043)      (13,890)      (13,130)
                                                           ----------    ----------    ----------
    Net premiums earned..................................   1,631,536     1,484,634     1,380,570
    Net investment income................................     234,485       230,739       222,000
                                                           ----------    ----------    ----------
                                                            1,866,021     1,715,373     1,602,570
                                                           ----------    ----------    ----------
Expenses:
    Net losses and loss adjustment expenses..............   1,196,896     1,148,817     1,020,888
    Net commissions......................................     387,830       365,929       333,069
    Other operating expenses.............................      51,930        50,629        48,758
    Increase in deferred acquisition costs...............      (5,601)       (3,444)       (2,826)
                                                           ----------    ----------    ----------
                                                            1,631,055     1,561,931     1,399,889
                                                           ----------    ----------    ----------
                                                              234,966       153,442       202,681
Realized net capital gains...............................      33,098        82,793       120,899
                                                           ----------    ----------    ----------
Operating income.........................................     268,064       236,235       323,580
Other deductions.........................................         (82)         (138)         (229)
                                                           ----------    ----------    ----------
Income before income taxes...............................     267,982       236,097       323,351
                                                           ----------    ----------    ----------
Income taxes (benefits):
    Current..............................................      56,112        56,261        86,010
    Deferred.............................................         232        (7,526)      (10,182)
                                                           ----------    ----------    ----------
                                                               56,344        48,735        75,828
                                                           ----------    ----------    ----------
Net income...............................................  $  211,638    $  187,362    $  247,523
                                                           ----------    ----------    ----------
                                                           ----------    ----------    ----------

Net income per common share:
    Basic................................................  $     6.09    $     5.40    $     7.15
    Diluted..............................................        6.05          5.37          7.10

Weighted average common shares outstanding:
    Basic................................................      34,751        34,704        34,636
    Diluted..............................................      34,984        34,882        34,865
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       32




<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                              2000          1999          1998
                                                              ----          ----          ----
                                                            (in thousands, except per share data)
<S>                                                        <C>           <C>           <C>
Common Stock:
    Balance, beginning of year...........................  $   35,528    $   35,467    $   35,363
    Issued under stock option and purchase plans.........          46            61           104
                                                           ----------    ----------    ----------
        Balance, end of year.............................      35,574        35,528        35,467
                                                           ----------    ----------    ----------
Additional paid-in capital:
    Balance, beginning of year...........................     200,567       198,425       195,494
    Excess of proceeds over par value of common stock
      issued under stock option and purchase plans.......       2,026         2,142         2,931
                                                           ----------    ----------    ----------
        Balance, end of year.............................     202,593       200,567       198,425
                                                           ----------    ----------    ----------
Accumulated other comprehensive income:
    Balance, beginning of year...........................      18,212       158,552       140,724
    Net change for year..................................      28,555      (215,906)       27,425
    Income tax effect on change..........................      (9,994)       75,566        (9,597)
                                                           ----------    ----------    ----------
        Balance, end of year.............................      36,773        18,212       158,552
                                                           ----------    ----------    ----------
Retained earnings:
    Balance, beginning of year...........................   1,398,210     1,227,695       995,078
    Net income...........................................     211,638       187,362       247,523
    Cash dividends declared (per common share:
      2000 -- $0.53; 1999 -- $0.49; 1998 -- $0.43).......     (18,423)      (16,847)      (14,906)
                                                           ----------    ----------    ----------
        Balance, end of year.............................   1,591,425     1,398,210     1,227,695
                                                           ----------    ----------    ----------
Treasury Stock:
    Balance, beginning and end of year...................     (10,000)      (10,000)      (10,000)
                                                           ----------    ----------    ----------
        Total stockholders' equity.......................  $1,856,365    $1,642,517    $1,610,139
                                                           ----------    ----------    ----------
                                                           ----------    ----------    ----------
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       33








<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                2000        1999       1998
                                                                ----        ----       ----
                                                                      (in thousands)
<S>                                                           <C>         <C>        <C>
Cash flows from operating activities:
    Net income..............................................  $ 211,638   $187,362   $247,523
                                                              ---------   --------   --------
    Adjustments to reconcile net income to net cash provided
      by operating activities:
        Changes in unpaid losses and loss adjustment
          expenses, unearned premiums and prepaid
          reinsurance premiums..............................   (204,903)   198,432    208,728
        Changes in premium and reinsurance balances
          receivable and payable, net.......................        124    (98,752)   (91,660)
        Change in deferred acquisition costs................     (5,601)    (3,444)    (2,826)
        Change in accrued investment income.................      4,527     (8,075)     5,296
        Realized net capital gains..........................    (33,098)   (82,793)  (120,899)
        Changes in current and deferred income taxes........      7,385    (13,176)   (28,092)
        Change in net unrealized currency translation
          adjustment........................................     20,625      2,343      5,031
        Changes in other assets and liabilities, net........    (15,159)     7,662        150
        Other, net..........................................       (468)     4,223      3,726
                                                              ---------   --------   --------
            Total adjustments...............................   (226,568)     6,420    (20,546)
                                                              ---------   --------   --------
            Net cash (used in) provided by operating
              activities....................................    (14,930)   193,782    226,977
                                                              ---------   --------   --------
Cash flows from investing activities:
    Proceeds of bonds available for sale sold...............    299,906    436,127    375,580
    Proceeds of bonds held to maturity redeemed or
      matured...............................................    148,829     78,936    109,372
    Proceeds of bonds available for sale redeemed or
      matured...............................................    421,894    238,616    267,373
    Proceeds of equities sold...............................    690,300    473,690    357,640
    Purchase of bonds held to maturity......................    (16,675)   (15,051)        --
    Purchase of bonds available for sale....................   (763,498)  (867,036)  (802,010)
    Purchase of equities....................................   (678,556)  (439,123)  (371,400)
    Net purchase of other invested assets...................    (63,040)   (45,217)  (126,133)
    Net (purchase) proceeds of short-term investments.......    (21,599)    23,270     (7,591)
    Change in other liabilities for securities in course of
      settlement............................................     62,521       (527)    (2,543)
    Other, net..............................................     (7,327)    (7,130)    (5,589)
                                                              ---------   --------   --------
            Net cash provided by (used in) investing
              activities....................................     72,755   (123,445)  (205,301)
                                                              ---------   --------   --------
Cash flows from financing activities:
    Dividends to stockholders...............................    (18,072)   (16,312)   (14,550)
    Proceeds from common stock issued.......................      2,072      2,203      3,035
    Net disbursements from reinsurance deposits.............     (8,264)   (26,886)   (10,230)
                                                              ---------   --------   --------
            Net cash from financing activities..............    (24,264)   (40,995)   (21,745)
                                                              ---------   --------   --------
Effect of exchange rate changes on cash and cash
  equivalents...............................................     (8,332)     4,086        (79)
                                                              ---------   --------   --------
            Change in cash and cash equivalents.............     25,229     33,428       (148)
Cash and cash equivalents, beginning of year................    104,017     70,589     70,737
                                                              ---------   --------   --------
            Cash and cash equivalents, end of year..........  $ 129,246   $104,017   $ 70,589
                                                              ---------   --------   --------
                                                              ---------   --------   --------
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       34




<PAGE>

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                                ----       ----       ----
                                                                      (in thousands)
<S>                                                           <C>        <C>        <C>
Net income..................................................  $211,638   $187,362   $247,523
                                                              --------   --------   --------

Other comprehensive income (loss):
    Net unrealized appreciation (depreciation) of
      investments:
        Net unrealized holding gains (losses) arising during
          period............................................    89,168   (107,284)   125,758
        Related income tax effect...........................   (31,209)    37,548    (44,015)
        Reclassification adjustment for gains included in
          net income........................................   (33,098)   (82,793)  (120,899)
        Related income tax effect...........................    11,584     28,978     42,315
                                                              --------   --------   --------
                                                                36,445   (123,551)     3,159
                                                              --------   --------   --------
    Net unrealized currency translation (loss) gain.........   (27,515)   (25,829)    22,566
    Related income tax effect...............................     9,631      9,040     (7,897)
                                                              --------   --------   --------
                                                               (17,884)   (16,789)    14,669
                                                              --------   --------   --------
Other comprehensive income (loss)...........................    18,561   (140,340)    17,828
                                                              --------   --------   --------
Comprehensive income........................................  $230,199   $ 47,022   $265,351
                                                              --------   --------   --------
                                                              --------   --------   --------
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       35










<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

    Transatlantic Holdings, Inc. (the 'Company') is a holding company,
incorporated in the state of Delaware, which owns all of the common stock of
Transatlantic Reinsurance Company (TRC). TRC owns all of the common stock of
Trans Re Zurich (TRZ) and Putnam Reinsurance Company (Putnam). As of
December 31, 2000, American International Group, Inc. (AIG, and collectively,
with its subsidiaries, the AIG Group) beneficially owned approximately 60% of
the Company's outstanding shares.

    Transatlantic Holdings, Inc. and its subsidiaries (collectively, TRH),
through its operating subsidiaries TRC, TRZ and Putnam, offers reinsurance
capacity for a full range of property and casualty products to insurers and
reinsurers on a treaty and facultative basis, with an emphasis on specialty
classes. Including domestic as well as international risks, TRH's principal
lines of business are auto liability (including nonstandard risks), other
liability (including directors' and officers' liability and other professional
liability), accident and health, medical malpractice and marine and aviation in
the casualty lines, and fire and allied lines in the property lines (which
include property catastrophe risks). Casualty lines represented 76.7%, 74.8% and
71.0% of net premiums written in 2000, 1999 and 1998, respectively. The balance
represented property lines.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (a) BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION: The accompanying
consolidated financial statements have been prepared on the basis of accounting
principles generally accepted in the United States of America (GAAP). Certain
reclassifications have been made to conform prior years' presentations with
2000.

    The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

    These consolidated financial statements include the accounts of the Company
and its subsidiaries. Intercompany accounts and transactions have been
eliminated.

    (b) INVESTMENTS: Bonds are classified as held-to-maturity and carried at
amortized cost if TRH has the positive intent and ability to hold each of these
securities to maturity. The balance of TRH's bonds are classified as
available-for-sale and carried at market value. Common and nonredeemable
preferred stocks are carried principally at market value. Market values for
fixed maturity securities and equities are generally based upon quoted market
prices. For certain fixed maturity securities, for which market prices were not
readily available, market values were estimated using values obtained from
independent pricing services. Other invested assets consist of investments in
partnerships, a short 'duration' bond fund managed by an AIG subsidiary and
other investments which are carried primarily at market value. Short-term
investments are carried at cost, which approximates market value.

    Realized gains or losses on the sale of investments are determined on the
basis of specific identification. Changes in unrealized appreciation
(depreciation) of bonds available for sale, equity investments and other
invested assets are charged or credited, net of deferred income taxes, directly
to accumulated other comprehensive income (See Note 8), a component of
stockholders' equity. Investment income is recorded as earned. Amortization of
bond premium and the accrual of bond discount are charged or credited to net
investment income.

    (c) CASH AND CASH EQUIVALENTS: Cash and cash equivalents generally include
cash deposited in demand deposits at banks and highly liquid investments with
original maturities of 90 days or less.

    (d) DEFERRED ACQUISITION COSTS: Acquisition costs, consisting primarily of
net commissions incurred on business conducted through reinsurance contracts or
certificates, are deferred, and then amortized over the period in which the
related premiums are earned, generally one year. Anticipated losses and

                                       36








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
loss adjustment expenses and estimated remaining costs of servicing the
contracts are considered in determining acquisition costs to be deferred.
Anticipated investment income is not considered in the deferral of acquisition
costs.

    (e) PREMIUM REVENUES: Premiums are earned primarily on a pro rata basis over
the term of the related coverages. Unearned premiums and prepaid reinsurance
premiums represent the portion of gross premiums assumed and reinsurance ceded,
respectively, relating to the unexpired terms of such coverages. In the
Consolidated Statements of Operations, premiums written and earned and the
change in unearned premiums are presented net of reinsurance ceded.

    (f) LOSSES AND LOSS ADJUSTMENT EXPENSES: Losses and loss adjustment
expenses, net of related reinsurance recoverable, are charged to income as
incurred. Unpaid losses and loss adjustment expenses are principally based on
reports and individual case estimates received from ceding companies. An amount
is included for losses and loss adjustment expenses incurred but not reported
(IBNR) on the basis of past experience. The methods of making such estimates and
for establishing the resulting reserves are continually reviewed and updated,
and any adjustments resulting therefrom are reflected in income currently.

    Unpaid losses and loss adjustment expenses include certain amounts for the
reinsurance of risks related to environmental impairment and asbestos-related
illnesses. The majority of TRH's environmental and asbestos-related liabilities
arise from contracts entered into after 1984. These obligations generally arose
from contracts underwritten specifically as environmental or asbestos-related
coverages rather than from standard general liability coverages where the
environmental or asbestos-related liabilities were neither clearly defined nor
specifically excluded. The reserves carried at December 31, 2000 for such
claims, including IBNR, are based upon known facts and current law. However,
significant uncertainty exists as, among other things, there are inconsistent
court resolutions and judicial interpretations with respect to underlying policy
intent and coverage and uncertainties as to the allocation of responsibility for
resultant damages. Further, there is always the possibility of changes in
statutes, laws, regulations and other factors that could have a material effect
on these liabilities and, accordingly, future earnings.

    (g) DEFERRED INCOME TAXES: Deferred income taxes are provided for the
expected tax effect of temporary differences between the amounts of assets and
liabilities used for financial reporting purposes and the amounts used in tax
returns.

    (h) REINSURANCE DEPOSITS: Amounts received pursuant to reinsurance contracts
that are not expected to indemnify the ceding company against loss or liability
are recorded as deposits and included in the Consolidated Balance Sheets as
'reinsurance balances payable.' These deposits are treated as financing
transactions and are credited with interest according to contract terms.

    (i) CURRENCY TRANSLATION: Assets and liabilities denominated in foreign
currencies are translated into U.S. dollars at year-end exchange rates. Income
and expense accounts are translated at average exchange rates for the year. The
resulting net unrealized currency translation gain (loss) for functional
currencies is reflected in accumulated other comprehensive income, a component
of stockholders' equity.

    Transaction gains and losses on assets and liabilities denominated in
foreign currencies which are not designated as functional currencies are
reflected in results of operations during the period in which they occur.

    (j) ACCOUNTING STANDARDS:

    In June 1997, the Financial Accounting Standards Board (FASB) adopted
Statement of Financial Accounting Standards (SFAS) No. 130, 'Reporting
Comprehensive Income.' This statement established standards for reporting and
display of comprehensive income and its components (revenues,

                                       37








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
expenses, gains and losses) in a full set of general-purpose financial
statements. Comprehensive income is defined as the change in stockholders'
equity during a period from transactions and other events and circumstances from
non-owner sources and includes net income and all changes in stockholders'
equity except those resulting from investments by owners and distribution to
owners.

    This standard requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. In accordance with the standard, TRH adopted SFAS No. 130 in
1998.

    Also in June 1997, the FASB adopted SFAS No. 131, 'Disclosure about Segments
of an Enterprise and Related Information.' This statement established standards
for the way that public business enterprises report information about operating
segments in annual and interim financial statements and required presentation of
a measure of profit or loss, certain specific revenue and expense items and
segment assets. Generally, financial information is required to be reported on
the basis that is used internally for evaluating segment performance and
deciding how to allocate resources to segments. The standard also establishes
guidance for related disclosures about products and services, geographic areas
and major customers, superseding most of SFAS No. 14, 'Financial Reporting for
Segments of a Business Enterprise.' In accordance with SFAS No. 131, TRH
implemented the standard for the 1998 annual financial statements.

    SFAS No. 133, 'Accounting for Derivative Instruments and Hedging
Activities,' issued by the FASB in June 1998, as amended by SFAS No. 137 and
SFAS No. 138 in June 1999 and June 2000, respectively, established accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. All
derivatives must be recognized as either assets or liabilities in the balance
sheet and measured at fair value. The accounting recognition for the change in
the fair value of a derivative depends on a number of factors, including the
intended use of the derivative. These standards are effective for TRH on
January 1, 2001 and may not be applied retroactively. As of December 31, 2000,
TRH had no derivative instruments.

    In October 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-7, 'Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk.'
This statement provides guidance on how to account for insurance and reinsurance
contracts that do not transfer both required elements of insurance risk (i.e.,
underwriting risk and timing risk). SOP 98-7 was effective for TRH on
January 1, 2000. Restatement of previously issued annual financial statements is
not permitted. The impact of applying this statement was not material to TRH's
results of operations, financial position or cash flows.

    In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, 'Revenue Recognition in Financial Statements.'
SAB 101 provides guidance on the recognition, presentation and disclosure of
revenue in financial statements. In accordance with the bulletin and subsequent
guidance that deferred the implementation date, TRH adopted SAB 101 in the
fourth quarter of 2000. With respect to results of operations, financial
position and cash flows, SAB 101 did not have a material impact in 2000 and is
not expected to have a material impact thereafter.

    In September 2000, the FASB issued SFAS No. 140, 'Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities - a
replacement of SFAS No. 125.' SFAS No. 140 specifies the accounting and
reporting requirements for securitizations and other transfers of financial
assets and collateral, the recognition and measurement of servicing assets and
liabilities and the extinguishment of liabilities. This statement is effective
for the recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. SFAS No. 140 is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring after
March 31, 2001 and is to be applied prospectively with

                                       38








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
certain exceptions. Adoption of the new requirements on their effective dates
has not had and is not expected to have a material impact on TRH's results of
operations, financial position or cash flows.

3. INVESTMENTS

    (a) STATUTORY DEPOSITS: Investments, the substantial majority of which are
bonds and common stocks available for sale, were deposited with governmental
authorities as required by law and amounted to approximately $118,000,000 and
$119,000,000 at December 31, 2000 and 1999, respectively.

    (b) NET INVESTMENT INCOME: An analysis of net investment income of TRH
follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                                ----       ----       ----
                                                                      (in thousands)
<S>                                                           <C>        <C>        <C>
Fixed maturities............................................  $207,569   $213,086   $216,994
Equities....................................................     9,988     11,163      9,645
Other.......................................................    22,039     14,820      2,524
                                                              --------   --------   --------
    Total investment income.................................   239,596    239,069    229,163
Investment expenses.........................................    (5,111)    (8,330)    (7,163)
                                                              --------   --------   --------
    Net investment income...................................  $234,485   $230,739   $222,000
                                                              --------   --------   --------
                                                              --------   --------   --------
</TABLE>

    (c) INVESTMENT GAINS AND LOSSES: Realized net capital gains and the change
in net unrealized appreciation (depreciation) of investments are summarized as
follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              --------------------------------
                                                                2000        1999        1998
                                                                ----        ----        ----
                                                                       (in thousands)
<S>                                                           <C>         <C>         <C>
Realized net capital gains (losses) on sale of investments:
    Fixed maturities........................................  $ (33,573)  $  (3,679)  $  9,197
    Equities................................................     66,879      87,404    111,811
    Other...................................................       (208)       (932)      (109)
                                                              ---------   ---------   --------
        Totals..............................................  $  33,098   $  82,793   $120,899
                                                              ---------   ---------   --------
                                                              ---------   ---------   --------
Change in net unrealized appreciation (depreciation) of
  investments:*
    Fixed maturities carried at amortized cost..............  $  29,083   $ (65,307)  $  2,712
    Fixed maturities carried at market......................    128,481    (167,122)    21,157
    Equities................................................    (69,958)    (26,409)   (15,450)
    Other...................................................     (2,456)      3,455       (846)
                                                              ---------   ---------   --------
        Totals..............................................  $  85,150   $(255,383)  $  7,573
                                                              ---------   ---------   --------
                                                              ---------   ---------   --------
</TABLE>

---------

* Before deferred income tax effect.

                                       39








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INVESTMENTS (CONTINUED)
    (d) FIXED MATURITIES: The amortized cost and market value of bonds at
December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                    GROSS UNREALIZED
                                                       AMORTIZED    -----------------
                                                          COST       GAINS    LOSSES    MARKET VALUE
                                                          ----       -----    ------    ------------
                                                                      (in thousands)
<S>                                                    <C>          <C>       <C>       <C>
2000
BONDS HELD TO MATURITY AND CARRIED AT AMORTIZED
  COST:
    States, foreign and domestic municipalities and
      political subdivisions........................   $  932,260   $49,984   $   129    $  982,115
                                                       ----------   -------   -------    ----------
                                                       ----------   -------   -------    ----------

BONDS AVAILABLE FOR SALE AND CARRIED AT MARKET
  VALUE:
    U.S. Government and government agency bonds.....   $  268,162   $ 9,052   $   100    $  277,114
    States, foreign and domestic municipalities and
      political subdivisions........................    1,366,344    43,039     2,278     1,407,105
    Foreign governments.............................      228,125     4,313       444       231,994
    Corporate.......................................      585,240     6,913    12,786       579,367
                                                       ----------   -------   -------    ----------
        Totals......................................   $2,447,871   $63,317   $15,608    $2,495,580
                                                       ----------   -------   -------    ----------
                                                       ----------   -------   -------    ----------
</TABLE>

<TABLE>
<CAPTION>
                                                                    Gross Unrealized
                                                       Amortized    -----------------
                                                          Cost       Gains    Losses    Market Value
                                                          ----       -----    ------    ------------
                                                                      (in thousands)
<S>                                                    <C>          <C>       <C>       <C>
1999
Bonds held to maturity and carried at amortized
  cost:
    States, foreign and domestic municipalities and
      political subdivisions........................   $1,062,968   $25,866   $ 5,094    $1,083,740
                                                       ----------   -------   -------    ----------
                                                       ----------   -------   -------    ----------

Bonds available for sale and carried at market
  value:
    U.S. Government and government agency bonds.....   $  316,189   $ 1,760   $ 6,775    $  311,174
    States, foreign and domestic municipalities and
      political subdivisions........................    1,177,140     1,332    67,001     1,111,471
    Foreign governments.............................      345,162     5,228       755       349,635
    Corporate.......................................      641,439     8,817    23,378       626,878
                                                       ----------   -------   -------    ----------
        Totals......................................   $2,479,930   $17,137   $97,909    $2,399,158
                                                       ----------   -------   -------    ----------
                                                       ----------   -------   -------    ----------
</TABLE>

                                       40








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INVESTMENTS (CONTINUED)

    The amortized cost and market value of bonds at December 31, 2000 by
contractual maturity, are as follows. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties. Investments in fixed
maturities exclude short-term investments.

<TABLE>
<CAPTION>
                                                              AMORTIZED
                                                                 COST      MARKET VALUE
                                                                 ----      ------------
                                                                   (in thousands)
<S>                                                           <C>          <C>
BONDS HELD TO MATURITY:
Due in one year or less.....................................  $   70,809    $   72,841
Due after one year through five years.......................     178,591       188,702
Due after five years through ten years......................     186,770       199,501
Due after ten years.........................................     496,090       521,071
                                                              ----------    ----------
    Totals..................................................  $  932,260    $  982,115
                                                              ----------    ----------
                                                              ----------    ----------
BONDS AVAILABLE FOR SALE:
Due in one year or less.....................................  $  227,296    $  228,563
Due after one year through five years.......................     769,172       777,794
Due after five years through ten years......................     280,208       281,633
Due after ten years.........................................   1,171,195     1,207,590
                                                              ----------    ----------
    Totals..................................................  $2,447,871    $2,495,580
                                                              ----------    ----------
                                                              ----------    ----------
</TABLE>

    Gross gains of $6,688,000, $4,961,000 and $7,625,000 and gross losses of
$41,457,000, $9,273,000 and $647,000 were realized on sales of investments in
fixed maturities available for sale in 2000, 1999 and 1998, respectively.

    (e) EQUITIES: Gross gains of $118,739,000, $109,404,000 and $122,685,000 and
gross losses of $51,860,000, $22,000,000 and $10,874,000 were realized on sales
of equities in 2000, 1999 and 1998, respectively. At December 31, 2000 and 1999,
net unrealized appreciation of equities (before applicable income taxes)
included gross gains of $98,810,000 and $150,576,000 and gross losses of
$41,216,000 and $23,024,000, respectively.

4. FEDERAL AND FOREIGN INCOME TAXES

    (a) The Company files a U.S. consolidated federal income tax return with its
domestic subsidiaries, TRC and Putnam. TRC will include as part of its taxable
income those items of income of the non-U.S. subsidiary, TRZ, which are subject
to U.S. income tax currently, pursuant to Subpart F income rules of the Internal
Revenue Code, and included, as appropriate, in the consolidated federal income
tax return.

                                       41








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. FEDERAL AND FOREIGN INCOME TAXES (CONTINUED)
    The U.S. federal income tax rate was 35% for 2000, 1999 and 1998. Actual tax
expense on income before income taxes differs from the 'expected' amount
computed by applying the U.S. federal income tax rate because of the following:

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                 ------------------------------------------------------------------------------
                                           2000                       1999                       1998
                                 ------------------------   ------------------------   ------------------------
                                             PERCENT OF                 Percent of                 Percent of
                                            INCOME BEFORE              Income Before              Income Before
                                  AMOUNT    INCOME TAXES     Amount    Income Taxes     Amount    Income Taxes
                                  ------    ------------     ------    ------------     ------    ------------
                                                             (dollars in thousands)
<S>                              <C>        <C>             <C>        <C>             <C>        <C>
'Expected' tax expense.........  $ 93,794        35.0 %     $ 82,634        35.0 %     $113,173        35.0 %
Adjustments:
    Tax-exempt interest........   (34,837)      (13.0)       (31,375)      (13.3)       (31,832)       (9.8)
    Dividends received
      deduction................    (1,458)       (0.6)        (2,051)       (0.9)        (1,648)       (0.5)
    Other......................    (1,155)       (0.4)          (473)       (0.2)        (3,865)       (1.2)
                                 --------       -----       --------       -----       --------       -----
        Actual tax expense.....  $ 56,344        21.0 %     $ 48,735        20.6 %     $ 75,828        23.5 %
                                 --------       -----       --------       -----       --------       -----
                                 --------       -----       --------       -----       --------       -----
Foreign and domestic components
  of actual tax expense
  (benefit):
    Foreign....................  $  2,717                   $  3,302                   $ 10,421
    Domestic:
        Current................    53,395                     52,959                     75,589
        Deferred...............       232                     (7,526)                   (10,182)
                                 --------                   --------                   --------
                                 $ 56,344                   $ 48,735                   $ 75,828
                                 --------                   --------                   --------
                                 --------                   --------                   --------
</TABLE>

    (b) The components of the net deferred income tax asset at December 31, 2000
and 1999 were as follows:

<TABLE>
<CAPTION>
                                                                2000       1999
                                                                ----       ----
                                                                (in thousands)
<S>                                                           <C>        <C>
Deferred income tax assets:
    Unpaid losses and loss adjustment expenses, net of
      related reinsurance recoverable.......................  $165,738   $167,226
    Unearned premiums, net of prepaid reinsurance
      premiums..............................................    27,192     25,591
    Cumulative translation adjustment.......................    16,828      7,198
    Other...................................................     6,422      6,124
                                                              --------   --------
        Total deferred income tax assets....................   216,180    206,139
                                                              --------   --------
Deferred income tax liabilities:
    Deferred acquisition costs..............................    26,818     24,858
    Net unrealized appreciation of investments..............    36,910     17,285
    Other...................................................     8,331     10,448
                                                              --------   --------
        Total deferred income tax liabilities...............    72,059     52,591
                                                              --------   --------
        Net deferred income tax asset.......................  $144,121   $153,548
                                                              --------   --------
                                                              --------   --------
</TABLE>

    No valuation allowance has been recorded.

    (c) Income tax payments by TRH totaled $47,594,000, $61,861,000 and
$110,884,000 in 2000, 1999 and 1998, respectively.

                                       42








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

    Activity in the liability for unpaid losses and loss adjustment expenses is
summarized as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999         1998
                                                              ----         ----         ----
                                                                      (in thousands)
<S>                                                        <C>          <C>          <C>
At beginning of year:
    Unpaid losses and loss adjustment expenses...........  $3,304,931   $3,116,038   $2,918,782
    Less reinsurance recoverable.........................     542,769      459,935      396,054
                                                           ----------   ----------   ----------
        Net unpaid losses and loss adjustment expenses...   2,762,162    2,656,103    2,522,728
                                                           ----------   ----------   ----------
Net losses and loss adjustment expenses incurred in
  respect of losses occurring in:
    Current year.........................................   1,182,539    1,216,294    1,080,377
    Prior years..........................................      14,357      (67,477)     (59,489)
                                                           ----------   ----------   ----------
        Total............................................   1,196,896    1,148,817    1,020,888
                                                           ----------   ----------   ----------
Net losses and loss adjustment expenses paid in respect
  of losses occurring in:
    Current year.........................................     390,433      340,155      343,974
    Prior years..........................................     953,708      702,603      543,539
                                                           ----------   ----------   ----------
        Total............................................   1,344,141    1,042,758      887,513
                                                           ----------   ----------   ----------
At end of year:
    Net unpaid losses and loss adjustment expenses.......   2,614,917    2,762,162    2,656,103
    Plus reinsurance recoverable.........................     462,245      542,769      459,935
                                                           ----------   ----------   ----------
        Unpaid losses and loss adjustment expenses.......  $3,077,162   $3,304,931   $3,116,038
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

    As a result of net increases in estimates of losses occurring in prior
years, net losses and loss adjustment expenses were increased by $14.4 million
in 2000. In particular, significant adverse development was recorded in 2000 on
losses occurring in 1998 and 1999 in fire and allied lines. These increases to
incurred losses were partially offset by favorable development in 2000 on losses
occurring primarily in 1994 through 1999 in the other liability line.

    As a result of net decreases in estimates of losses occurring in prior
years, net losses and loss adjustment expenses were reduced by $67.5 million in
1999. Significant favorable development was recorded in 1999 on losses occurring
in 1987 through 1996 in the other liability line and in 1994 through 1998 in the
aviation line. These reductions to incurred losses were partially offset by
adverse development in 1999 on losses occurring in 1997 and 1998, principally in
fire, allied lines, auto liability and ocean marine lines, and prior to 1984 in
the other liability line.

    As a result of net decreases in estimates of losses occurring in prior
years, net losses and loss adjustment expenses were reduced by $59.5 million in
1998. Significant favorable development was recorded in 1998 on losses occurring
in years subsequent to 1986 in the other liability line, in 1996 and 1997 in the
medical malpractice line and in 1993 through 1996 in the fire and allied lines.
These reductions to incurred losses were partially offset by adverse development
in 1998 on losses occurring in 1996 and 1997 in the ocean marine line, prior to
1984 in the other liability line and in 1997 in the fire line.

6. COMMON STOCK

    Common stock activity for each of the three years in the period ended
December 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                              2000         1999         1998
                                                              ----         ----         ----
<S>                                                        <C>          <C>          <C>
Shares outstanding, beginning of year....................  34,727,822   34,666,836   34,562,870
Issued under stock option and purchase plans.............      45,786       60,986      103,966
                                                           ----------   ----------   ----------
Shares outstanding, end of year..........................  34,773,608   34,727,822   34,666,836
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

                                       43








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. NET INCOME PER COMMON SHARE

    Net income per common share has been computed in the following table based
upon weighted average common shares outstanding.

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                 2000          1999          1998
                                                                 ----          ----          ----
                                                               (in thousands, except per share data)
<S>                                                           <C>           <C>           <C>
Net income (numerator)......................................   $211,638      $187,362      $247,523
                                                               --------      --------      --------
                                                               --------      --------      --------
Weighted average common shares outstanding used in the
  computation of net income per share:
    Average shares issued...................................     35,551        35,504        35,436
    Less: Average shares in treasury........................        800           800           800
                                                               --------      --------      --------
    Average outstanding shares -- basic (denominator).......     34,751        34,704        34,636
    Average potential shares, principally stock options.....        233           178           229
                                                               --------      --------      --------
    Average outstanding shares -- diluted (denominator).....     34,984        34,882        34,865
                                                               --------      --------      --------
                                                               --------      --------      --------
Net income per common share:
    Basic...................................................   $   6.09      $   5.40      $   7.15
    Diluted.................................................       6.05          5.37          7.10
</TABLE>

8. ACCUMULATED OTHER COMPREHENSIVE INCOME

    The components of accumulated other comprehensive income and changes in such
amounts between years are as follows:

<TABLE>
<CAPTION>
                                                                             NET
                                                            NET          UNREALIZED
                                                        UNREALIZED        CURRENCY
                                                       APPRECIATION      TRANSLATION     ACCUMULATED
                                                      OF INVESTMENTS,   (LOSS) GAIN,        OTHER
                                                            NET              NET        COMPREHENSIVE
                                                       OF INCOME TAX    OF INCOME TAX      INCOME
                                                       -------------    -------------      ------
                                                                      (in thousands)
<S>                                                   <C>               <C>             <C>
Balance, December 31, 1997..........................     $152,493         $(11,769)       $140,724
Change during year..................................        3,159           14,669          17,828
                                                         --------         --------        --------
Balance, December 31, 1998..........................      155,652            2,900         158,552
Change during year..................................     (123,551)         (16,789)       (140,340)
                                                         --------         --------        --------
Balance, December 31, 1999..........................       32,101          (13,889)         18,212
Change during year..................................       36,445          (17,884)         18,561
                                                         --------         --------        --------
Balance, December 31, 2000..........................     $ 68,546         $(31,773)       $ 36,773
                                                         --------         --------        --------
                                                         --------         --------        --------
</TABLE>

9. PENSION, SAVINGS AND STOCK PURCHASE PLANS

    TRH's employees participate in benefit plans administered by AIG (See Note
10) including a noncontributory defined benefit pension plan, an employee stock
purchase plan and a voluntary savings plan (a 401(k) plan) which provides for
certain matching contributions. These plans cover a substantial majority of
TRH's employees. Certain of these plans do not separately identify plan benefits
and plan assets attributable to employees of participating companies. In the
opinion of management, no material additional liability would accrue to TRH were
such plan benefits and plan assets identifiable.

    In addition, under TRH's 1990 Employee Stock Purchase Plan, as amended, full
time employees with at least one year of employment with the Company or any of
its subsidiaries are eligible to receive privileges to purchase shares of the
Company's common stock at a price which is 85% of the fair market value of such
stock on the date of subscription or the date of grant of the purchase
privilege, whichever

                                       44








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. PENSION, SAVINGS AND STOCK PURCHASE PLANS (CONTINUED)
is greater. An aggregate of 750,000 shares of common stock has been authorized
for subscription and 1,768 shares were purchased under the plan in 2000.

    The charges made to operations for these plans for 2000, 1999 and 1998 were
$583,000, $581,000 and $676,000, respectively.

10. STOCK OPTION PLANS

    In 2000, the Company's Board of Directors adopted, and the stockholders
approved, the '2000 Stock Option Plan' (the 2000 Plan). This plan provides that
options may be granted to certain key employees and non-employee directors to
purchase a maximum of 1,500,000 shares of the Company's common stock at prices
not less than their fair market value at the date of grant. At December 31,
2000, 1,320,400 shares were reserved for future grants under the 2000 Plan. The
2000 Plan also provides that 25% of the options granted become exercisable on
the anniversary date of the grant in each of the four years following the grant
and expire 10 years from the date of grant. The Company also maintains the
'Transatlantic Holdings, Inc. 1995 Stock Option Plan' (the 1995 Plan) and the
'Transatlantic Holdings, Inc. 1990 Stock Option Plan' (the 1990 Plan). The 1995
Plan and the 1990 Plan operate under substantially similar terms to the 2000
Plan, except that non-employee directors were not covered under the 1990 Plan.
No further options can be granted under the 1995 Plan nor the 1990 Plan,
although options outstanding continue in force until exercise, expiration or
forfeiture.

    In each of 1994 and 1992, the Stock Option and Purchase Plan Committee
granted 30,000 options to certain non-employee directors of the Company, who are
directors, officers and employees of AIG, to purchase shares of the Company's
common stock at $34.00 per share and $35.00 per share, respectively. Such
options were granted outside of, but on substantially the same terms and
conditions as, the 1990 Plan. As of December 31, 2000, all of these options were
exercisable as none have been exercised or forfeited. The impact of the above
options on the financial statements is not material.

    A summary of the combined status of the 2000 Plan, the 1995 Plan and the
1990 Plan (collectively, the Company Plans) as of December 31, 2000, 1999 and
1998 and changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
                                          2000                         1999                         1998
                               --------------------------   --------------------------   --------------------------
                                              WEIGHTED                     Weighted                     Weighted
                                NUMBER        AVERAGE        Number        Average        Number        Average
                               OF SHARES   EXERCISE PRICE   of Shares   Exercise Price   of Shares   Exercise Price
                               ---------   --------------   ---------   --------------   ---------   --------------
<S>                            <C>         <C>              <C>         <C>              <C>         <C>
Outstanding, beginning of
  year.......................    938,207       $60.03        864,095        $55.01        847,856        $47.56
Granted......................    179,600        95.25        165,000         76.50        178,450         75.44
Exercised....................    (46,155)       46.64        (57,732)        34.98       (112,811)        30.93
Forfeited....................    (12,340)       77.03        (33,156)        54.80        (49,400)        55.87
                               ---------                    --------                     --------
Outstanding, end of year.....  1,059,312        66.39        938,207         60.03        864,095         55.01
                               ---------       ------       --------        ------       --------        ------
                               ---------       ------       --------        ------       --------        ------
Exercisable, end of year.....    637,863       $54.83        518,753        $49.95        429,586        $43.36
                               ---------       ------       --------        ------       --------        ------
                               ---------       ------       --------        ------       --------        ------
Weighted average fair value
  of options granted during
  the year...................     $26.65                      $21.74                       $18.36
</TABLE>

    The weighted average fair value of each option grant is estimated on the
date of grant using the 'Binomial Option Price Model' with the following
weighted average assumptions used for grants in 2000, 1999 and 1998,
respectively: expected volatility of 18.0% for each grant; risk-free interest
rates of 5.4%, 6.4% and 4.6%; and expected lives of six years for each grant. An
increasing dividend schedule is used in the binomial model based on historical
experience.

                                       45








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. STOCK OPTION PLANS (CONTINUED)
    The following table summarizes information about the Company Plans'
outstanding and exercisable options at December 31, 2000:

<TABLE>
<CAPTION>
                                                  OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                                      -------------------------------------------   --------------------------
                                                   WEIGHTED
                                                    AVERAGE
                                                   REMAINING          WEIGHTED                     WEIGHTED
              RANGE OF                 NUMBER     CONTRACTUAL         AVERAGE        NUMBER        AVERAGE
          EXERCISE PRICES             OF SHARES      LIFE          EXERCISE PRICE   OF SHARES   EXERCISE PRICE
          ---------------             ---------      ----          --------------   ---------   --------------
<S>                                   <C>         <C>              <C>              <C>         <C>
$19.75 TO $36.25....................    136,052       3.0 years        $34.06        136,052        $34.06
$46.00 TO $51.33....................    273,884       5.5               49.22        273,884         49.22
$71.88 TO $76.50....................    469,776       8.0               74.72        227,927         73.98
$95.25..............................    179,600       9.9               95.25             --            --
                                      ---------                                      -------
$19.75 TO $95.25....................  1,059,312       7.0               66.39        637,863         54.83
                                      ---------                                      -------
                                      ---------                                      -------
</TABLE>

    The Company accounts for its stock options based on the intrinsic value
method prescribed in Accounting Principles Board Opinion (APB) No. 25 and
related interpretations, as permitted under SFAS No. 123. Had compensation cost
been charged to earnings in accordance with the fair value method discussed in
SFAS No. 123, the Company's net income and net income per share (on a pro forma
basis) would have been as follows:

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                 2000          1999          1998
                                                                 ----          ----          ----
                                                               (in thousands, except per share data)
<S>                                                           <C>           <C>           <C>
Net income:
    As reported.............................................   $211,638      $187,362      $247,523
    Pro forma...............................................    209,061       184,953       245,792
Net income per common share:
    As reported:
        Basic...............................................       6.09          5.40          7.15
        Diluted.............................................       6.05          5.37          7.10
    Pro forma:
        Basic...............................................       6.02          5.33          7.10
        Diluted.............................................       5.98          5.30          7.05
</TABLE>

11. RELATED PARTY TRANSACTIONS

    In August 1998, AIG increased its beneficial ownership of the Company's
outstanding common stock from 49% to over 50%. As of December 31, 2000, AIG
beneficially owned approximately 60% of the Company's outstanding shares.

    TRH has service and expense agreements and certain other agreements with the
AIG Group which provide for the reimbursement to the AIG Group of certain
administrative and operating expenses which include, but are not limited to,
investment advisory and cash management services, office space and human
resource related activities. Under the guidance of TRH's Finance Committee of
the Board of Directors and senior management, certain AIG Group companies act as
financial advisors and managers of TRH's investment portfolio. In 2000, 1999 and
1998, $7,700,000, $10,600,000 and $9,800,000, respectively, of operating and
investment expenses relate to services and expenses provided by the AIG Group
under these agreements.

    Approximately $209 million (11%), $184 million (11%) and $167 million (11%)
of gross premiums written by TRH in 2000, 1999 and 1998, respectively, were
attributable to reinsurance purchased by the AIG Group, for the production of
which TRH paid ceding commissions to the AIG Group of

                                       46








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. RELATED PARTY TRANSACTIONS (CONTINUED)
$38 million, $34 million and $31 million, respectively, in such years. (See
Note 13 for information relating to reinsurance ceded to related parties.)

12. DIVIDEND RESTRICTION AND STATUTORY FINANCIAL DATA

    The payment of dividends by the Company is dependent on the ability of its
subsidiaries to pay dividends. The payment of dividends by TRC and its
wholly-owned subsidiaries, TRZ and Putnam, is restricted by insurance
regulations. Under New York insurance law, TRC and Putnam may pay dividends only
out of their statutory earned surplus. Generally, the maximum amount of
dividends that a company may pay without regulatory approval in any twelve-month
period is the lesser of adjusted net investment income or 10% of statutory
policyholders' surplus as of the end of the most recently reported quarter
unless the New York Insurance Department, upon prior application, approves a
greater dividend distribution. Adjusted net investment income is defined for
this purpose to include net investment income for the twelve months immediately
preceding the declaration or distribution of the current dividend increased by
the excess, if any, of net investment income over dividends declared or
distributed during the period commencing thirty-six months prior to the
declaration or distribution of the current dividend and ending twelve months
prior thereto. The statutory surplus of TRC includes the statutory surplus of
Putnam since all the capital stock of Putnam is owned by TRC. At December 31,
2000, TRC had statutory earned surplus of $1,067,314,000 and, in 2001, could pay
dividends of approximately $153,188,000 without such regulatory approval.

    Statutory surplus and net income as reported to the New York Insurance
Department were as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999         1998
                                                              ----         ----         ----
                                                                      (in thousands)
<S>                                                        <C>          <C>          <C>
TRC
    Statutory surplus....................................  $1,531,876   $1,442,571   $1,343,659
    Statutory net income.................................     170,898      131,479      209,752
Putnam
    Statutory surplus....................................     107,728      104,317      109,771
    Statutory net income.................................      10,828        9,443        9,872
</TABLE>

    TRC and Putnam each prepare statutory financial statements in accordance
with accounting practices prescribed or permitted by New York -- their state of
domicile. Prescribed statutory accounting practices are discussed in a variety
of publications of the National Association of Insurance Commissioners (NAIC),
as well as in state laws, regulations and general administrative rules.
Permitted statutory accounting practices encompass all accounting practices not
so prescribed. All material statutory accounting practices of TRC and Putnam are
prescribed in the authoritative literature described above.

    In 1998, the NAIC adopted the Codification of Statutory Accounting
Principles (Codification) as primary guidance on statutory accounting effective
January 1, 2001. The Codification provides guidance for areas where previously
statutory accounting had been silent and changes current statutory accounting in
some areas. The New York Insurance Department recently adopted most of the
Codification guidance for implementation on January 1, 2001, but did not adopt
several key provisions including those on deferred income taxes. The cumulative
effect of the implementation of Codification guidance (as adopted by the New
York Insurance Department) on the statutory surplus of TRC and Putnam as of
January 1, 2001 was not material. In addition, the Codification guidance is not
expected to have a material effect on future statutory net income, financial
position or cash flows.

                                       47








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. REINSURANCE CEDED

    In the normal course of business, TRH purchases reinsurance from its
retrocessionnaires to reduce the effect of individual or aggregate losses and to
allow increased gross premium writings and afford greater risk capacity without
necessarily requiring additional capital.

    TRH's ceded reinsurance agreements consist of pro rata and excess-of-loss
contracts. Under pro rata reinsurance, TRH and its retrocessionnaires share
premiums, losses and expenses in an agreed upon proportion. For consideration,
generally based on a percentage of premiums of the individual policy or policies
subject to the reinsurance agreement, excess-of-loss contracts provide
reimbursement to TRH for losses in excess of a predetermined amount up to a
predetermined limit.

    Premiums written and earned and losses and loss adjustment expenses incurred
are comprised as follows:

<TABLE>
<CAPTION>

                                                                   YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999          1998
                                                           ----------   ----------   ----------
                                                                      (in thousands)

<S>                                                        <C>          <C>          <C>
Gross premiums assumed...................................  $1,880,389   $1,690,714   $1,566,885
                                                           ----------   ----------   ----------
Reinsurance ceded:
    AIG Affiliates.......................................      95,060      100,415       93,413
    Other................................................     126,750       91,775       79,772
                                                           ----------   ----------   ----------
                                                              221,810      192,190      173,185
                                                           ----------   ----------   ----------
Net premiums written.....................................  $1,658,579   $1,498,524   $1,393,700
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
Gross premiums earned....................................  $1,855,374   $1,675,233   $1,545,215
                                                           ----------   ----------   ----------
Reinsurance ceded:
    AIG Affiliates.......................................      98,735      102,987       83,472
    Other................................................     125,103       87,612       81,173
                                                           ----------   ----------   ----------
                                                              223,838      190,599      164,645
                                                           ----------   ----------   ----------
Net premiums earned......................................  $1,631,536   $1,484,634   $1,380,570
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
Gross incurred losses and loss adjustment expenses.......  $1,363,165   $1,375,589   $1,226,992
Reinsurance ceded........................................     166,269      226,772      206,104
                                                           ----------   ----------   ----------
Net losses and loss adjustment expenses..................  $1,196,896   $1,148,817   $1,020,888
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

    Amounts recoverable from retrocessionnaires are recognized in a manner
consistent with the claims liabilities associated with the retrocession and are
presented on the balance sheet as reinsurance recoverable on paid and unpaid
losses and loss adjustment expenses. Such balances at December 31, 2000 and 1999
are comprised as follows:

<TABLE>
<CAPTION>
                                                              2000                    1999
                                                      ---------------------   ---------------------
                                                         AIG                     AIG
                                                      AFFILIATES    OTHER     Affiliates    Other
                                                      ----------    -----     ----------    -----
                                                                     (in thousands)
<S>                                                   <C>          <C>        <C>          <C>
Paid................................................   $ 53,922    $ 40,699    $ 15,380    $ 23,445
Unpaid..............................................    207,175     242,037     278,767     250,969
                                                       --------    --------    --------    --------
    Total...........................................   $261,097    $282,736    $294,147    $274,414
                                                       --------    --------    --------    --------
                                                       --------    --------    --------    --------
</TABLE>

    Ceded reinsurance arrangements do not relieve TRH from its obligations to
the insurers and reinsurers from whom it assumes business. The failure of
retrocessionnaires to honor their obligations could result in losses to TRH;
consequently, an allowance has been established for estimated unrecoverable
reinsurance on paid and unpaid losses totaling $13.0 million in both 2000 and
1999. TRH evaluates the financial condition of its retrocessionnaires through a
security committee. With respect to reinsurance recoverable on paid and unpaid
losses and prepaid reinsurance premiums, TRH holds substantial amounts of funds
and letters of credit to collateralize these amounts. Such funds and letters

                                       48








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. REINSURANCE CEDED (CONTINUED)
of credit can be drawn on for amounts remaining unpaid beyond contract terms. No
uncollateralized amounts recoverable from a single retrocessionnaire, other than
amounts due from AIG affiliates, are considered material to the financial
position of TRH.

14. SEGMENT INFORMATION

    TRH conducts its business and assesses performance through segments
organized along geographic lines. Financial data from offices in London, Paris
and Zurich are reported in the aggregate as Europe and considered as one segment
due to operational and regional similarities. Data from offices in the Americas,
other than those in the United States which underwrite primarily domestic
business, and from offices in the Asia Pacific region are grouped as
International -- Other and represent the aggregation of non-material segments.
In each segment, property and casualty reinsurance is provided to insurers and
reinsurers on a treaty and facultative basis, through brokers or directly to
ceding companies.

    A significant portion of assets and liabilities of TRH's international
operations relate to the countries where ceding companies and reinsurers are
located. Most investments are located in the country of domicile of these
operations. In addition to licensing requirements, TRH's international
operations are regulated in various jurisdictions with respect to currency,
amount and type of security deposits, amount and type of reserves and amount and
type of local investment. Regulations governing constitution of technical
reserves and remittance balances in some countries may hinder remittance of
profits and repatriation of assets.

    While the great majority of premium revenues and assets relate to the
regions where particular offices are located, a portion of such amounts are
derived from other regions of the world. In addition, two large international
brokers accounted for non-AIG business equal to 15% and 14%, respectively, of
consolidated revenues, with a significant portion in each segment.

    The following table is a summary of financial data by segment:

<TABLE>
<CAPTION>
                                                                    INTERNATIONAL
                                                                ---------------------
                                                 DOMESTIC       EUROPE(4)     OTHER        CONSOLIDATED
                                                 --------       ---------     -----        ------------
                                                                    (in thousands)
<S>                                             <C>             <C>          <C>           <C>
2000
REVENUES(1)(2)(3).............................  $1,038,310      $  654,460   $206,349       $1,899,119
INCOME BEFORE INCOME TAXES(2).................     242,459          14,040     11,483          267,982
SEGMENT ASSETS(5).............................   3,911,303       1,233,370    377,999        5,522,672
</TABLE>

<TABLE>
<CAPTION>
                                                                    International
                                                                ---------------------
                                                 Domestic       Europe(4)     Other        Consolidated
                                                 --------       ---------     -----        ------------
                                                                    (in thousands)
<S>                                             <C>             <C>          <C>           <C>
1999
Revenues(1)(2)(3).............................  $1,020,806      $  615,683   $161,677       $1,798,166
Income before income taxes(2).................     260,075          (2,607)   (21,371)         236,097
Segment assets(5).............................   3,932,305       1,111,175    436,718        5,480,198
</TABLE>

<TABLE>
<CAPTION>
                                                                    International
                                                                ---------------------
                                                 Domestic       Europe(4)     Other        Consolidated
                                                 --------       ---------     -----        ------------
                                                                    (in thousands)
<S>                                             <C>             <C>          <C>           <C>
1998
Revenues(1)(2)(3).............................  $  986,552      $  610,063   $126,854       $1,723,469
Income before income taxes(2).................     287,486          40,502     (4,637)         323,351
Segment assets(5).............................   3,851,473       1,018,009    383,767        5,253,249
</TABLE>

                                                        (footnotes on next page)

                                       49








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SEGMENT INFORMATION (CONTINUED)
(footnotes from previous page)

(1) Revenues represent the sum of net premiums earned, net investment income and
    realized net capital gains.

(2) Domestic revenues and income before income taxes include realized net
    capital gains of $29,668, $82,162 and $118,601 in 2000, 1999 and 1998,
    respectively. Realized net capital gains for other segments in each of the
    years presented is not material.

(3) Net revenues from affiliates of AIG approximate $110,038, $80,237 and
    $81,358 in 2000, 1999 and 1998, respectively, and are included primarily in
    domestic revenues.

(4) Includes revenues from the London, England office of $380,694, $350,398 and
    $331,944 in 2000, 1999 and 1998, respectively.

(5) As of December 31.

    Net premiums earned by major product grouping are as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                           ------------------------------------
                                                              2000         1999         1998
                                                           ----------   ----------   ----------
                                                                      (in thousands)
<S>                                                        <C>          <C>          <C>
Casualty
    Auto liability.......................................  $  312,727   $  308,194   $  272,950
    Other liability*.....................................     274,627      256,349      248,175
    Ocean marine and aviation............................     193,521      146,623      192,827
    Accident and health..................................     190,916      130,927       69,835
    Medical malpractice..................................     141,355      141,932       91,749
    Surety, credit and financial guaranty................      74,005       70,652       65,366
    Other................................................      62,575       45,034       40,856
                                                           ----------   ----------   ----------
        Total casualty...................................   1,249,726    1,099,711      981,758
                                                           ----------   ----------   ----------
Property
    Fire.................................................     193,413      177,758      176,834
    Homeowners multiple peril............................      57,855       62,913       64,214
    Auto physical damage.................................      51,670       47,551       44,252
    Allied lines.........................................      42,299       44,607       68,544
    Other................................................      36,573       52,094       44,968
                                                           ----------   ----------   ----------
        Total property...................................     381,810      384,923      398,812
                                                           ----------   ----------   ----------
        Total............................................  $1,631,536   $1,484,634   $1,380,570
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

---------

* A significant portion of this product grouping includes more complex risks
  such as professional liability (other than medical malpractice), directors'
  and officers' liability, errors and omissions and environmental impairment
  liability.

                                       50








<PAGE>


                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

    The following is a summary of unaudited quarterly financial data for each of
the years ended December 31, 2000 and 1999. However, in the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
to present fairly the results of operations for such periods have been made.

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                 ---------------------------------------------------
                                                 MARCH 31,   JUNE 30,   SEPTEMBER 30,   DECEMBER 31,
                                                   2000        2000         2000            2000
                                                   ----        ----         ----            ----
                                                        (in thousands, except per share data)
<S>                                              <C>         <C>        <C>             <C>
NET PREMIUMS WRITTEN...........................  $392,513    $402,770     $450,929        $412,367
NET PREMIUMS EARNED............................   390,182     403,750      428,198         409,406
NET INVESTMENT INCOME..........................    58,637      57,820       58,369          59,659
REALIZED NET CAPITAL GAINS.....................    13,877       5,928        9,241           4,052
OPERATING INCOME...............................    72,158      64,608       67,561          63,737
NET INCOME.....................................    56,358      50,985       53,395          50,900
NET INCOME PER COMMON SHARE:
    BASIC......................................      1.62        1.47         1.54            1.46
    DILUTED....................................      1.61        1.46         1.53            1.45
</TABLE>

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                 ---------------------------------------------------
                                                 March 31,   June 30,   September 30,   December 31,
                                                   1999        1999         1999            1999
                                                   ----        ----         ----            ----
                                                        (in thousands, except per share data)
<S>                                              <C>         <C>        <C>             <C>
Net premiums written...........................  $357,218    $360,043     $401,473        $379,790
Net premiums earned............................   332,041     362,316      383,419         406,858
Net investment income..........................    55,313      58,495       58,465          58,466
Realized net capital gains.....................    41,728      18,015        8,519          14,531
Operating income...............................    96,685      76,871       44,762          17,917
Net income.....................................    74,228      59,279       36,188          17,667
Net income per common share:
    Basic......................................      2.14        1.71         1.04            0.51
    Diluted....................................      2.13        1.70         1.04            0.51
</TABLE>

                                       51










<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    There have been no changes in nor any disagreements with accountants on
accounting and financial disclosure within the twenty-four months ended
December 31, 2000.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Information required by this Item concerning directors of the Company is
included in the Company's Proxy Statement for the 2001 Annual Meeting of
Stockholders, filed with the Securities and Exchange Commission within 120 days
after the end of the Company's fiscal year (the '2001 Proxy Statement'), in the
section captioned 'Election of Directors,' and such information is incorporated
herein by reference. Information required by this Item concerning the executive
officers of the Company is included in Part I of this Annual Report on
Form 10-K under the section captioned 'Directors and Executive Officers of the
Registrant.' Information required by this Item concerning compliance with
Section 16(a) of the Securities Exchange Act of 1934, as amended, is included in
the 2001 Proxy Statement under the caption 'Election of Directors: `Ownership of
Certain Securities,' ' and such information is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

    Information required by this Item is included in the 2001 Proxy Statement in
the sections captioned 'Election of Directors: `Compensation of Directors and
Executive Officers,' `Compensation Committee Interlocks and Insider
Participation' and `Pension Benefits,' ' and such information is incorporated
herein by reference. The sections of the 2001 Proxy Statement captioned
'Election of Directors: `Committee Reports on Executive Compensation' and
`Performance Graph' ' are not incorporated by reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information required by this Item is included in the 2001 Proxy Statement in
the sections captioned 'Beneficial Ownership' and 'Election of Directors:
`Ownership of Certain Securities,' ' and such information is incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information required by this Item is included in the 2001 Proxy Statement in
the sections captioned 'Election of Directors: `Compensation Committee
Interlocks and Insider Participation,' `Relationship with AIG,' `AIG Group
Reinsurance,' `Certain Transactions with the AIG Group' and `Relationship with
SICO and Starr,' ' and such information is incorporated herein by reference.

                                       52








<PAGE>


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) Financial Statements and Exhibits

        1. Financial Statements and Schedules

               See accompanying Index to Consolidated Financial Statements in
           Item 8. Schedules not included in the accompanying index have been
           omitted because they are not applicable.

        2. Exhibits

           21.1 -- Subsidiaries of Registrant.

           23.1 -- Consent of PricewaterhouseCoopers LLP.

           See accompanying Exhibit Index for additional Exhibits incorporated
           by reference.

    (b) Reports on Form 8-K

        No reports on Form 8-K were filed during the last quarter of 2000.

                                       53










<PAGE>


                                   SIGNATURES

    PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                                          TRANSATLANTIC HOLDINGS, INC.

                                          By:        /s/ ROBERT F. ORLICH
                                               .................................
                                                      Robert F. Orlich
                                                 Title: President and Chief
                                                      Executive Officer

March 22, 2001

    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>

              SIGNATURE                                  TITLE                         DATE
              ---------                                  -----                         ----
<S>                                         <C>                                    <C>


           /s/ ROBERT F. ORLICH             President and Chief Executive Officer    March 22, 2001
 .........................................    (principal executive officer);
             Robert F. Orlich                 Director


          /s/ STEVEN S. SKALICKY            Executive Vice President and Chief       March 22, 2001
 .........................................    Financial Officer (principal
            Steven S. Skalicky                financial and accounting officer)



             /s/ JAMES BALOG                Director                                 March 22, 2001
 .........................................
               James Balog


                                            Director
 .........................................
             C. Fred Bergsten


            /s/ IKUO EGASHIRA               Director                                 March 22, 2001
 .........................................
              Ikuo Egashira


           /s/ M. R. GREENBERG              Director                                 March 22, 2001
 .........................................
             M. R. Greenberg


          /s/ JOHN J. MACKOWSKI             Director                                 March 22, 2001
 .........................................
            John J. Mackowski


          /s/ EDWARD E. MATTHEWS            Director                                 March 22, 2001
 .........................................
            Edward E. Matthews


           /s/ HOWARD I. SMITH              Director                                 March 22, 2001
 .........................................
             Howard I. Smith


           /s/ THOMAS R. TIZZIO             Director                                 March 22, 2001
 .........................................
             Thomas R. Tizzio

</TABLE>

                                       54











<PAGE>


                                                                      SCHEDULE I

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
      SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN RELATED PARTIES
                            AS OF DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                      AMOUNT AT
                                                                                     WHICH SHOWN
                                                            COST OR                    IN THE
                                                           AMORTIZED      MARKET       BALANCE
                   TYPE OF INVESTMENT                        COST*        VALUE         SHEET
                   ------------------                        -----        -----         -----
                                                                      (in thousands)
<S>                                                        <C>          <C>          <C>
Fixed maturities:
    Bonds:
        U.S. Government and government agencies and
          authorities....................................  $  268,162   $  277,114   $  277,114
        States, foreign and domestic municipalities and
          political subdivisions.........................   2,298,604    2,389,220    2,339,365
        Foreign governments..............................     228,125      231,994      231,994
        Public utilities.................................      45,979       46,399       46,399
        All other corporate..............................     539,261      532,968      532,968
                                                           ----------   ----------   ----------
            Total fixed maturities.......................   3,380,131    3,477,695    3,427,840
                                                           ----------   ----------   ----------
Equities:
    Common stocks:
        Public utilities.................................       9,543       11,530       11,530
        Banks, trust and insurance companies.............      78,900       88,222       88,222
        Industrial, miscellaneous and all other..........     397,814      445,973      445,973
                                                           ----------   ----------   ----------
            Total common stocks..........................     486,257      545,725      545,725
    Nonredeemable preferred stocks.......................      28,569       26,695       26,695
                                                           ----------   ----------   ----------
            Total equities...............................     514,826      572,420      572,420
                                                           ----------   ----------   ----------
Other invested assets....................................     233,477      233,629      233,629
                                                           ----------   ----------   ----------
Short-term investments...................................      28,091       28,091       28,091
                                                           ----------   ----------   ----------
            Total investments............................  $4,156,525   $4,311,835   $4,261,980
                                                           ----------   ----------   ----------
                                                           ----------   ----------   ----------
</TABLE>

---------

* Investments in fixed maturities are shown at amortized cost.

                                      S-1








<PAGE>


                                                                     SCHEDULE II

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 BALANCE SHEETS
                             (PARENT COMPANY ONLY)
                        AS OF DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                 2000         1999
                                                                 ----         ----
                                                                  (in thousands)
<S>                                                           <C>          <C>
Assets:
    Bonds available for sale, at market value (amortized
      cost: 2000 -- $16,270; 1999 -- $14,406)...............  $   16,711   $   14,128
    Cash and cash equivalents...............................         441          308
    Investment in subsidiaries..............................   1,841,330    1,629,916
    Other assets............................................         546          870
    Dividend due from subsidiary............................       4,700        4,350
                                                              ----------   ----------
        Total assets........................................  $1,863,728   $1,649,572
                                                              ----------   ----------
                                                              ----------   ----------
Liabilities:
    Dividends payable.......................................  $    4,700   $    4,350
    Accrued liabilities.....................................       2,663        2,705
                                                              ----------   ----------
        Total liabilities...................................       7,363        7,055
                                                              ----------   ----------
Stockholders' equity:
    Preferred Stock.........................................          --           --
    Common Stock............................................      35,574       35,528
    Additional paid-in capital..............................     202,593      200,567
    Accumulated other comprehensive income..................      36,773       18,212
    Retained earnings.......................................   1,591,425    1,398,210
    Treasury Stock, at cost; 800,000 shares.................     (10,000)     (10,000)
                                                              ----------   ----------
        Total stockholders' equity..........................   1,856,365    1,642,517
                                                              ----------   ----------
        Total liabilities and stockholders' equity..........  $1,863,728   $1,649,572
                                                              ----------   ----------
                                                              ----------   ----------
</TABLE>

 See Notes to Condensed Financial Information of Registrant -- (Parent Company
                                     Only)

                                      S-2








<PAGE>


                                                                     SCHEDULE II

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
          CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- (CONTINUED)
                            STATEMENTS OF OPERATIONS
                             (PARENT COMPANY ONLY)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                                ----       ----       ----
                                                                      (in thousands)
<S>                                                           <C>        <C>        <C>
Revenues:
    Net investment income (principally dividends from
      subsidiary)...........................................  $ 19,398   $ 17,662   $ 15,618
    Equity in undistributed income of subsidiaries..........   193,323    170,613    233,138
                                                              --------   --------   --------
        Total revenues......................................   212,721    188,275    248,756
Operating expenses..........................................     1,155      1,123      1,527
                                                              --------   --------   --------
Income before income taxes..................................   211,566    187,152    247,229
Income tax benefits -- current..............................       (72)      (210)      (294)
                                                              --------   --------   --------
        Net income..........................................  $211,638   $187,362   $247,523
                                                              --------   --------   --------
                                                              --------   --------   --------
</TABLE>

 See Notes to Condensed Financial Information of Registrant -- (Parent Company
                                     Only)

                                      S-3








<PAGE>


                                                                     SCHEDULE II

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
          CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- (CONTINUED)
                            STATEMENTS OF CASH FLOWS
                             (PARENT COMPANY ONLY)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                2000        1999        1998
                                                                ----        ----        ----
                                                                       (in thousands)
<S>                                                           <C>         <C>         <C>
Cash flows from operating activities:
    Net income..............................................  $ 211,638   $ 187,362   $ 247,523
                                                              ---------   ---------   ---------
    Adjustments to reconcile net income to net cash provided
      by operating activities:
        Equity in undistributed income of subsidiaries......   (193,323)   (170,613)   (233,138)
        Change in dividend due from subsidiary..............       (350)       (535)       (355)
        Changes in other assets and accrued liabilities.....         63         223         638
                                                              ---------   ---------   ---------
            Total adjustments...............................   (193,610)   (170,925)   (232,855)
                                                              ---------   ---------   ---------
            Net cash provided by operating activities.......     18,028      16,437      14,668
                                                              ---------   ---------   ---------
Cash flows from investing activities:
    Proceeds of bonds matured...............................      3,235          --          --
    Purchase of bonds.......................................     (5,130)     (2,435)     (3,029)
                                                              ---------   ---------   ---------
            Net cash used in investing activities...........     (1,895)     (2,435)     (3,029)
                                                              ---------   ---------   ---------
Cash flows from financing activities:
    Dividends to stockholders...............................    (18,072)    (16,312)    (14,550)
    Proceeds from common stock issued.......................      2,072       2,203       3,035
                                                              ---------   ---------   ---------
            Net cash from financing activities..............    (16,000)    (14,109)    (11,515)
                                                              ---------   ---------   ---------
            Change in cash and cash equivalents.............        133        (107)        124
Cash and cash equivalents, beginning of year................        308         415         291
                                                              ---------   ---------   ---------
Cash and cash equivalents, end of year......................  $     441   $     308   $     415
                                                              ---------   ---------   ---------
                                                              ---------   ---------   ---------
</TABLE>

---------

Notes to Condensed Financial Information of Registrant -- (Parent Company Only)

(1) The condensed financial information of registrant should be read in
    conjunction with the Consolidated Financial Statements and Notes to
    Consolidated Financial Statements included elsewhere herein.

(2) Investment in subsidiaries is reflected on the equity method.

                                      S-4











<PAGE>


                                                                    SCHEDULE III

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                      SUPPLEMENTARY INSURANCE INFORMATION
      AS OF DECEMBER 31, 2000, 1999 AND 1998 AND FOR THE YEARS THEN ENDED
<TABLE>
<CAPTION>
                                                                                                                NET
                                              UNPAID                                                        COMMISSIONS
                                            LOSSES AND                                         NET LOSSES   AND CHANGE
                               DEFERRED        LOSS                     NET          NET        AND LOSS    IN DEFERRED
                              ACQUISITION   ADJUSTMENT   UNEARNED     PREMIUMS    INVESTMENT   ADJUSTMENT   ACQUISITION
                                 COSTS       EXPENSES    PREMIUMS      EARNED       INCOME      EXPENSES       COSTS
                                 -----       --------    --------      ------       ------      --------       -----
                                                                   (in thousands)
<S>                           <C>           <C>          <C>         <C>          <C>          <C>          <C>
2000
 PROPERTY-CASUALTY
   DOMESTIC.................    $36,994     $1,991,271   $201,015    $  834,994    $173,648    $  556,640    $215,324
   INTERNATIONAL:
      EUROPE................     18,798        892,107    114,818       604,976      49,454       515,032     108,264
      OTHER.................     20,831        193,784    102,788       191,566      11,383       125,224      58,641
                                -------     ----------   --------    ----------    --------    ----------    --------
         CONSOLIDATED.......    $76,623     $3,077,162   $418,621    $1,631,536    $234,485    $1,196,896    $382,229
                                -------     ----------   --------    ----------    --------    ----------    --------
                                -------     ----------   --------    ----------    --------    ----------    --------

1999
 Property-Casualty
   Domestic.................    $33,932     $2,277,655   $194,274    $  768,633    $170,011    $  537,145    $199,843
   International:
      Europe................     16,889        788,187     98,382       565,692      49,975       482,326     119,390
      Other.................     20,201        239,089    105,127       150,309      10,753       129,346      43,252
                                -------     ----------   --------    ----------    --------    ----------    --------
         Consolidated.......    $71,022     $3,304,931   $397,783    $1,484,634    $230,739    $1,148,817    $362,485
                                -------     ----------   --------    ----------    --------    ----------    --------
                                -------     ----------   --------    ----------    --------    ----------    --------
1998
 Property-Casualty
   Domestic.................    $38,412     $2,266,341   $214,255    $  708,436    $159,515    $  507,357    $167,770
   International:
      Europe................     15,785        638,036     95,381       556,301      52,532       421,638     132,041
      Other.................     13,381        211,661     77,016       115,833       9,953        91,893      30,432
                                -------     ----------   --------    ----------    --------    ----------    --------
         Consolidated.......    $67,578     $3,116,038   $386,652    $1,380,570    $222,000    $1,020,888    $330,243
                                -------     ----------   --------    ----------    --------    ----------    --------
                                -------     ----------   --------    ----------    --------    ----------    --------

<CAPTION>

                                OTHER        NET
                              OPERATING    PREMIUMS
                              EXPENSES     WRITTEN
                              --------     -------
                                  (in thousands)
<S>                           <C>         <C>
2000
 PROPERTY-CASUALTY
   DOMESTIC.................   $23,745    $  845,478
   INTERNATIONAL:
      EUROPE................    17,818       625,374
      OTHER.................    10,367       187,727
                               -------    ----------
         CONSOLIDATED.......   $51,930    $1,658,579
                               -------    ----------
                               -------    ----------
1999
 Property-Casualty
   Domestic.................   $23,782    $  750,623
   International:
      Europe................    16,426       570,647
      Other.................    10,421       177,254
                               -------    ----------
         Consolidated.......   $50,629    $1,498,524
                               -------    ----------
                               -------    ----------
1998
 Property-Casualty
   Domestic.................   $23,308    $  711,689
   International:
      Europe................    16,432       547,770
      Other.................     9,018       134,241
                               -------    ----------
         Consolidated.......   $48,758    $1,393,700
                               -------    ----------
                               -------    ----------
</TABLE>

                                      S-5








<PAGE>


                                                                     SCHEDULE IV

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                                  REINSURANCE
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                        PERCENTAGE
                                                                                            OF
                                                  CEDED TO     ASSUMED                    AMOUNT
                                          GROSS     OTHER     FROM OTHER                 ASSUMED
                                          AMOUNT  COMPANIES   COMPANIES    NET AMOUNT     TO NET
                                          ------  ---------   ---------    ----------     ------
                                                               (in thousands)
<S>                                       <C>     <C>         <C>          <C>          <C>
2000
    PREMIUMS WRITTEN:
        PROPERTY-CASUALTY...............    --    $221,810    $1,880,389   $1,658,579      113%

1999
    Premiums written:
        Property-Casualty...............    --    $192,190    $1,690,714   $1,498,524      113%

1998
    Premiums written:
        Property-Casualty...............    --    $173,185    $1,566,885   $1,393,700      112%
</TABLE>

                                      S-6








<PAGE>


                                                                     SCHEDULE VI

                 TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
                      SUPPLEMENTARY INFORMATION CONCERNING
                     PROPERTY/CASUALTY INSURANCE OPERATIONS
      AS OF DECEMBER 31, 2000, 1999 AND 1998 AND FOR THE YEARS THEN ENDED


<TABLE>
<CAPTION>
                                                                                             NET LOSSES AND LOSS
                                  UNPAID                                                     ADJUSTMENT EXPENSES     NET PAID
                                LOSSES AND                                                       RELATED TO         LOSSES AND
                   DEFERRED        LOSS      DISCOUNT                NET          NET       ---------------------      LOSS
                  ACQUISITION   ADJUSTMENT    IF ANY   UNEARNED    PREMIUMS    INVESTMENT    CURRENT      PRIOR     ADJUSTMENT
                     COSTS       EXPENSES    DEDUCTED  PREMIUMS     EARNED       INCOME        YEAR       YEARS      EXPENSES
                     -----       --------    --------  --------     ------       ------        ----       -----      --------
                                                                 (in thousands)
<S>               <C>           <C>          <C>       <C>        <C>          <C>          <C>          <C>        <C>
2000............    $76,623     $3,077,162      --     $418,621   $1,631,536    $234,485    $1,182,539   $ 14,357   $1,344,141
1999............    $71,022     $3,304,931      --     $397,783   $1,484,634    $230,739    $1,216,294   $(67,477)  $1,042,758
1998............    $67,578     $3,116,038      --     $386,652   $1,380,570    $222,000    $1,080,377   $(59,489)  $  887,513

<CAPTION>
                           NET
                       COMMISSIONS
                       AND CHANGE
                       IN DEFERRED      NET
                       ACQUISITION    PREMIUMS
                          COSTS       WRITTEN
                          -----       -------
                            (in thousands)
<S>                    <C>           <C>
2000.................   $382,229     $1,658,579
1999.................   $362,485     $1,498,524
1998.................   $330,243     $1,393,700
</TABLE>

                                      S-7









<PAGE>


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.                  DESCRIPTION                                   LOCATION
  ---                  -----------                                   --------
<S>     <C>                                         <C>
 3.1    -- Certificate of Incorporation, as
           amended through April 19, 1990.........  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
 3.1.1  -- Certificate of Amendment of the
           Certificate of Incorporation, dated
           May 25, 1999...........................  Filed as exhibit to the Company's 1999
                                                      Annual Report on Form 10-K (File
                                                      No. 1-10545) and incorporated herein by
                                                      reference.
 3.2    -- Amended and Restated By-Laws, as of
           March 25, 1999.........................  Filed as exhibit to the Company's 1998
                                                      Annual Report on Form 10-K (File No.
                                                      1-10545) and incorporated herein by
                                                      reference.
 4.1    -- Form of Common Stock Certificate.......  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.1    -- Amended and Restated Shareholders
           Agreement among American Express
           Company, Gulf Insurance Company, The
           Lambert Brussels Financial Corporation,
           Stoneridge Limited, Mavron Ltd.,
           American International Group, Inc.,
           American Home Assurance Company,
           Metropolitan Life Insurance Company,
           certain trustees under an Indenture of
           Trust made by SwissRe Holding Limited,
           SwissRe Holding Limited, General Re
           Corporation, Compagnie Financiere et de
           Reassurance du Groupe AG, Daido Mutual
           Life Insurance Company, The Nichido
           Fire and Marine Insurance Company,
           Limited, Transatlantic Reinsurance
           Company, and PREINCO Holdings, Inc.,
           dated January 5, 1990..................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.2    -- Exclusive Agency Agreement between
           Transatlantic Reinsurance Company and
           American Home Assurance Company, dated
           February 27, 1980......................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.3    -- Service and Expense Agreement among
           PREINCO Holdings, Inc., Putnam Rein-
           surance Company, and American Interna-
           tional Group, Inc. dated July 1, 1986..  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.4    -- Service and Expense Agreement between
           Transatlantic Reinsurance Company and
           American International Group, Inc.,
           dated December 15, 1977................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
</TABLE>








<PAGE>



<TABLE>
<CAPTION>
EXHIBIT
  NO.                  DESCRIPTION                                   LOCATION
  ---                  -----------                                   --------
<S>     <C>                                         <C>
10.5    -- Investment Management Contract between
           Transatlantic Reinsurance Company and
           AIG Global Investors, Inc. dated
           August 1, 1986.......................... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.6    -- Investment Management Contract between
           Putnam Reinsurance Company and AIG
           Global Investors, Inc. dated August 1,
           1986.................................... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.7    -- Transatlantic Holdings, Inc. 1990 Stock
           Option Plan*............................ Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.7(a) -- Transatlantic Holdings, Inc. 1990
           Employee Stock Purchase Plan*........... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-41474)
                                                      and incorporated herein by reference.
10.7(b) -- Amended Transatlantic Holdings, Inc.
           1990 Stock Option Plan*................. Filed as exhibit to the Company's 1992
                                                      Quarterly Report on Form 10-Q for the
                                                      quarter ended June 30, 1992 (File
                                                      No. 1-10545) and incorporated herein by
                                                      reference.
10.7(c) -- Transatlantic Holdings, Inc. 1995 Stock
           Option Plan and form of Director Option
           Agreement*.............................. Filed as exhibits to the Company's
                                                      Registration Statement on Form S-8 (File
                                                      No. 33-99764) and incorporated herein by
                                                      reference.
10.7(d) -- Amendment to Transatlantic Holdings,
           Inc. 1990 Employee Stock Purchase Plan,
           effective as of December 7, 1995*....... Filed as exhibit to the Company's Current
                                                      Report on Form 8-K (File No. 1-10545)
                                                      dated January 31, 1996, and incorporated
                                                      herein by reference.
10.7(e) -- Transatlantic Holdings, Inc. 2000 Stock
           Option Plan*............................ Filed as exhibit to the Company's
                                                      Registration Statement on Form S-8 (File
                                                      No. 333-50298) and incorporated herein
                                                      by reference.
10.8    -- Transatlantic Reinsurance Company 1989
           Stock Option Plan*...................... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.9    -- Transatlantic Reinsurance Company 1984
           Stock Option Plan*...................... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.10   -- Transatlantic Reinsurance Company 1979
           Stock Option Plan*...................... Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
</TABLE>








<PAGE>



<TABLE>
<CAPTION>
EXHIBIT
  NO.                  DESCRIPTION                                   LOCATION
  ---                  -----------                                   --------
<S>     <C>                                         <C>
10.11   -- Quota Share Reinsurance Treaty between
           National Union Fire Insurance Company
           of Pittsburgh, Pa. and Transatlantic
           Reinsurance Company, dated June 5,
           1978...................................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.12   -- Quota Share Reinsurance Treaty between
           New Hampshire Insurance Company and
           Transatlantic Reinsurance Company,
           dated February 9, 1978.................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.13   -- Quota Share Reinsurance Treaty between
           American International Underwriters
           Overseas Ltd. and Transatlantic
           Reinsurance Company, dated
           September 22, 1978.....................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.14   -- Surplus Treaty between American
           International Group Companies and
           Transatlantic Reinsurance Company,
           dated September 29, 1989...............  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.15   -- Quota Share Reinsurance Treaty among
           Lexington Insurance Company, Landmark
           Insurance Company, New Hampshire
           Insurance Company and Transatlantic
           Reinsurance Company, dated February 28,
           1990...................................  Filed as exhibit to the Company's
                                                      Registration statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.16   -- Representative Facultative Insurance
           Certificate for Casualty Reinsurance
           Risk (Certificate between National
           Union Fire Insurance Company of
           Pittsburgh, Pa. and Transatlantic
           Reinsurance Company, dated January 9,
           1990)..................................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.17   -- Representative Facultative Insurance
           Certificate for Property Reinsurance
           Risk (Certificate between American Home
           Assurance Company and Transatlantic
           Reinsurance Company, dated March 7,
           1990)..................................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
</TABLE>








<PAGE>



<TABLE>
<CAPTION>
EXHIBIT
  NO.                  DESCRIPTION                                   LOCATION
  ---                  -----------                                   --------
<S>     <C>                                         <C>
10.18   -- Agreement between American Interna-
           tional Group, Inc. and Transatlantic
           Reinsurance Company, dated December 15,
           1977, providing Transatlantic
           Reinsurance Company with a right of
           first acceptance of reinsurance of
           risks insured by affiliates of
           American International Group, Inc......  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.19   -- Aggregate Excess Treaty between
           Transatlantic Reinsurance Company and
           National Union Fire Insurance Company
           of Pittsburgh, Pa., dated November 15,
           1989...................................  Filed as exhibit to the Company's
                                                      Registration Statement (File No. 33-34433)
                                                      and incorporated herein by reference.
10.20   -- Management Agreement between Transat-
           lantic Reinsurance Company and Putnam
           Reinsurance Company, dated February 15,
           1991...................................  Filed as exhibit to the Company's 1995
                                                      Annual Report on Form 10-K (File No.
                                                      1-10545) and incorporated herein by
                                                      reference.
10.21   -- Quota Share Reinsurance Agreement
           between Transatlantic Reinsurance Com-
           pany and Putnam Reinsurance Company,
           dated December 6, 1995.................  Filed as exhibit to the Company's 1995
                                                      Annual Report on Form 10-K (File No.
                                                      1-10545) and incorporated herein by
                                                      reference.
21.1    -- Subsidiaries of the registrant.........  Filed herewith.
23.1    -- Consent of PricewaterhouseCoopers LLP..  Filed herewith.
</TABLE>

---------

* Management compensation plan.